The Red Sox agreed to a massive contract extension with Rafael Devers last week, committing to their star third baseman into the 2030’s. The deal tacked on $313.5MM in new money to buy out ten would-be free agent seasons and keep Devers in Boston for the bulk of his career.
That $313.5MM was tacked onto a $17.5MM salary to which the parties had agreed the day before to avoid an arbitration hearing for his final season of eligibility. Chris Cotillo of MassLive reports (Twitter link) the deal was structured to go into effect for the 2024 campaign, a notable development for luxury tax purposes. The average annual value of a contract counts against a team’s luxury tax ledger. Devers’ deal will come with a $17.5MM tax hit for the 2023 season — reflecting the previous one-year agreement — before recalculating for the 2024-33 campaigns bought out by the extension.
Alex Speier of the Boston Globe reports some additional specifics on the extension. Devers receives a $20MM signing bonus, followed by his established $17.5MM salary in 2023. He receives salaries of $27.5MM annually from 2024-26, $31MM per year from 2027-30 and $29MM salaries between 2031-33.
According to Speier, some of that money will be deferred. Doing so will bring the deal’s luxury tax hit for the 2024-33 campaigns to a bit above $29MM. That suggests the contract’s net present value is actually somewhere around the $290MM range. A straight ten-year, $313.5MM contract would’ve had a luxury tax number of $31.35MM, on the other hand.
That’s a small benefit to the Boston organization over the long haul. The more immediate relief for the club comes in structuring the agreement so Devers’ 2023 CBT number remains at $17.5MM. That’ll keep Boston’s overall tax number around $211MM after factoring in projected salaries for arbitration-eligible players. They’re roughly $22MM south of the $233MM base tax threshold, leaving them a fair bit of spending room before hitting that mark.
The Red Sox have set a press conference for tomorrow at 11:00 am EST to announce the deal. Devers, chairman Tom Werner, team president Sam Kennedy, chief baseball officer Chaim Bloom and skipper Alex Cora will all attend.