Red Sox Prompt Interesting Debate On Luxury Tax

Fresh off of winning the 2018 World Series, the Boston Red Sox have learned that their success comes with a cost. Boston will have to pay $12 million in luxury tax as the top spending team in Major League Baseball. And while that sum of money isn’t anything life-changing to the Sox, the fact that they even have to pay it at all has sparked a debate on whether or not the luxury tax payments should even exist in the first place.

On one hand, the luxury tax serves to help teams that are in smaller markets and teams that aren’t as popular remain solvent in some ways. For example, the Tampa Bay Rays don’t get the same in the way of attendance or merchandise sales as a team like the Red Sox who are an international brand. Instead of those teams having to drastically change the way they do business, they are subsidized in a way by the bigger teams in the league who spend the most money, like the Red Sox and their exorbitant payroll.

Another huge component of the luxury tax is the fact that teams in bigger media markets make more money from their local television contracts. While not every team has their own television network like the Yankees have the YES Network, a team like the Red Sox has their games distributed to an entire region of the country, whereas the Rays are in a situation where their games are more broadcast to a more narrow local audience.

On the other hand, the Red Sox having to pay $12 million for being in a better media market than Tampa Bay can come across as unfair to the team paying. Obviously the Miami Marlins haven’t built a product that has drawn a ton of attendance, but it can be argued that paying them to make up for some of that shortfall shouldn’t be put on the more successful teams in the league.

The payment that the Red Sox are required to make to the rest of the league as a result of the luxury tax won’t change the status of the Red Sox as 2019 World Series MLB betting favorites given how they ran through the rest of the league last season. Their starting pitching will remain a strength next year. With David Price, Chris Sale, and Nathan Eovaldi all under contract for next season, it will be difficult for teams to overcome that threesome who have all exhibited postseason success in their careers.

Boston is at +550 to win the 2019 World Series, but will have to overcome the Houston Astros at +600 and the New York Yankees at +650 just to get to the World Series. Having the top three favorites to win the World Series in one league, with two of them being in the same division, will make for a compelling 2019 season, with the Red Sox position as the biggest spenders in the league usually being occupied by the Yankees historically.

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