The Dodgers, cutting payroll, ticket prices, Yu Darvish and next offseason

(Via)

Much has been made about the lack of free agent spending in baseball this winter. It has been noticeable and caused some to start throwing around the “C” word — collusion. I don’t know one way or the other whether that’s true or happening, but folks everywhere are getting a bit antsy.

The Dodgers have made no secret about their desire to not only cut payroll, but to remain under the $197 million luxury tax threshold so as to not have to pay the luxury tax for a sixth consecutive year. Here is the amount of money the Dodgers have paid out in luxury tax penalties since its implementation back in 2012:

Year Luxury Tax Paid
2013 $11.4M
2014 $26.6M
2015 $43M
2016 $31.8M
2017 $36.2M
Total $149M

The Dodgers have paid out almost $150 million, or just about a million bucks less than the St. Louis Cardinals’ Opening Day payroll in 2017. That’s a lot of money. It stands to reason the Dodgers don’t want to incur penalty, especially ahead of next year’s almost unprecedented free agent class — which includes Bryce Harper, Manny Machado, Josh Donaldson and possibly (probably) Clayton Kershaw.

If the Dodgers keep their payroll under $237 million (which they’re projected to do), they’d have to pay a 50 percent tax on any amount over $197 million. This is preventing the Dodgers — by their own doing right now — from re-signing Yu Darvish, who reportedly wants to come back. To give him a deal that would entice him to come back, the Dodgers would have to pay him in the neighborhood of $20-25 million a season. I’ve written about that a number of times on this site. Let’s say, for the sake of argument, the Dodgers have $5-7 million left (after setting aside money for potential bonuses), as Eric Stephen opines here. If they add Darvish at $25 million a season, they’d be $20 million over the luxury tax. A 62 percent tax (50 percent for the sixth straight year being over, plus a 12 percent surtax) on that would be about $12.5 million. Seeing as Darvish would probably bring in more than $12.5 million in value, it doesn’t sound that bad. But I’m sure it’s a bit more complicated than that on the surface.

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The Dodgers raised season ticket prices this offseason. Fans are not happy. They never are when there’s an increase in ticket prices. But when was the last time ticket prices dropped in any major sport? I’ll wait for the answer … and I’ll be waiting awhile. Fans, however, incorrectly conflate the rise of ticket prices with player salaries. Ticket and concession prices do not pay for the players’ salaries. So in this time of players speaking out against ownership and the fact players are not getting signed to contracts, fans are taking the side of the billionaire ownership groups. Because the Dodgers have cut payroll doesn’t mean the bottom line still isn’t winning and making money — something they’ve been doing consistently and will continue to do.

Yes, the players dug themselves a big hole when they renegotiated the current Collective Bargaining Agreement, but the Players’ Union is just like any other union — it doesn’t matter how much money they make, the union will want to make sure its members are being treated fairly and getting what they deserve. Don’t look at it in terms of, “They make millions of dollars, how much more do they need?” Professional baseball players get paid as much as they do for a few reasons:

  1. They do it better than anyone else on the planet
  2. Revenue is at an all-time high because…
  3. We (fans) pay for it

If the fans didn’t continue to pay for the product, owners would not agree to hand out multi-million dollar contracts. But since we do, we can’t complain about their salaries because we’re the ones funding them. I understand why fans don’t want to take the side of players for playing a “kids game,” but you realize the billionaire owners aren’t the good guys, right? Anyhoo…

The Dodgers have cut their payroll by a significant amount and could absolutely fit a guy like Darvish back onto the team if they were just to go over their self-imposed budget number. They can afford it! But it makes sense that they don’t want to do so this year to put themselves in a better spot to spend next year.

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Resetting the luxury should lead to the Dodgers spending big (as if they aren’t already) again. Maybe not in the $300 million range, but they should be active in next year’s free agent market. Now if they don’t reinvest that saved money into the payroll — an advantage they have over almost every other team in baseball — then that would be a massive mistake and reason for fans to be upset.

Chad and Daniel are on the side of, “It’s not my money.”

And that’s a fine position to have. I get it. I kind of agree with it, but I do see the value in not wanting to pay more luxury taxes if they don’t absolutely have to. The Dodgers have added a starting pitcher at the non-waiver trade deadline in all three years under this new front office. If they don’t re-sign Darvish and there is a need at the deadline, I’m plenty confident a trade could get done while not exceeding the $197 million mark. But it would be nice just to be able to solve the team’s lack of starting pitching depth (in a sense) with one signing.

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The Dodgers’ known payroll commitments, in terms of competitive balance purposes, for 2019 is currently projected to be $85 million. Of course, that doesn’t include arbitration, which will cost significantly more in ’19 because Corey Seager is eligible for the first time and Alex Wood will be eligible for the third time. Kris Bryant got $10.85 million in his first year of arbitration, and Seager is going to be in that neighborhood. Wood could see an eight-figure arbitration number as well. And with the Matt Kemp trade, there isn’t as much coming off the books next year — at least not right now since he’s still a Dodger. Kershaw will almost assuredly opt-out, freeing up another nearly $31 million in competitive balance tax money. With the new threshold of $206 million, the Dodgers (and all teams) will have a little extra money to play around with.

If the end goal of cutting payroll this offseason is landing Harper next year and retaining Kershaw, great. If the end result is just one of them, that’s not as great but still OK. If the end result is neither and the Dodgers don’t use their massive financial advantage to upgrade the roster, then that’s not good. That would be a nightmare scenario.

Some have/will call me a shill. That’s fine. I believe this front office doesn’t want to carry a $300 million payroll yearly, nor should it have to. I also believe it’ll use its ample financial advantage to continue to improve the team. A free agent like Harper comes along once in a generation and the Dodgers would be foolish to not make every effort to sign him (and retain the face of their franchise in Kershaw). If we meet back here in a year and neither of these two are Dodgers, well, then there will likely be some people very mad online — yours truly included.

About Dustin Nosler

Dustin Nosler
Dustin Nosler began writing about the Dodgers in July 2009 at his blog, Feelin' Kinda Blue. He co-hosts a weekly podcast with Jared Massey called Dugout Blues. He is a contributor/editor at The Hardball Times. He graduated from California State University, Sacramento, with his bachelor’s degree in journalism and a minor in digital media. While at CSUS, he worked for the student-run newspaper The State Hornet for three years, culminating with a 1-year term as editor-in-chief. He resides in Stockton, Calif., and has yet to be shot.