A Look at the Los Angeles Dodgers’ Payroll and Luxury Tax Status Heading into the 2023-2024 Offseason

With a full offseason finally officially here, the Los Angeles Dodgers look to improve upon a 100-win team that couldn’t get over the hump in the postseason once again. The quickest way to do this involves signing big-name free agents to contracts worth all of King Midas’ gold.

Key Takeaways:

• The Dodgers currently have a payroll estimated at around $126MM for 2024. This could drop to roughly $120MM with certain moves, such as potentially cutting [Ryan] Yarbrough.
• They have room to increase their payroll significantly, with past Opening Day payrolls ranging between $240-280MM.
• Before hitting the luxury tax threshold, the Dodgers can spend about $100MM.
• Baseball does not have a strict salary cap. Instead, there’s a $237MM threshold that teams will pay on if they exceed that number by the end of the season.

Your Los Angeles Dodgers, having one of the highest payrolls, will no doubt be active in free agency this offseason as they add to the roster. A quick look at just how much the front office likely will spend requires knowing how much money they already have tied up, and what the luxury tax threshold is next year.

Anthony Franco from MLB Trade Rumors breaks down what these numbers could look like,

In terms of 2024, Roster Resource estimates their current payroll around $126MM, which includes the MLBTR arbitration projections. A few non-tenders could drop that closer to $120MM, particularly if they let go of [Ryan] Yarbrough, who was cut by the Rays at this time a year ago. Their luxury tax figure would be under $140MM if they did indeed cut Yarbrough. That gives the Dodgers plenty of room to be aggressive this winter, as they have frequently run Opening Day payrolls in the $240-280MM range, per Cot’s Baseball Contracts. Even if they want to reset their luxury tax status after paying the tax in the past two years, they could add about $100MM before getting near this year’s $237MM base threshold.

Anthony Franco – MLBTradeRumors

In short, Los Angeles could get as low as $120MM with certain moves. As DodgersNation’s own Doug McKain points out, that leaves roughly $100MM prior to reaching the luxury tax threshold.

UPDATE

Max Muncy agreed to a two-year contract extension that lowered his AAV for the 2024 season. If the Dodgers non-tender Yarbrough, the current luxury tax applicable payroll would be closer to $118MM.

That leaves a small fortune’s worth of room that the club can spend next year. With the Dodgers already linked to a number of top-end, pricey players, it looks like they will need every penny.

Importantly, baseball does not have a salary cap. The estimated $237MM luxury tax threshold for 2024 applies to clubs that exceed that number by season’s end. The Dodgers, being third-time offenders, would pay a 50% surcharge for every dollar in excess of that threshold.

This offseason sets up to be an exciting one for the Boys in Blue, as they look to get over the hump in October.

Required Reading

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Mandatory Credit: Jayne Kamin-Oncea-USA TODAY Sports

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