Dodgers Payroll 2024: What’s LA’s outlook after Ohtani, Yamamoto mega contracts?

Nearly every iteration of "the Los Angeles Dodgers have spent an historic amount of money" has been said or written this offseason. Committing over $1 billion this offseason to Shohei Ohtani, Yoshinobu Yamamoto, and Tyler Glasnow among others is a crazy amount of money and has made LA the star of this offseason to be sure. What is even more remarkable is that the Dodgers are pretty clearly not done making moves going into 2024, which does beg the question as to how far they are willing to go.

Sure, the structure of Ohtani's deal -- where the vast majority of his $700 million deal is deferred until the 2030's and 2040's -- has freed up some room, but every team has a limit and costs aren't only measured in dollars here. First, let's take a look at where the Dodgers' payroll stands as of now and then take a look at what it could mean for LA the rest of the offseason.

Projected 2024 Dodger Payroll and Luxury Tax Payroll

Getting good payroll numbers right now for any team is nightmare fuel because the exact structure of a lot of contracts isn't explicitly known and we don't have arbitration figures locked in yet. These 2024 payroll numbers are pulled from Cot's contracts as they at least have all of LA's deals so far this offseason accounted for, even if the exact numbers are subject to change.

Estimated actual 2024 Dodgers Opening Day Payroll: $222,314,617
Estimated 2024 Dodgers Luxury Tax Payroll: $288,370,935

The huge caveat here is that every projection system seems to be counting Ohtani's 2024 payroll number differently. Some are using the $70 million a year over 10 years and not accounting for deferrals at all, a couple are using the $2 million he is actually going to get paid (but those places haven't been updated to including Yamamoto, among other issues), and then there is the group that includes Cot's that has put a figure out there for Ohtani that is just north of $28 million for next season.

Fortunately, Ohtani's luxury tax hit is known to be $46,076,768, which means that after signing Yamamoto, the Dodgers are firmly in the second tier of luxury tax penalties with the next tier coming up at $297 million. Combine that with being over the luxury tax threshold for three or more years in a row, and you have a very, very hefty tax bill for the Dodgers in 2024 so far. More on that in a bit, considering there is more than money at stake when it comes to being a CBT offender.

Top 5 Salaries on the 2024 Dodgers Roster (luxury tax version)

So who's taking up the biggest chunks of the Dodgers' payroll? Again, how Ohtani's deal is counted makes things a bit tricky, so we are going to stick with the luxury tax figures here just for the stake of clarity. If one is bothered by that way of thinking because he's actually only getting $2 million next season, just take Ohtani's name off the top of the list and add Chris Taylor's name to the bottom of the top five, as he is making $13 million in 2024.

Again, there isn't a perfect way to do this, given the imperfect information out there, as well as the differences in how actual payroll vs. luxury tax payroll are counted, but this does get the top five names right for the most part -- unless you REALLY don't want to count any of Ohtani's future dollars. Ohtani's contract takes his luxury tax hit down to a touch over $46 million a year from the $70 million in actual value over the next decade. Betts' deal comes in second, thanks to the $5 million signing bonus he is getting every year through 2032 in addition to some deferrals, and then Glasnow, Yamamoto, and Freeman are all grouped up pretty closely in the third-through-fifth spots.

Where do the Dodgers go from here this offseason?

So the big question now is what does all of this payroll info mean for the Dodgers for the rest of the offseason. Well, that is complicated, but it does seem clear that LA does have a decent chunk of actual, non-luxury tax dollars to play with to beef up their rotation. The Dodgers are a high revenue team, just added two big revenue sources in Ohtani and Yamamoto, and are only committed to $222 million or so for next season. At the end of the day, making the investments they have so far without actually filling all of their roster holes wouldn't make much sense anyways.

However, the Dodgers' luxury tax situation does make things a bit sticky. As a multi-year luxury tax offender that is approaching the third tax threshold, any additional signings are going to cost a lot more than what they sign for in actual dollars to the team. Being over the luxury tax for three or more years comes with a 50% tax on their overage, and if they get to the third tier of overage this season, the surcharge they pay jumps up to 60%. That is not a small amount, so expect the Dodgers to be picky with who they add the rest of the way.

Another thing to keep in mind is how the Dodgers' luxury tax situation impacts their pursuit of free agents that have qualifying offers attached to them. As a team that has paid the luxury tax, LA has already had to forfeit their second and fifth selections in the 2024 draft to sign Ohtani. If they decide to sign any of the remaining four free agents that were given QOs, which includes Josh Hader and Blake Snell, they would have to also give up their third and sixth selections as well, which would all but punt on an entire draft class.

The end result is that the trade market remains the most likely place that the Dodgers make another big addition. The team can target players that aren't making prohibitive amounts of money (Dylan Cease, Shane Bieber, any number of relievers, etc. are all options here) to lessen the luxury tax hit while still upgrading where they need to. Cash clearly doesn't seem to be a problem, but the trade market may end up being the best use of the team's resources, especially if they want to avoid the qualifying offer guys.

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