Red Sox sign Steve Pearce

[OH FOY]

Love Dirt Dogs like Pearce. Anything for the team. Can never have enough of these guys. Perfect signing 1 year, at same price, how can you be disappointed.

[OH FOY]

How much does each team make after that huge TV contract, that was signed this week? Go all in this year, next year it is going to be hard. 3 key Free Agents, plus an opt out on JD. Have to go hard 1 more year. Sale's shoulder still a concern for me, for next year.

[sk7326]

So by your calculations, it looks like bringing back Pearce might have prevented the return of Kelly/replacement set up guy.

 

This does assume the team is limited by luxury tax thresholds.

 

By even simpler math, it means goodbye to Blake Swihart (or another catcher)...

 

It assumes the team cares about the threshholds which Dombrowski has indicated it not really true. Given the impossibility of resetting in the next season or two, short high price contract are a non-issue for this team.

[notin]

It assumes the team cares about the threshholds which Dombrowski has indicated it not really true. Given the impossibility of resetting in the next season or two, short high price contract are a non-issue for this team.

 

Not really true.

 

There may be an actual desire to limit the amount paid, which would limit the exact types of contracts you say are a non-issue...

[cp176]

So by your calculations, it looks like bringing back Pearce might have prevented the return of Kelly/replacement set up guy.

 

This does assume the team is limited by luxury tax thresholds.

 

By even simpler math, it means goodbye to Blake Swihart (or another catcher)...

 

You are right about one thing for sure notin - most of these comments about Red Sox budgetary constraints are based on assumptions. The Red Sox may indeed feel constrained by luxury tax ramifications and maybe they won't. They are likely to I think but no one here really knows.

As for Swihart - i agree - I think that he will be gone. Either somehow traded or allowed to simply go free. A sad story but I doubt they bring back all 3 of their catchers next year. they don't need to.

[Dojji]

Not really true.

 

There may be an actual desire to limit the amount paid, which would limit the exact types of contracts you say are a non-issue...

 

The problem (which isn't a problem for us) is that Henry is probably still making money, even with the cap penalties. All we see is team payroll, and we worry about the money side of the game based on that, but Henry's thinking based on the entire balance sheet, and from his perspective, the penalties are just another expense.

 

As long as he's profiting, and believe me as long as the team wins he WILL profit, I doubt he'll have any compunction sinking money into a winning team. He's an investment guy, and owning one of the best franchises in major professional sports and keeping its prestige topped up are an investment worth making, every time, even if cap penalties do offer a small diminishment in return.

[jacksonianmarch]

Profit and loss isn’t the most important thing for these owners. The value of the franchise is the biggest gainer for these billionaires. They may lose $500 mil over a ten year period, but the franchise may gain $1 billion in value. They write off the losses as operating loss and then take the big gainer on the sale

[Bellhorn04]

Profit and loss isn’t the most important thing for these owners. The value of the franchise is the biggest gainer for these billionaires. They may lose $500 mil over a ten year period, but the franchise may gain $1 billion in value. They write off the losses as operating loss and then take the big gainer on the sale

 

I agree that the market value is the big thing. At the same time, turning a profit isn't such a bad thing either, and profitability does help increase the market value.

 

Bottom line, I don't think the Sox or Yanks are suffering operating losses.

[Dojji]

Profit and loss isn’t the most important thing for these owners. The value of the franchise is the biggest gainer for these billionaires. They may lose $500 mil over a ten year period, but the franchise may gain $1 billion in value. They write off the losses as operating loss and then take the big gainer on the sale

 

That's true for most owners, especially of middling franchises, but if Henry had been all about the big sale, he'd have had dozens of opportunities to secure it. The man is playing for keeps, and as the owner of one of the 2-3 most lucrative franchises in major professional sports, it's a fair bet to say that he is making money, even if most sports franchises don't.

