With a potential collective bargaining agreement forecast to dominate baseball news over the next several days, many fans are guessing that both the free agent and trade markets may turn into a frenzy if indeed a mutual pact is reached. One key component of the agreement could be the increase of the luxury tax threshold, allowing clubs across the league to conceivably increase payroll another $11 million before being penalized with a tax. Such an addendum could certainly provide the Dodgers with a little bit more breathing room when assembling the club’s player personnel for 2017 and beyond.
It’s no secret that one ultimate mission of the current Dodgers’ front office crew is to field a championship-caliber team while keeping the club’s payroll under the regulated threshold. It only makes sense from a business perspective. What’s more, the Dodgers have recently been mandated to reduce debt in order to conform to MLB rules.
Bill Shaikin of the Los Angeles Times put together a detailed report on the mandate, indicating that the club has a goal of cutting from about $300 million in 2015 to closer to $200 million in 2018. Shaikin explained that during the four full seasons under Guggenheim, as the owners looked to trigger the revitalization of the franchise, the Dodgers’ end-of-season payrolls have totaled $1.069 billion, with another $112 million in luxury taxes, adding up to $1.181 billion, or an average of $295 million per season.
Shaikin also clarifed that under the current luxury tax guidelines, the tax rate increases are based on the number of consecutive years a team has exceeded the threshold. If the Dodgers could get below the threshold even for one year, any future tax would be lower, potentially saving the team tens of millions of dollars.
There’s no question that the Dodgers’ farm system is among the best in the sport, setting the stages for an ideal business model many years down the road. This essentially prevents the Dodgers from being heavily dependent upon expensive free agent signings in order to stay competitive. Another component of a new CBA may be a regulated international draft, which could limit the organization’s stronghold on overseas talent. Los Angeles has loaded up significantly on international players over the past few seasons, and the aggressiveness in signing such foreign players has probably occurred just in the nick of time.
The biggest concerns among the Dodgers’ fan base right now, however, is how much money the team is willing to spend in efforts to bring back third baseman Justin Turner and closer Kenley Jansen. Rumblings around the Jansen camp suggest the reliever is seeking a contract in excess of $100 million, while some experts are guessing that Turner scores a deal in the five-year/$85 million range. While president of baseball operations Andrew Friedman has yet to orchestrate a free agent deal in excess of $48 million during his first two seasons as boss, there’s no question he’ll need to exceed that amount to land either player this time around.
In the end, something as minute as an increase of the tax threshold may have an indirect effect on the current financial decisions facing the Dodgers. It’s tough to imagine the team making a strong playoff push without either Turner or Jansen, having to ultimately depend on more economical types of free agents or trades to build a roster worth contending for a fifth-straight divisional crown.
With pitchers and catchers anticipating to report to camp on February 15, the movements over the next ten weeks could comprehensibly indicate whether or not the management crew of the Dodgers intends on making a strong push towards a championship in 2017, or strategically waiting until the current talent of youth matures sometime down the road.
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