The Los Angeles Dodgers will pay more than $23 million this season for star closer Edwin Diaz, as they have reached a luxury tax threshold that triggers a hefty penalty.
The Dodgers have been contending for World Series titles year after year under the president of baseball operations, Andrew Friedman.
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One consequence of consistent playoff pushes is that rosters tend to get expensive, especially as you pay players to stay on the team and look to add talent.
The Dodgers consistently rank among the largest payrolls in MLB, and according to baseball insiders Ken Rosenthal and Will Sammon, there are penalties that come with the spending — penalties that could impact any free-agent deals this year.
“Any team that exceeds the base luxury-tax threshold for three or more consecutive years pays a 50 percent penalty for every dollar it goes above. Any team that exceeds the base threshold by $60 million or more pays an additional 60 percent surcharge,” The Athletic’s story reads.
“The Los Angeles Dodgers qualify on both counts, so their penalty for signing Tucker or any of the other remaining free agents would be 110 percent. At a $40 million AAV, Tucker would cost them $84 million. At a $35 million AAV, the number would be a mere $73.5 million.
“Not that the Dodgers necessarily care – they paid a record $169.4 million in tax after winning their second straight World Series title.
“Their signing of free-agent closer Edwin Díaz, whose AAV after deferrals is $21.1 million, will cost them $44.3 million annually.”
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Throughout sports, especially baseball, it is very easy for other teams to catch up to the champions, making what the Dodgers have achieved all the more impressive.
The franchise’s ownership seems intent on competing as long as possible, taking advantage of the current window with Freddie Freeman, Shohei Ohtani, and Mookie Betts on the roster.
With a new collective bargaining agreement set to be negotiated, there will likely be a new structure for the luxury tax, potentially altering the Dodgers’ course then.
In the meantime, the Dodgers will keep pushing forward, adding to the team as needed by taking on salary from free agency or a trade, even if it means a tax is consistently applied to those deals.
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