[moonslav59]

It is interesting, in that after next year we will potentially have an open position at 1st base with Both Moreland and Pearce contracts up, while in 2019 we have the same strong 1st base presence we had in 2018. DD with have the flexibility to move Devers to 1st for 2020, go to the FA market or potentially move a minor leaguer up. Looks like the 1 year contract was designed to maintain flexibility going forward. Another excellent DD move.

 

Plus, next year we have Pearce for the full season- not just 2+ months/

[Dojji]

One thing I'd be careful about, as a fan. Steve Pearce played well above his career ability last year and he'll be 36 this year. I don't think it's fair to expect a WS MVP level performance for 1 year at 6.5. If he puts in the kind of year we got from Johnny Gomes in 2013, that's more or less what I actually expect from him. Something between .740 and .780 OPS. If he does much more than that, that'll be fantastic, but it's not what I expect out of him.

[moonslav59]

So by your calculations, it looks like bringing back Pearce might have prevented the return of Kelly/replacement set up guy.

 

This does assume the team is limited by luxury tax thresholds.

 

By even simpler math, it means goodbye to Blake Swihart (or another catcher)...

 

Assuming my numbers are close, and DD will try to stay under the $40M line, signing Pearce might amount to this:

 

Pearce $6M per

Eovaldi $16M per

Familia $9M per

 

vs

 

No Pearce

Eovaldi $16M per

Ottavino $8M per

Cody Allen $7M per (or Kelly)

 

[cp176]

The problem (which isn't a problem for us) is that Henry is probably still making money, even with the cap penalties. All we see is team payroll, and we worry about the money side of the game based on that, but Henry's thinking based on the entire balance sheet, and from his perspective, the penalties are just another expense.

 

As long as he's profiting, and believe me as long as the team wins he WILL profit, I doubt he'll have any compunction sinking money into a winning team. He's an investment guy, and owning one of the best franchises in major professional sports and keeping its prestige topped up are an investment worth making, every time, even if cap penalties do offer a small diminishment in return.

 

Thanks for posting this. I think that this take is right on.

[Bellhorn04]

One thing I'd be careful about, as a fan. Steve Pearce played well above his career ability last year and he'll be 36 this year. I don't think it's fair to expect a WS MVP level performance for 1 year at 6.5. If he puts in the kind of year we got from Johnny Gomes in 2013, that's more or less what I actually expect from him. Something between .740 and .780 OPS. If he does much more than that, that'll be fantastic, but it's not what I expect out of him.

 

He's got a career .852 OPS against lefties though.

[moonslav59]

It assumes the team cares about the threshholds which Dombrowski has indicated it not really true. Given the impossibility of resetting in the next season or two, short high price contract are a non-issue for this team.

 

I heard somewhere we were just barely over the $40M mark this year. My guess is the official number will show we ended up just under the $40M over line. That might be evidence that the Boston bean counters are hard at work trying to keep us under that top line. The draft penalty is not severe, and if you go just barely over the tax on a small amount over is very small, so in that sense going over the $40M line in and of itself is not earth-shattering, but going over by a lot may take its toll.

 

My guess is DD is not being forced to stay under the $40M line, but it is a high priority not to go way over it. My guess is, upper management has already chosen a season where they plan to reset. I think it will be the 2021 season, so any new contract that runs through 2021 will be very carefully scrutinized with that in mind, and the fact that any 2021 salaries on the books may prevent re-signing some of our best young stars.

 

At some point, it will likely become a juggling act for DD. I'm not calling out anyone who thinks Henry will just keep sending and spending through 2021 and beyond, but re-setting the tax for just one year would save Henry a ton of money for many years afterwards. I'm thinking that is the plan, and my suggestions and projections are based on that foundational belief.

[moonslav59]

He's got a career .852 OPS against lefties though.

 

Yes, and even .825 vs LHPs and some decent number vs righties, when he faces them is worth the $6M/1.

[Dojji]

He's got a career .852 OPS against lefties though.

