Dodgers cut projected tax payroll next year to $181 million
NEW YORK — The Los Angeles Dodgers brought their projected 2018 payroll under the $197 million luxury tax threshold with the weekend trade that sent first baseman Adrian Gonzalez, oft-injured starting pitchers Scott Kazmir and Brandon McCarthy and infielder Charlie Culberson to the Atlanta Braves for outfielder Matt Kemp.
Los Angeles will send Atlanta $4.5 million by May 1 as part of the trade announced Saturday, cutting its 2018 payroll for tax purposes by $25 million to about $181 million while increasing its 2019 payroll by $20 million.
The Dodgers rid themselves of three guaranteed salaries from next year’s tax payroll that totaled $49,554,483: Gonzalez at $22 million, Kazmir at $15,554,483 and McCarthy at $12 million. Los Angeles acquired Kemp, a $20 million charge, along with the $4.5 million cash transaction.
That leaves Los Angeles with a projected luxury tax payroll that includes $122,969,286 for 10 signed players; an estimated $26 million for eight players eligible for salary arbitration; an estimated $10 million for the rest of its 40-man roster; $14,044,600 for benefits; and $8 million for the two cash transactions involving Kemp, including a $3.5 million charge for the December 2014 trade that sent him to San Diego. Los Angeles must pay the Padres $600,000 on the first of each month from April through August and $500,000 on Sept. 1.
Los Angeles still has room for 2018 additions, such as a deal for freeagent reliever Tom Koehler and in-season acquisitions.
The Dodgers’ 2017 luxury tax payroll was about $250 million with a projected tax of about $34 million, according to Aug. 31 figures compiled by the commissioner’s office. Final calculations are likely to be made this week.
Los Angeles will pay tax for the fifth straight year; because of that, its tax rate next year will be 50 percent of the amount above $197 million plus a 12 percent surtax on the portion above $217 million through $237 million and a 50 percent surtax on the amount over that.
If Los Angeles’ payroll finishes below $197 million in 2018, the Dodgers’ base tax rate would reset to 20 percent on the first $20 million above the 2019 threshold of $206 million. That would put them in a better position going into next year’s offseason, when Bryce Harper and Manny Machado could be free agents.
On a cash basis, the trade was neutral.
Atlanta acquired $47.5 million of 2018 salaries: Gonzalez gets $21.5 million, Kazmir earns $16 million (of which $8 million is deferred to Dec. 15, 2021) and McCarthy gets $10 million. The Braves immediately designated Gonzalez for assignment and intend to release him.
Los Angeles took on the $43 million owed Kemp, who gets salaries of $21.5 million in each of the next two seasons and is likely to be traded or released. In addition, the Dodgers are sending the Braves the $4.5 million.
The New York Yankees, who have paid a luxury tax in each year since it began in 2003, also are intent on getting below next year’s threshold. After New York and left-hander CC Sabathia agreed Saturday to a $10 million, one-year contract that is subject to a successful physical, the Yankees’ projected 2018 payroll for tax purposes is at about $177 million.