With the huge news of the Dodgers trading for Mookie Betts and David Price on Tuesday, there comes the task of a lot of player salary to sort out.
Betts has $27M coming to him in 2020 and Price has 3 years at $31M due to him. We are hearing reports that the Red Sox are going to pay for half of Price’s contract over the next 3 years. As part of the trades of the day the Dodgers traded Kenta Maeda to the Minnesota Twins and are reportedly trading Joc Pederson to the Anaheim Angels.
As of this writing, none of these trades are official and the trade with the Angels is still missing some names.
Angels-Dodgers trade is not yet done as players are being informed, source tells The Athletic. Angels getting Joc Pederson, a big league starter and a prospect from the Dodgers in exchange for Luis Rengifo and another prospect.
— Fabian Ardaya (@FabianArdaya) February 5, 2020
There are rumors that the starting pitcher going back to the Angels may be “friend of the show”, Ross Stripling, but that is purely speculation at this time.
Now we’ll take a look at how the big trade day impacts the Dodgers payroll in 2020 and the future. The calculations are based on the Annual Average Value (AAV) of the contracts for luxury tax purposes.
Money Coming And Going
The Dodgers started the day with a 2020 payroll figure of $178M, which left them about $30M under the first luxury tax penalties. When you take into account some of the easier incentives for Clayton Kershaw, Kenta Maeda, Alex Wood and Jimmy Nelson it probably means that the Dodgers were less than $20M under the tax.
The money factors:
- Mookie Betts + $27M
- David Price + 31M – $15.5M (estimated paid by Red Sox)
- Kenta Maeda – $3.25M and around – $5M in probable incentives
- Joc Pederson – $9.5M in pending salary arbitration awards
— Jared Carrabis (@Jared_Carrabis) February 5, 2020
2020 Luxury Tax Impact
My calculations have the Dodgers payroll coming in at $207.5M which is only $.5M under the luxury tax (see payroll sheet for more details on MLB’s luxury tax). This does not include the incentives for Kershaw, Wood or Nelson so the Dodgers as of now will most likely be into the luxury tax penalties.
If the Dodgers do send Ross Stripling to the Angels then it will lower their salaries by $2.1M. It would not surprise me if they make another trade or two to lower the luxury tax issues while accumulating more prospects. It was just a little over a year ago that the Dodgers dumped salary and ended up with Jeter Downs and Josiah Gray.
Yearly Salary Implications
- 2020 before trades – $178M / after – $207.5M
- 2021 before trades – $160M / after – $172M
- 2022 before trades – $97M / after – $125M
My calculations contain my own estimates for arbitration to try and get a grasp on the real values. Most estimates you see just ignore arbitration but how do you discount stalwarts like Cody Bellinger, Walker Buehler, and Corey Seager? The Dodgers aren’t just going to cut those players so I include my own arbitration estimates. It looks like the Dodgers will probably be in the luxury tax brackets in both 2020 and 2021.
The Dodgers have made a huge trade to take on a lot of salary but didn’t have to give up as much prospect capital as most of us thought. I have to give credit to the front office for stepping it up to acquire elite talent. That elite talent costs money but the more money the Dodgers took on, the less they had to trade away. It does look like the Dodgers will be paying into the luxury tax in both 2020 and 2021 (barring other trades) but it has been over 31 years since the last World Series win for the Dodgers. Let’s go Dodgers!