 

We all know Pearce is not going to bat entirely against lefties.

[S5Dewey]

The problem (which isn't a problem for us) is that Henry is probably still making money, even with the cap penalties. All we see is team payroll, and we worry about the money side of the game based on that, but Henry's thinking based on the entire balance sheet, and from his perspective, the penalties are just another expense.

 

As long as he's profiting, and believe me as long as the team wins he WILL profit, I doubt he'll have any compunction sinking money into a winning team. He's an investment guy, and owning one of the best franchises in major professional sports and keeping its prestige topped up are an investment worth making, every time, even if cap penalties do offer a small diminishment in return.

 

This gets the award as Post of the Week.

[jacksonianmarch]

Listen, there’s no guarantee that Pearce is still gonna be good. But what it does by having him on a 1 yr deal is guarantee that you won’t start the year with a hole. You won’t have to rush Chavis to see if he is ready. You won’t have to push Moreland against lefties. This allows for your team to also have a contingency against what’s expected to be a lefty heavy Yankees rotation. It’s a great move and on a one year deal, it’s a steal

[Bellhorn04]

At some point, it will likely become a juggling act for DD. I'm not calling out anyone who thinks Henry will just keep sending and spending through 2021 and beyond, but re-setting the tax for just one year would save Henry a ton of money for many years afterwards. I'm thinking that is the plan, and my suggestions and projections are based on that foundational belief.

 

How exactly does re-setting the tax for just one year save 'a ton of money for many years afterwards'? I know it re-sets the tax rate, but you seem to be overstating the benefit of that a bit.

[Dojji]

Listen, there’s no guarantee that Pearce is still gonna be good. But what it does by having him on a 1 yr deal is guarantee that you won’t start the year with a hole. You won’t have to rush Chavis to see if he is ready. You won’t have to push Moreland against lefties. This allows for your team to also have a contingency against what’s expected to be a lefty heavy Yankees rotation. It’s a great move and on a one year deal, it’s a steal

 

Eh. If Pearce is outright bad, that contract won't prevent him from being cut, but I don't actually think Pearce is gonna suck. However he was on another level towatds the end of the year last year, and I don't expect him to actually climb quite that high next year, as I said, something in the .750 range is more or less what I expect out of him, any more than that is gravy.

[Dojji]

How exactly does re-setting the tax for just one year save 'a ton of money for many years afterwards'? I know it re-sets the tax rate, but you seem to be overstating the benefit of that a bit.

 

Resetting the tax resets the penalties. If you don't reset the penalties they do tend to build up on you, so resetting it now and again might save tens of millions of John Henry's money.

 

That said, I expect Henry to make the calculated decision to reset the cap around the time that the core is likely to diminish anyway. We still have a strong chance at competing for trophies this year, I think Henry's going to look at the projected window in 3 years when everyone is projecting a serious roster crunch as a good time to take a step back and reset the cap.

[Bellhorn04]

Resetting the tax resets the penalties. If you don't reset the penalties they do tend to build up on you, so resetting it now and again might save tens of millions of John Henry's money.

 

Sure, re-setting it 'now and again' makes perfect sense. But it doesn't really save a ginormous amount of money, unless you go right back out and exceed the threshold again, which puts you in the same position going forward. Any benefits will be quite short-lived.

[sk7326]

Not really true.

 

There may be an actual desire to limit the amount paid, which would limit the exact types of contracts you say are a non-issue...

 

There might be - but that should be a reason for us to laugh at Henry ... not to sympathize that he does not have enough boats

[Hitch]

The problem (which isn't a problem for us) is that Henry is probably still making money, even with the cap penalties. All we see is team payroll, and we worry about the money side of the game based on that, but Henry's thinking based on the entire balance sheet, and from his perspective, the penalties are just another expense.

