Though the Dodgers’ pockets are among the deepest in the game, they haven’t been known (at least under their current front office leadership) for handing out monster contracts. The Dodgers, in fact, successfully dipped under Major League Baseball’s luxury tax threshold for the first time under the Guggenheim ownership group in 2018.
Still, when the Los Angeles organization swung a massive contract swap last December to sneak beneath the tax line, the general assumption was that the club mostly saw an opportunity to re-set its tax rate. After all, the scheme under the current collective bargaining agreement includes enhanced penalties for repeat offenders, increasing the incentives for performing a limbo act at least once every few years. Many wondered if the timing was designed at least in part to coincide with a 2018-19 free agent market that features some premium talent.
Now, though, there’s some evidence that the Dodgers may have different plans altogether. According to a report from Bill Shaikin of the L.A. Times, a 2017 document prepared for potential investors suggested that the organization projected to remain beneath the luxury tax threshold for years to come. Specifically, the Dodgers told investors they projected to carry a $185MM payroll for 2019 and 2020 before increasing that number to $191MM in 2021 and $196MM in 2022. The organization predicted soaring revenue despite a streamlined budget (including with regard to player salaries).
Some provisos are assuredly warranted. As Shaikin explains, this document hardly binds the team in a legal sense. And a “high-ranking team official” tells Shaikin that the payroll numbers represented only a “forecast.” That said, it’s also fair to point out that any organization could theoretically expose itself to potential liability by including any known misrepresentations in a bid to draw investors.
Notably, too, the document was prepared before the team qualified for the postseason last year and ultimately went on to make consecutive World Series appearances. And it’s somewhat unclear whether the salary levels contemplated would relate to actual expenditures or calculations for purposes of assessing the competitive balance tax. Over the long haul, that might not matter much, but it certainly weighs into both the team’s immediate plans and the intentions behind the numbers it presented.
So, what might all this mean for the Dodgers’ near-term spending outlook? Most immediately, a source indicated to Shaikin that it’s quite likely the Dodgers will go past $200MM for the coming season. Whether or not that’s due to tweaked thinking since this document was prepared, it seems that the $185MM figure is no longer realistic.
Even if the Dodgers were to stick to that kind of spending level, the constraints may not be as great as one might imagine. Presently, the Dodgers are within just a few million dollars of that $185MM sum, though that estimate includes yet-undetermined arbitration salaries and doesn’t account for factors like non-tendered players or potential trade candidates with notable salaries (or projected salaries).
Furthermore, L.A.’s luxury tax ledger, which is based on the average annual salary of the team’s contracts rather than actual year-to-year salaries, is cleaner. Currently, the Dodgers payroll sits at just a bit north of $161MM for purposes of the CBA — well shy of this year’s $206MM luxury tax barrier. Even if one of Hyun-Jin Ryu or Yasmani Grandal were to accept a $17.9MM qualifying offer, the Dodgers would be at just over $179MM in luxury tax dollars, although that outcome would throw a wrench into the supposed 2019 bottom-line payroll target.
All things considered, it’s eminently possible for the Dodgers to add a premium salary — even after re-upping Clayton Kershaw at a rate that’s just short of the loftiest AAV in history — while staying out of the tax. It would take some finagling, and would perhaps mean parting with talented players on generally appealing contracts, but the document does not seem to conclusively take the Dodgers out of the hypothetical running for highly-paid players.
In the broader picture, of course, there’s surely something to be gleaned from this document. The notion of a payroll that trudges northward with inflation certainly does not align with the general image of the Dodgers as a freewheeling financial behemoth. It generally suggests that the organization will prioritize efficient spending while generally avoiding massive and lengthy contractual entanglements — a description that won’t be surprising to those that have followed the club’s course under president of baseball operations Andrew Friedman.
