The Los Angeles Dodgers have seemingly taken over the “biggest spenders” label from the New York Yankees, especially these last few seasons when Hal Steinbrenner made it a point to get under the luxury tax threshold in aggressive fashion twice over the last four years.
On the other hand, the Dodgers have operated with reckless abandon … or that’s how we viewed it because of their actions ahead of the 2021 season. When they blew past the luxury tax mark by over $75 million after signing Trevor Bauer to the dumbest contract in sports history, fans viewed LA as the new gold standard in terms of flexing their financial muscle.
They were hit with the luxury tax bill this week and it’s been revealed they owe $32.65 million since they exceeded a number of benchmarks that multiplied the penalty. But did you know that this is the first time the Dodgers are paying this tax since 2017?
Surprised by two things here! The price of that penalty is massive, as it’s 42.5% of their excess expenditures, and the fact LA wasn’t spending recklessly from 2018-2020 really makes it feel like that window could’ve been more maximized.
The Dodgers were hit with the 2021 luxury tax bill this week and it’s massive.
In case you were wondering why your favorite team was taxed at an unthinkable rate, here’s the official explanation from MLB’s glossary:
"“Clubs that exceed the threshold by $20 million to $40 million are also subject to a 12 percent surtax. Meanwhile, those who exceed it by more than $40 million are taxed at a 42.5 percent rate the first time and a 45 percent rate if they exceed it by more than $40 million again the following year(s).“Beginning in 2018, clubs that are $40 million or more above the threshold shall have their highest selection in the next Rule 4 Draft moved back 10 places unless the pick falls in the top six. In that case, the team will have its second-highest selection moved back 10 places instead.”"
That second paragraph may reveal why the Dodgers didn’t go above and beyond for Max Scherzer and Corey Seager. They can’t afford to be this far beyond the threshold in 2022 without more serious consequences.
Even crazier? This wasn’t even the Dodgers’ highest payroll or payroll tax penalty! Back in 2015, the organization had a ridiculous $297 million payroll and were billed $43.7 million for the tax, which remains the largest in MLB history. That year, Clayton Kershaw, Zack Greinke, Carl Crawford, Andre Ethier and Adrian Gonzalez were making an average of $23.76 million in salary.
It’s especially disappointing, however, that a combined $76 million in luxury tax penalties didn’t result in a single championship. That team in 2015 was bounced in the NLDS by the New York Mets and the 2021 squad lost to a team of destiny in the Atlanta Braves after too many injures rattled the roster.
Now, we’ll wait and see if this extra $32.65 million will affect the Dodgers’ spending post-lockout. Could a mini reset and a 2023 splurge be the better option given the losses plus more players coming off the books after 2022?