Red Sox payroll was 164 million this year. Let's say they raise it to 170 for 2012. I think thats reasonable. So far they have 126 million in the books for 2012. Picking up Marco Scutaro's $6 million option SHOULD get picked up. He's a nice player, and can cover SS and 3B. I agree with most of you let Papi walk, move Youk to DH but let him play some 3B as well. That sets you at 130.5 million.
Now for Arbitration... Ellsbury - $7 million(MVP year I think a 4.5 million raise isn't out of the question), Salty $2 million(solid year a million dollar bump isn't out of the question. Aceves $3 million(A big year, a nice $2 million bump should be fitting) Avilies $2 million, Bard $2 million, Lowrie $1.5 million, Morales 1.5 million. That's 149.5 if my math is right, but let's say 150. Papelbon is a must 5/75, 15 million per. $165 million. Factor in a few bench players and RP making their 500K salaries. Also Trading a few C level prospects for Ianetta or even Lars Anderson straight up.
Reject Wheeler's option
Non tender Macdonald, Miller and Alberts.
2012 roster
C: Salty
1B: Gonzo
2B: Pedo
SS: Scutty
3B: Avilies/Lowrie
LF: Crawford
CF: Ellsbury
RF: Reddick
DH: Youk
Bench
Larvanway
Kalish
Iannetta
Lowrie/Alivies
Rotation
Lester
Beckett
Bucholz
Aceves
Lackey
Bullpen
Papelbon
Bard
Jenks
Morales
Weiland
Tazawa
Doubront
Payroll should be about 168-170 million. Fitting right into your budget.