That said, it’s difficult to reach any firm conclusions based solely upon this document. For instance, the Dodgers’ financial experts may simply have been projecting payroll to grow steadily from its then-projected future rate, rather than making any detailed assessment of the ever-complicated process of compiling a roster from season to season. And there are always creative possibilities that could be part of the planning here. The Dodgers’ wealth of young talent leaves the team capable (in theory, at least) of shedding contracts that go bad in future seasons. Most importantly, business plans change, and individual player investment decisions will surely not be dictated by the directional thinking at one point in time.
They will go way over the luxury tax. Those reports mean nothing in 2019
Joedirt is clearly privy to information that no one else has
Don’t try to church it up son, don’t you mean dirt. Even the survey said the dog was too hot for you. Loved that movie!!
Is this where you want to be when Jesus comes back?
All pretty consistent with what we’ve seen so far – they said they were going to get under the tax, they said they weren’t going to spend spend spend, and that’s exactly what they did.
Does MLBTR stand with their 14 year $420M prediction Bryce Harper to the Dodgers? 😉
That’s crazy money. Hasn’t MLB learned anything?
(Miggy et. al…..)
Xabial what’s your prediction for Harper? Team year and $. Will be interesting how this offseason will go for Harper.
I always figured if the dodgers signed him it would be something like 5yr/200million, low years but crazy AAV
Harper will find some sucker team to sign him well beyond his age 35 season.
A team desperate for a playoff run.
You’re the guy who predicted the Orioles wouldn’t trade Machado last year, even after the Dodgers had a clear need.
People in glass houses shouldn’t throw stones.
So either they are going to sign Bryce Harper, or they are not going to sign Bryce Harper. Got it!
There are twos of possibilities boggles the mind
They lost the world series and did nothing to improve the team last offseason. There is just no way they would be able to get away with that again. You have Kemp, Hill and Puig expiring next offseason. There is plenty of room for a big splash
Matt Kemp, Tom Koehler, Scott Alexander, JT Chargois…
Seager will be back
will Seager be able to play 160 games at short.
Are you kidding me? Kemp was nothing but a salary exchange and it was up in the air if he would even make the team. Chargois was a spring training waiver claim. Koehler was a cheap signing that did not pitch a game for them. Alexander ok but thats very underwhelming
You could actually say that without Kemp, they don’t win their division.
Kemp being a salary dump is not relevant at all. Kemp was on fire and played like an all star the first half. Without Kemp they do not even make the playoffs
It is absolutely relevant. They did not intend on Kemp being an impact player for the team. Friedman even told him that himself. They were not acquiring him for his talent. When you win the division by 1 game there are so many players you can point to and say they dont make the playoffs without them.
that’s true of both him and muncy, but neither were actually expected to break out the way they did.
patiently awaiting sheryl ring’s take on this
She has been an amazing addition to the FG Team.
I liked a few of her articles and then I looked at her twitter one day. Apparently if you have some conservative leanings you are a white supremacist instead of being someone you disagree with. Can’t stomach even hitting one her links anymore
political opinions =/= legal opinions (some of the time), but point taken. i don’t follow her on twitter, i had no idea.
Boo hoo. Waaaah.
Of course, grumpy fans who have been waiting 30 years can see this as a sign the team really p[ans to maximize “value” by underspending on talent while stadium prices keep rising and that lucrative TV contract keeps half their fan base in the dark. Business as usual. And they wonder why those same fans question the team’s motives? On the other hand, this could just be piffle and they are getting a Dodger Blue #34 ready. 🙂
Nobody has worn that number since Fernando retired
How can it be considered underspending if they are right up against the limit?
Players are underpaid for a significant part of their career. All Teams have resources to put more into their payroll. But until the tax line is bumped up significantly, it’s hard to make an argument that one of the biggest spenders in the League, aren’t spending enough.
I wish my team had the best pitcher in the game and made it to the World Series the last 2 years, stop complaining.
Scherzer doesn’t play for the Dodgers….
Neither does Jacob deGrom
It can be considered underspending if they are a piece or two away from building a championship team and instead of spending for those players decide to program that money towards fattening the bottom line.
