How might another luxury tax bill affect the Dodgers’ future?

One of the biggest questions of the Dodgers’ offseason finally has a definitive answer.

Will the team stay below Major League Baseball’s luxury tax threshold in 2023?

No, probably not, Andrew Friedman, president of the club’s baseball operations, confirmed Wednesday.

The news didn’t come as a surprise. While there seemed to be an opportunity as winter began for the Dodgers to keep their payroll under the MLB tax threshold of $233 million next season, that opportunity disappeared in late December with the reduction of Trevor Bauer’s suspension for violation violated the League’s domestic rules on violence and sexual assault policy.

Since the pitcher was reinstated for the 2023 campaign — albeit on a reduced $22.5 million salary after 50 games were docked as part of the umpire’s decision — his money went back into the Dodgers’ books.

Although the team fired him, Bauer continues to count towards his payroll, which is currently estimated at around $245 million for tax calculation purposes.

“We were definitely done with Bauer,” Friedman said, adding that the team will not attempt to cut pay to get back under the line anytime this season.

“We’re doing everything we can to win a championship this year while keeping our future prospects bright,” added Friedman.

The latter goal might be more of a challenge now.

Before they found out about Bauer’s reduced suspension — his original ban was meant to cover the entirety of 2023, the final year of his contract with the team — the Dodgers were apparently on track to stay under the tax line.

They freed up more than $100 million from last year’s team thanks to the expiration of expensive contracts with David Price, Craig Kimbrel, Trea Turner and others, and their decision to part ways with Justin Turner and Cody Bellinger.

They’d missed out on some of their more aggressive free-agent pursuits — Notably Justin Verlander — and shifted their attention to lower-cost signings like Noah Syndergaard, JD Martinez and Miguel Rojas who could bolster the roster without breaking the bank.

And while the strategy wasn’t driven solely by the front office’s desire to get below the tax line, Friedman reiterated that it factored into his calculus.

“We want as much money as we spend to go to talent on the field,” Friedman said. “The more years you’ve passed [the tax line]the higher you go, the more money goes to MLB.”

Staying below the luxury tax line had clear benefits.

The club could have avoided tax penalties for the first time in three years after reportedly racking up around $32million in fees each of the previous two seasons.

Because repeat offenders are subject to a higher tax rate under MLB rules, the Dodgers’ potential penalties for exceeding the tax limit in future seasons would also have been reduced.

Because of this, prior to Bauer’s reinstatement, much of the industry assumed the Dodgers would try to stay below the tax limit this year in order to position themselves for bigger spending next winter — like signing pitcher Julio Urías for a long time -Date extension or a freehand run against two-way star Shohei Ohtani.

Now that they have to pay taxes again (taxes aren’t assessed until the end of the season, so the Dodgers’ exact penalty for 2023 is still unclear), it could hurt their future financial options, though Friedman tried to downplay such concerns.

“There’s always going to be that push-pull between the pressure to be the best we can and figuring out when we can strategically tuck in without sacrificing where we can spend more on our fielders,” Friedman said. “Is it critical? [to reset the tax]? No. But it is beneficial.”

The Dodgers’ up-and-coming talent will be challenged this season.

They’re hoping Gavin Lux can establish himself as their go-to shortstop. They plan to include prospects like Miguel Vargas and James Outman more prominently in the lineup. They expect Tony Gonsolin and Dustin May to continue to thrive while also relying on Gavin Stone, Ryan Pepiot and Bobby Miller to bolster their initial pitching depth.

The more the Dodgers can trust this younger (and significantly cheaper) part of their roster, the more money they can potentially allocate for larger ticket purchases. And since every lucrative purchase would in fact come at a premium thanks to the luxury tax, every dollar will be all the more important to the team’s long-term plans.

For most of Friedman’s tenure, it’s a needle they’ve threaded skillfully.

“We have a history over the last seven, eight years where we’ve maintained a very high level of play and a team with legitimate championship ambitions while we’ve been swinging up and down our payroll,” Friedman noted.

The question is will they continue to do so after eating up the rest of Bauer’s contract and likely having to pay the luxury tax again this year.

Friedman seems to think so. But really, only time will tell. How might another luxury tax bill affect the Dodgers’ future?

Emma Bowman is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button