The Los Angeles Dodgers’ use of deferred money for their big-name free agent signings has been a point of contention the past two offseasons.
It began with their signing of Shohei Ohtani last winter and has continued with the contract signed by Blake Snell and Tommy Edman’s five-year extension.
The Dodgers have utilized their financial might as a benefit since being coming under the ownership of Guggenheim Baseball Management in 2012.
The most notable example is the trade between the Dodgers and the Boston Red Sox in 2012, when L.A. acquired Adrián González, Carl Crawford, Nick Punto and Josh Beckett at practically no cost in exchange for absorbing more than $250 million in salary.
At the time of the tradem Gonzalez was a four-time All-Star and Gold Glove winner, and was hitting .300 with 15 home runs and 86 RBI.
It was not the last time the Dodgers acquired top-tier talent from the Red Sox in a salary dump. In 2020, the Dodgers acquired Mookie Betts from the Red Sox at a deeply discounted price. Betts was a year away from a huge payday in free agency and there was no sign of the Red Sox meeting his demands. The Dodgers took advantage of the opportunity and even absorbed half of the salary from David Price’s large contract to sweeten the deal.
Now the Dodgers have seemingly switched strategies to deferring payments on the contracts they hand out like with Ohtani, Snell, Will Smith and others.
According to Ronald Blum of the Associated Press, Snell deferred $66 million of the salary in his Dodgers contract:
Snell’s $182 million contract, announced Saturday, includes $66 million in deferred money payable to the pitcher through July 1, 2046, according to contract terms obtained by The Associated Press.
Snell is due to receive annual payments of $5.5 at the beginning of each July, starting in 2035:
The deferred money is payable in equal installments each July 1 from 2035-46.
Of Ohtani’s 10-year, $700 million contract, $680 million of it has been deferred to 2034. All told, the Dodgers have more than $1 billion in deferred salary.
With the competitive balance tax threshold set at $241 million for the 2025 season and the Dodgers’ current projected payroll of $211,011,666, there is plenty of room for the front office to keep making additions as they work to fill out the roster.
How deferring salary benefits Dodgers
Deferring payments on contracts keeps the Dodgers’ present-day payroll lower, which allows them to add more talent while incurring a smaller competitive balance tax than they otherwise would without it. Which in turn allows them the opportunity to add even more players if they are willing to pay hefty tax payments.
The Dodgers ownership group has shown the willingness to pay the luxury tax if it means fielding a more competitive team. From 2013-2017 the Dodgers’ payroll didn’t dip below $236 million and had a high of $301 million in 2015. The payroll picked up again from 2021 to last season where it didn’t fall below $240 million.
Have you subscribed to the Dodger Blue YouTube channel? Be sure to ring the notification bell to watch player interviews, participate in shows and giveaways, and stay up to date on all Dodgers news and rumors!