Spot on! And I also agree with your previous comment, no way the front office could even get away with being cheap while they are still in title contention
historically they both overspent and underspent at the same time, between bad contracts and wounded depth guys, especially pitching they racked up the spending but it was all short term and they haven’t really jumped in on any big time contracts outside of Kershaw who is a home town guy from their system. really, they have used their money for a while now as a blunt instrument in order to take a system that was a mess and really build a prospect and scouting based system, personally i feel like it borders on cheating the way they did it but got them to a point where they now don’t have to use money but have the luxury to do it if they want, which is likely where the investors want to be.
A question for Dodgers fans:
Who would you rather have, Harper, or say, Stanton?
Personally, Harper. His batting profile is likely to age more gracefully, where as Stanton’s calling card (absolute power), while elite, is a commodity that is being valued less and less as the years go by. As more and more balls leave the park, the players who’s game is built on it, become less important.
Harper easily
Simple.: NEITHER
Personally think the Dodgers would go within the trade route to acquire players because of their surplus of outfielders. That, or they sign Harper and use their surplus of outfield to improve the bullpen.
Khris Davis would be a great acquisition for the Dodgers, IMO, they could offer Pederson to the athletics along with cash and a minor prospect and add a righty to a lefty heavy lineup. Edit: I realized the athletics aren’t in need of lefty outfielders, but I still think Khris Davis would be a good fit for LA.
Except he can’t throw a baseball. He is a DH for a reason. The Dodgers made defensive miscue after defensive miscue in the WS and quite honestly throughout the postseason which was a portion of their downfall. Davis makes no sense to the Dodgers IMO. And the lineup outlook next season probably won’t be so lh dominant. There will still be a couple platoons here and there, but they basically platooned out of necessity.
Watching Davis play defense in the NL West parks would provide for good laughs.
It would be similar to watching a pitcher hit in the NL.
They have to spend and vastly improve, because the last two years they’ve been the best of the National league….
But there are five teams in the American that are better.
I’d probably say more like two
Year 31 now
And you can add all the years upcoming in Roberts extension to that.
So much for thinking they’d go get pitching. Need to add another top starter and one or two arms for the bullpen.
Free agency is a big fallacy. Even “smart” teams like the Cubs and Cardinals have made recent mistakes that have made their teams worse. When the Dodgers had that near $300M payroll they were losing in the NLDS. The last few years they’ve had a better team despite a smaller payroll.
$ does not equal wins. Especially doesn’t equal World Series victories. Ask the Mets, Angels, Yankees even (recently).
The Mets spend like a mid market team so you can’t really include them. They throw together budgets like the brewers or Indians even though they play in the largest media market
“Mets” “spend $$” is an oxymoron.
tell that to the largest payroll in MLB that had 108 wins and a WS title that was bought.
Dodgers are run by smart guys. They have lots of good young inexpensive players. Let someone else pay those two guys and wish they hadn’t. The Dodgers will still be good as well as flexible going forward. Nothing to see here, folks.
I’m a bit confused… That document means basically nothing, as does this analysis that essentially concludes that it means nothing.
Even in early November, baseball writers gotta come out with some sort of prose. Enlightened or not…
I don’t see a problem with this. Regardless of the owner’s pockets, 185M is still a massive payroll, and more than enough to field a competitive team. It’s the teams spending 100 or less that are the problem.
Dodgers sign Harper.
Trade verdugo for starter or pen help
Maybe Verdugo Lux Rios Will Smith Alvarez to the Reds for Iglesias, Hughes, Gennett, Castillo.
Maybe buy low on jose urena
Why in the world would a team like the dodgers with 6-7 rotation options want a guy like Jose urena? Wood,hill, Kershaw, buehler, and Maeda are all better pitchers. That’s not even to mention Urias or one of their other young arms.
wood needs to go, they ahould call him homer wood
Nobody wants Verdugo anymore…have you seen him play? Not good
Not good? He has barely gotten to pkay because of dodgers depth, his triple a numbers and what he showed last year in majors is at the very least an every day outfielder with room to be above average.
