Not winning at all costs
Henry’s reluctance to add to payroll will test Dombrowski
The luxury tax, negotiated into the Basic Agreement by the owners to suppress salaries, er, I mean, to promote competitive balance, discourages the most successful baseball franchises from buying the stairway to baseball heaven.
Yet, when July arrived, Red Sox owner John Henry said the luxury tax, which amounts to a soft salary cap in an industry that has no floor, was not the reason he was not of a mind to add a lot of payroll to ready his sputtering team for a pennant race.
“It’s a question of how much money do we want to lose … It’s a worthy team because we invested. Two years in a row we have the highest payroll. It’s not a matter of investment. It’s a matter of playing well,” Henry told WEEI.
Baseball team’s ledgers are
not open books, so we’re left to take the owner’s word that the Red Sox with all their sponsors and sellouts and TV deals and merchandise sales are losing money largely because of a payroll in the neighborhood of $240 million.
Such calculations, of course, never take into account that baseball franchises constantly appreciate in value.
Henry and friends purchased the Red Sox for $700 million in December 2001. Forbes Magazine estimates the franchise value at $3.2 billion now, an appreciation of $2.5 billion.
Whenever a ballplayer signs a big contract via free agency, somebody will calculate how much money he earns per game or per start, etc. Yet, nobody ever figures out how much a franchise appreciates per game. So let’s give that a try.
This is the 18th season of Henry’s ownership, so by season’s end, his Red Sox will have played 2,916 games, based on 162 games per season. Divide 2.5 billion by 2,916 and it comes out to an appreciation of $857,338 per game.
Given that, I believe Henry when he says the luxury tax isn’t what’s stopping him from adding payroll. He can afford to sink more dough into an investment that has appreciated so richly.
So if it’s not the money, what is it that’s stopping him? Two possibilities. First, it could be that he doesn’t want to get the stink eye from the rest of the owners for going rogue and undermining the owners’ efforts to curb inflation, although said efforts could not be organized because that would be collusion.
I suppose that could be it, but a second possibility might play a bigger part in Henry’s reluctance to splurge.
Simply overpowering the problem with money would be akin to slapping on another coat of paint while ignoring that the wood is rotting. It wouldn’t get to the main source of the problem with the 2019 Red Sox. Which is?
Dave Dombrowski hasn’t done nearly as good of a job building this year’s team as he did as architect of the 2018 World Champions.
Maybe Henry is in the process of an unvarnished evaluation of his president of baseball operations and doesn’t want a bailout to cloud that evaluation. Maybe Henry is starting to wonder if someone else could do a more efficient job building a baseball powerhouse if given a $240 million payroll.
The Red Sox live completely in the corporate world, and in that sort of world stockholders don’t care to hear about how splendid their portfolios looked a year ago when they are coming off consecutive shaky quarters.
In the bottom-line corporate world, it doesn’t matter how moves looked at the time decisions were made. It’s all about forecasting.
Analytics can tell you what has happened to this point with players. Skilled scouts can make educated guesses as to what will happen.
Dombrowski’s Midas touch has turned nearly everything to pyrite since the Red Sox were worshipped on duck boats. A sampling: Nathan Eovaldi signed a four-year, $68 million contract and pitched 21 innings, going 0-0 with a 6.00 ERA, before heading for yet another elbow surgery. The plan calls for him to work out of the bullpen when he is activated, which could happen as soon as this weekend.
Fellow World Series hero Steve Pearce signed a oneyear, $6.25 million contract. In 89 at-bats, he’s hitting .180 with one home run and has nearly twice as many strikeouts (31) as walks (16). On the injured list with a bad back, Pearce suffered a knee injury during an injury rehabilitation assignment.
Chris Sale, 30, will start his five-year, $145 million contract extension next season. In 20 starts, Sale is 4-9 with a 4.05 ERA and has allowed 17 home runs in 117⅔ innings. What makes the rest of the numbers so surprising is that he has 29 walks and 172 strikeouts. He’s as dumbfounded as anybody over his atypical season. During a nine-start stretch (May 3-June 15) that included a three-hit shutout with no walks and 12 strikeouts vs. the Royals, Sale posted a 2.09 ERA. It’s too early to call the contract a bad one for the Red Sox, but it’s getting late in the season to believe they couldn’t have gotten him cheaper if they had waited. His encouraging six-inning Thursday start in a combined two-hit shutout leaves open the possibility of the signing still making sense.
Dombrowski’s signing of shortstop Xander Bogaerts to a six-year, $120 million extension that has a player buyout after 2022 was a great deal for the Red Sox.
The trade for No. 5 starter Andrew Cashner won’t be judged on whether it looked good at the time, which it did, rather on how it works out.
The recent shedding of Tyler Thornburg and Eduardo Nunez serve as reminders of past mistakes made by Dombrowski.
And we haven’t even gotten to the bullpen. The idea that the ninth inning doesn’t require a pitcher with a different makeup, if it were true, would save owners a lot of money because big save totals translate to big bucks.
Henry’s an analytics guy, but even he must wonder if the Red Sox have taken too deep a plunge with numbers that discount the very real human element of baseball. At some point, he might wonder if he needs to trust his $240 million payroll to someone who has the guts to do things in a way that might seem foreign to ownership.
For all we know, Henry’s reluctance to add big salaries down the stretch might have something to do with seeing how his top executive can compete on a level playing field.