 

As long as he's profiting, and believe me as long as the team wins he WILL profit, I doubt he'll have any compunction sinking money into a winning team. He's an investment guy, and owning one of the best franchises in major professional sports and keeping its prestige topped up are an investment worth making, every time, even if cap penalties do offer a small diminishment in return.

 

Spot on.

 

We only see the tax limitations. The owners are more worried about bigger financial lines. If they are profitable and wining, they don't care if we go over the tax threshold.

[moonslav59]

We all know Pearce is not going to bat entirely against lefties.

 

True, but he's gotten better vs righties as he's aged.

 

Pearce actually had more PAs vs RHPs (131) than LHPs (120) last year.

 

OPS

Year vs RHPs/LHPs

2018: .828/.959

2017: .767/.730 (249 PAs v R/99 v L)

2016: .795/1.028 (207/95 PAs)

2015: .765/.623 (201/124)

 

career: .743/.852 (1548/908 PAs)

 

[Bellhorn04]

Spot on.

 

We only see the tax limitations. The owners are more worried about bigger financial lines. If they are profitable and wining, they don't care if we go over the tax threshold.

 

It's all a big game. The taxes and penalties are one of the factors in the game. The Yankees and Dodgers made efforts to get under the threshold for 2018 - presumably so it will cost them less to blow past the threshold for 2019.

[moonslav59]

Sure, re-setting it 'now and again' makes perfect sense. But it doesn't really save a ginormous amount of money, unless you go right back out and exceed the threshold again, which puts you in the same position going forward. Any benefits will be quite short-lived.

 

Going from a 50% tax to none for one year, then 20%, then 30% is pretty significant.

 

Let's take a three year sample (starting in 2019) without even going over the $40M line:

 

2019: $246M + $12M tax (30% of $40M)= $258M

2020: $248M + $20M tax (50% of $40M)= $268M

2021: $250M + $20M tax (50% of $40M)= $270M

2022 and 2023 would be similar to 2021 ($270+M x 3= $810M)

 

Now, make 2021 the reset year:

2021: $210M + no tax= $210

2022: $250M + $8M (20% tax)= $258M

2023: $250M + $12M (30% tax)=$262M

Total: $730M for these 3 years

 

Maybe $80M might not seem like a lot from our view of Henry's wallet size, but I guess it matters to him.

 

$80M equals signing a player to $27M x 3 years.

 

Now, he loses Pablo and Castillo's contracts before these years arrive, and hopefully, no current big contract player becomes dead weight, but even just staying near the $40M line for many years in a row, without re-setting, can become pretty costly.

 

Edited November 17, 2018 by moonslav59

[moonslav59]

It's all a big game. The taxes and penalties are one of the factors in the game. The Yankees and Dodgers made efforts to get under the threshold for 2018 - presumably so it will cost them less to blow past the threshold for 2019.

 

A 50% tax on $40M is $20M a year. re-setting not only saves the full $60M for the reset year ($40M not spending on contracts + $20M in taxes at 50%) , but it saves $12M the next year and $8M the 2nd year (in taxes) over the limit after the reset. It's about an $80M savings over 3 years.

 

[Bellhorn04]

Going from a 50% tax to none for one year, then 20%, then 30% is pretty significant.

 

Let's take a three year sample (starting in 2019) without even going over the $40M line:

 

2019: $246M + $12M tax (30% of $40M)= $258M

2020: $248M + $20M tax (50% of $40M)= $268M

2021: $250M + $20M tax (50% of $40M)= $270M

2022 and 2023 would be similar to 2021 ($270+M x 3= $810M)

 

Now, make 2021 the reset year:

2021: $210M + no tax= $210

2022: $250M + $8M (20% tax)= $258M

2023: $250M + $12M (30% tax)=$262M

Total: $730M for these 3 years

 

Maybe $80M might not seem like a lot from our view of Henry's wallet size, but I guess it matters to him.

 

$80M equals signing a player to $27M x 3 years.

 

Yes, but in your example, how much of the $80M is tax, and how much is actual payroll?