Don’t lie, you didn’t watch a single OKC game this year.
I’m watching him play against major league pitching and he is already in a position where he is one who needs to make adjustments to big league pitching…not good, should be the other way around….and Fat Matt Kemp who hit sub .200 in the second half with “jogging” outfield defense is playing ahead of him sooo yeahhh
Dear Dodger Fans: Please sign both Machado and Harper so that I can explain to our fanbase that we gave it the old college try but things just didn’t work out. Sincerely, Andy MacPhail and Matt Klentak
Why are the owners asking the fans to sign players?
Have a billion dollar payroll and lose another World Series…
Ah madmanTX still mad the Dodgers did not trade Walker Buehler for Yu Darvish. You specifically said they had to or no deal
You can remember what people post a year ago but cannot use a calculator to add a teams salary…skills my man!
What did Harper bat this year .249 or something. No thanks, go to the Phillies.
Oh he will be a Dodger, no doubt. Enjoy it, like a Kershaw playoff performance.
Not sure if someone has said it yet, but clearly this is the team letting this out as a negotiating tactic. If they cannot get the guy for the price they deem fit, they will claim budget burden. I don’t get why teams like the cubs, Yanks, BoSox, Dodgers have any financial constraints. They print money. Even though it’s a lost cause, the players union might be right about owners trying to mitigate salaries of players.
How in the world is it a negotiating tactic? You think Boras and Harper will see this and drop their price? Not happening.
Further it was from before the 2017 season and no one says they have a budget issue where they do not have money to burn. It is just being suggested that they are not that interested in 400 million dollar free agents.
Nobody has made Harper of offer for the Dodgers to beat yet
Not entirely true. The Nats offered him one around $300MM, but we don’t know the other specifics. (For example, they love their deferred money.)
After spending 2 billion in the past 6-7 seasons and barely able to hold off the rockies for the division…i would say they need to get more for their dollar because this spending and trading like crazy just to stay relavent isnt sustainable
No idea what kind of math you are doing. Its a lot closer to 1 billion than 2. The Rockies and Dbacks have taken themselves to their self induced limits and been unable to catch the Dodgers. Any team can make trades. The Dodgers have more farm system depth than those 2 teams so they can make more trades. But even them the Dbacks or Rockies could have easily traded for Machado
There is a calculator on your computer? can you not use it? add 2013-2018 its over 1.5 billion and it you add 2012 and 2011 its barley under 2 billion. Math…yea buddy
The Rockies SS and #B just won the silver slugger so they really wouldn’t of traded for Machado…
“watch baseball…it helps when you’re trying to talk about baseball.” – Juicemane
How is it not sustainable if they’re making a profit?
hahaha its hard not to make a profit when you play 162 games….i really am talking to children. But nobody cared to watch you guys in the World Series cause you couldn’t even make it competitive. One games was good and it took so much luck for that 18 inning miracle. haha and Dodger fans actually thought they could win 4 from Boston.
The Dodgers TV deal pays them 182 mil a season. What them worry?
I calculated $334 million
You calculated right, on the average annual. They can easily cover a $200M+ payroll and a whole lot of luxury tax on top of that with the media money alone.
Wonder if this information was leaked by the Giants Director of Baseball Operations
Haha!!! Gotta wonder.
Harper is overrated
249 average and a over 10 year, hundreds of millions deal?
Based upon what I’ve learned about baseball from the Pittsburgh media, it’s quite obvious that Magic Johnson needs money to buy more ski lifts.
#GoMagic’sWallet
Shady Dodgers as usually
I wonder how many took the trouble to read Shaikin’s excellent reporting. Among the many items of interest not mentioned in MLBTR’s summary was this nugget: “The projections call for the Dodgers’ revenues to increase from $591 million in 2019 to $695 million in 2022.”
So we can see clearly the need for them to stay under the luxury tax. Any further questions, sports fans?
The Dodgers may not be currently in compliance with MLB debt provisions. They had a five year exemption expire this year.