Dodgers proved to rest of MLB how worthwhile deferrals are with luxury tax situation

The 2026 trade deadline dust is settling, and the Los Angeles Dodgers payroll is bulging. Tarik Skubal was Los Angeles's big splash, and while they added some odds and ends along the way, the rest of his $32 million salary (about $9.5 million) hitting the Dodgers' books was one of the most significant monetary factors of this year's feeding frenzy.

With a sky-high payroll that is now an estimated $430 million, Los Angeles is looking at a hefty luxury tax bill that's set to reach nearly $180 million. While there's still some final accounting being done as trade details settle, that tax bill is larger than the payroll of 12 different teams and could fund both the Miami Marlins and Cleveland Guardians rosters combined, with money to spare.

The thing is, as obscene as those numbers are, they could be so much worse. The Dodgers are the kings of deferred money, and without those deferrals, the numbers would look even more astronomical.

If all the money were due in the present, LA's payroll would rise to $470.6 million, and the tax bill would shoot up to $224.6 million. For reference, the final luxury tax threshold for 2026 sits at $244 million, meaning the Dodgers' tax bill would almost reach the luxury tax if it were a team's payroll. $224.6 million would also be a top-13 payroll in the sport.

All big-market teams could learn something from the Dodgers' hefty deferrals

The difference in payroll isn't the game here because that money comes due one way or another. It's the tax that's the whole game. By deferring all of that money, the Dodgers are saving $45.1 million in tax payments.

That allows them to absorb salaries like Skubal's at the deadline with no worries. They're essentially skirting paying their fair share in taxes by kicking the can down the road.

Eventually it will come time to pay the piper, but by that point, Los Angeles will be laughing all the way to the bank. Not only does this fearlessness allow them to collect a superior group of talent that makes them perennial World Series favorites, but it makes financial sense, too.

One of the most basic economic principles is the time value of money, and by reducing their tax payments through deferrals, the Dodgers are taking advantage of that concept. That $45.1 million can be earning them interest, allowing for larger expenditures down the road. It can also be reinvested into the club in different ways, such as scouting and player development, which allows them to consistently churn out top prospects, which in turn fuels trade deadline splurges like the deal for Skubal.

At the end of the day, many of the cheaper owners in the game cite the need to run their teams like businesses. To them, that means extracting maximum profits.

The Dodgers, on the other hand, run their team like a real business. They invest heavily in their product, take advantage of every financial loophole, and then print money as the value of their brand explodes through consistently playing winning baseball. Fortunately, the rest of the league doesn't seem interested in catching on to the gambit.

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