In this article about the Red Sox’ recent moves, Alex Speier touches on their trade of Casey Kotchman for Mariners’ utility man Bill Hall. It’s been said this offseason that the Sox are especially concerned about the luxury tax and are doing everything in their power to remain under the $170 million salary threshold. This threshold is determined based on the average annual value of a contract, Bill hall’s 4 years at $24 million for instance would be a cost of $6 million against the luxury tax threshold. However, since his contract was structured differently, and since the Brewers were paying the Mariners almost the full amount of the contract, Bill Hall’s expiring contract is actually worth around -$1.5 million against the threshold.
Expiring contracts have a significant trade value in the NBA, but I’ve never heard of any baseball trades being made for this reason. Bill Simmons goes so far as to suffix Expiring Contract onto the end of any player in the last year of a contract, so at the very least, we should refer to Bill Hall as Bill Hall’s Expiring Contract for this season, right?
Hall is in the last guaranteed year of a four-year, $24 million deal that will pay him $8.4 million next season. The Mariners, according to a major-league source, will pay $7.5-8 million of his salary â€” essentially sending the Sox the same money that was given to Seattle by the Brewers when the Mâ€™s acquired Hall last summer.
Hallâ€™s contract is evaluated for luxury tax purposes as being worth $6 million in 2010, based on its AAV. But the full amount of the cash transfer â€” call it $7.5 million â€” will be deducted from the Soxâ€™ payroll as determined for luxury tax purposes. That being the case, Hall will actually reduce the Soxâ€™ payroll in calculating the competitive balance tax by roughly $1.5 million dollars. Overall, then, the Sox were able to sign Beltre and add Hall and a player to be named at a cost (for CBT purposes) of roughly $2 million in 2010.