Dodgers plan: Stay below luxury tax
The Dodgers plan to keep their player payroll below the level that would require a luxury tax payment for at least the next four years, according to a document prepared for potential investors and reviewed by The Los Angeles Times.
By cutting payroll this year to the point where they were not assessed a tax, the Dodgers reduced their tax rate for future years. However, if they do not wish to pay the tax at all, the Dodgers could be hard-pressed to sign top free agents this winter, including coveted outfielder Bryce Harper.
The Dodgers spent $195 million in player payroll this year, when they advanced to the World Series for the second consecutive season and won the National League West for the sixth time in the six full seasons under the ownership of Guggenheim Baseball Management.
Under the projections prepared for potential investors, the Dodgers would spend $185 million in 2019 and 2020, $191 million in 2021 and $196 million in 2022.
The Dodgers’ payroll projections are not binding. One high-ranking team official called the figures a forecast, and another said he would be shocked if the player payroll did not top $200 million next season.
Dodgers spokesman Steve Brener denied a request for an interview for this story.
The luxury tax would be assessed on any team that spends $206 million in 2019, $208 million in 2020, and $210 million in 2021. The 2022 threshold has not been set.
At a news conference last week, Dodgers president of baseball operations Andrew Friedman deflected a question about whether the team would be willing to pay the luxury tax next year.
“It’s not something that we’ve really gotten into at this point,” he said. “More than that, there’s no question that we have plenty of resources to win a World Series next year.”
The Dodgers signed Clayton Kershaw last Friday to a threeyear contract with an average annual value of $31 million, tied with David Price of the Boston Red Sox for the highest such figure among major league pitchers. Kershaw can earn as much as $4 million more a year in incentive bonuses.
“You would expect the Dodgers to have one of the highestpayroll teams in baseball,” Kershaw said before the season ended. “You would expect, since we got under the tax threshold this year, the club would be able to spend for a few years after that.”
It is uncertain whether the Dodgers could reduce their payroll to $185 million next season. If catcher Yasmani Grandal and pitcher Hyun-Jin Ryu each accepts his qualifying offer, and if the team extends salary arbitration to seven players – the six arbitration-eligible players on the postseason roster, plus injured shortstop Corey Seager – the Dodgers’ payroll would stand at about $190 million for 16 players.
That figure does not include players not yet eligible for arbitration, including pitchers Walker Buehler and infielder Max Muncy. Those players would be paid near the $555,000 minimum.
The Dodgers have explored the sale of a minority share of the team for at least two seasons. The document reviewed by The Times provides potential investors with management projections of the team’s revenues and expenses. Those revenues and expenses can change over time.
The document was prepared before the 2017 postseason, when the Dodgers generated additional revenue by advancing to the World Series for the first time in 29 years.
For the 2017 season, the Dodgers paid $290 million to cover payroll and the luxury tax. Nonetheless, in their 2018 payroll, the Dodgers hit the $195 million targeted in the document, enabling them to avoid paying a luxury tax for the first time in Guggenheim’s six full seasons of ownership.