Note: This post was prepared prior to my learning of the Miguel Rojas extension. The $500K increase in the AAV really has no influence on the determination as to what the Dodgers may or may not do.
Yesterday, Badger brought up an article by Jack Harris on the LAD luxury tax plight. Once the Dodgers acquired Miguel Rojas, that put the Dodgers over the threshold, with very few options to get back under. The Dodgers were not going to hurt their on the field chances by moving either CT3 or Max Muncy. They were not going to hurt their future by tying a prospect that a team would pay $8MM for Blake Treinen, just to get under the threshold.
Jack Harris reported that the estimated LAD payroll for 2023 is at $245MM. Cots and Roster Resource has the AAV payroll at between $238MM and $239MM. Spotrac has the AAV payroll at $229.5, but they are missing a significant line item of 0-3 year players, which is estimated to be $3.4MM. They also have differing present value calculations for the deferred contracts of Freddie Freeman and Mookie Betts.
We will not know what the 2023 payroll number is until the end of the season and all of the payrolls are properly tabulated including present value calculations and any of the incentives. But I agree that it is safe to assume that the Dodgers will go past the threshold for the third consecutive year. The estimated CBT for LAD? If the payroll is $238MM, the tax would be $2.5MM. If the payroll is $245MM as Jack Harris estimates, the tax would be $6MM.
The Dodgers payroll and tax for 2022 totaled $325.7MM. If assuming the largest estimate for the LAD estimated payroll is correct (Jack Harris), the total payroll and tax amount would be $251MM. I do believe the Dodgers can afford that level of payroll and tax. Would they prefer not to pay the $6MM in tax? Of course. But it is not going to dissuade them from keeping their current roster as it currently exists, and not mortgaging their future with a Treinen trade.
Per Jack Harris’ column, AF commented on the dilemma of going over or staying under the CBT threshold:
“There’s always going to be that push-pull between pressing to be as good as we can be and figuring out when we can strategically get under without sacrificing where we are to be able to spend more on our on-field players,” Friedman said. “Is it critical [to reset the tax]? No. But it is advantageous.”
It is clear that AF believed that Miguel Rojas made the team better in 2023 than Jacob Amaya might have. Will Amaya become a significant MLB player? I am not prescient enough to make that assertion. Almost every talent evaluator has Amaya’s ceiling as a defensive utility infielder. Maybe he becomes a regular for Miami (as Rojas did), but it is doubtful that the Dodgers believed he would be an everyday SS for them down the line. They stockpile utility players, so Amaya is certainly replaceable. I hope Amaya has a strong career with Miami. However, I will not look back at this trade and think the Dodgers blew it.
Okay, so they do not get under the CBT threshold for 2023. They are certainly capable of dropping below for 2024. 2024 free agents include:
- Clayton Kershaw – $20.00MM
- Julio Urias – $14.25MM
- Max Muncy – $13.50MM
- Noah Syndergaard – $13.00MM
- D. Martinez – $10.00MM
- Blake Treinen – $8.00MM
- Daniel Hudson – $6.50MM
- Miguel Rojas – $5.00MM
- Shelby Miller – $1.50MM
- Trevor Bauer – $24.54MM
The total contracts for 2024 free agents is approximately $116.3MM, leaving the 2024 payroll at approximately $122MM. With the threshold escalating to $237MM for 2024, that would leave about $115MM before the 2024 options are exercised.
There are club options that can be exercised for 2024 with a range of contract amounts depending on 2023 results:
- Max Muncy – Between $10MM and $14MM
- Blake Treinen – Between $1MM and $7MM
- Daniel Hudson – $6.5MM
Let’s assume that the Muncy’s option will be exercised at $14MM. He will earn that if he surpasses 550 PA. He reached 565 last year. Let’s assume that Treinen will be exercised at $1MM. Including Hudson, that would approximately equate to $21.5MM, leaving $93.5MM to resign Urias, Kershaw, and sign Ohtani (if that is what they want to do), and stay under the threshold. I am still not convinced that the Dodgers have any intention on giving a $500MM contract to anyone.
Of course that does not take into account any arbitration increases, or players needed to fill the roster.
The Dodgers can worry about next year after this season is done. But the idea is that if getting under the threshold is imperative, they can do it in 2024. $6MM in tax for 2023 is not going to hurt the Dodgers financially.
I am also not convinced that the Dodgers will be making any kind of trade before or during ST. I think they want to see what they have, especially with Lux at SS and the “kids”. They are not going to fall out of contention by the deadline. If they need to improve their club at the deadline, they can do so. They just need to factor in a 50% tax on what payroll increase they incur. That tax will not deter them from improving their club down the stretch. The team goal is still to win a WS, and the LAD owners are not going to preclude AF/BG from acquiring the players they deem necessary to reach that goal.