How does Blake Snell's contract affect the Dodgers 2025 payroll?

The Dodgers made waves just before Thanksigiving when they signed left-hander Blake Snell to a five-year, $182 million contract with deferred money included. Jon Heyman reported the full contract details on Tuesday, laying out the reality that $66 million of that contract is deferred, reducing the present-day value of the contract to $150.336M when accounting for the Competitive Balance Tax payroll.

The topic of deferred money came up in Snell's introductory press conference with the Dodgers on Tuesday.

"I think it's just how it all played out," said Snell. "It just played out the way that people around me felt comfortable with, I felt comfortable with, they (nodded head towards Andrew Friedman) felt comfortable with. We talked and found something that could work for both of us."

After signing Snell, the Dodgers are now in the top penalty bracket, as they are more than $60 million over the $241 million CBT threshold. As a fifth-time payor of the tax, Los Angeles is taxed at a 50% rate for all overages beyond the $241 million threshold, and 60% for all overages beyond $301 million, adding up to 110% in total. The difference between the total value and the present-day value averages about $6.3 million per season, which saves them $7 million per year in luxury tax payments. At the time of this writing, the Dodgers are estimated to have a CBT payroll of $307.4 million.

How Blake Snell's deferrals will affect Dodgers' payroll, CBT threshold

The Dodgers are no strangers to using deferred money, as many of their top players have taken such contracts. Not only does it help Los Angeles with the luxury tax, allowing them to add more top talent to the roster, but it affords the player to continue to receive money long after playing with the team. Shohei Ohtani's $680 million deferred is the most extreme example, but it's one afforded by being the biggest star in the baseball world.

Freddie Freeman, Teoscar Hernandez, Will Smith, Mookie Betts, Justin Turner, and Tommy Edman also have deferred money in their contracts with the Dodgers. Between those eight players, Los Angeles has more than $1 billion in deferred money, according to BrooksGate.

With Snell in the fold, the Dodgers will try to defend their World Champion title. Their rotation should be healthier in 2025, with Shohei Ohtani and Tony Gonsolin expected to return from their respective Tommy John surgeries.