(Photo Credit: Kevin Sullivan/OC Register)
Even though many of the finer details of the new collective bargaining agreement are still being disclosed and analyzed, the Dodgers may be on the verge of making several moves via the free agent or trade markets now that a set of regulations and guidelines has been established for the next five years.
While it’s been heavily publicized recently that a target payroll of $200 million is the Dodgers’ objective moving towards the 2018 season, a threshold of $235 million will probably be the most critical figure to watch in 2017, especially considering how much money will come off the books for the club in 2018.
According to the Associated Press, under the new parameters, tax rates increase from 17.5 percent to 20 percent for first offenders, remain at 30 percent for second offenders and rise from 40 percent to 50 percent for third offenders. There is a new surtax of 12 percent for teams $20 million to $40 million above the threshold, 42.5 percent for first offenders more than $40 million above the threshold and 45 percent for subsequent offenders more than $40 million above.
As far as what that means for the Dodgers, Eric Stephen of True Blue LA laid out a very clear explanation.
“The Dodgers were already at the 50% rate in 2016, and while the final numbers haven’t been reported yet they will almost certainly be well over $40 million over the $189 million threshold, after blowing past the same threshold in 2015 with their $298 million payroll. The luxury tax threshold in 2017 is $195 million, so the Dodgers would pay 50% on any amount over that. In addition, they would pay another 12% extra (so, 62%) from $215-235 million, and a whopping 95% (50% tax plus the 45% surcharge as a subsequent offender) of anything over $235 million. In other words, the Dodgers would almost be paying double for anything over $235 million.”
There’s no question that the luxury tax boundaries create an interesting puzzle for president of baseball operations Andrew Friedman and his troops, having to decide whether to surpass the upper-level threshold and pay the maximum penalty in order to fashion a competitive roster. Because the Dodgers will have more flexibility as far as guaranteed contracts in 2018 are concerned, the front office and ownership group may decide to spend lavishly in an attempt to assemble the finest available talent.
It may be a wise decision to resolve a few critical decisions early, most specifically offering competitive contracts to infielder Justin Turner and reliever Kenley Jansen. If for whatever reason either of the two are swallowed up by an opposing club, the options remaining are very limited, particularly from the perspective of putting together a playoff-caliber roster. If the management crew makes strong pushes for other free agents like Rich Hill and Chase Utley in addition to Turner and Jansen, it may be an early indicator that the club isn’t phased by passing the upper limits of the tax threshold, at least for this season.
The Dodgers may elect to make several 40-man roster moves as early as this weekend if they wish to free roster space and participate in the Rule 5 draft, which is held on the final day of the upcoming Winter Meetings. The meetings also act as a catalyst to the orchestration of some of the biggest trades and free agent signings of the winter months.
The Winter Meetings commence on Sunday, December 4 just outside of the nation’s capital in National Harbor, MD, and end on Thursday, December 8 with the conclusion of the Rule 5 draft.