After exceeding the Major League Baseball luxury tax threshold for five straight years, the Los Angeles Dodgers made headlines in 2018 when they did not reach deep into their pockets to spend money in the offseason despite coming off a World Series loss.
Their goal of avoiding the competitive balance tax was to reset all penalties. The hope, among fans at least, was that it was just a one-year deal for the Dodgers and they would get back to their spend ways in 2019.
That was especially true when they lost in the World Series for a second straight year. Although spending seemingly was nonexistent, Dodgers president of baseball operations Andrew Friedman maintained there was not a mandate from ownership to stay below the threshold for a second consecutive year.
The Dodgers were linked to a number of the big free agents on the market, including Bryce Harper, who they reportedly had interest in signing to a short-term, recording-breaking contract in terms of annual average value (AAV).
Harper instead signed a 13-year deal with the Philadelphia Phillies for a lower AAV and the Dodgers went into the season below the $206 million luxury tax threshold after only handing out free agent contracts to A.J. Pollock and Joe Kelly in addition to an extension for Clayton Kershaw.
Friedman did not make any big in-season trades to acquire salary, thus the Dodgers were not among the teams that will be taxed for going over the threshold, according to Bob Nightengale of USA Today:
The #Redsox, #Cubs and #Yankees are the only three teams who will pay a luxury tax this year, GMs were told
— Bob Nightengale (@BNightengale) November 12, 2019
Considering the Dodgers stayed below the threshold in 2018 to reset all penalties, which include a tax surcharge and loss of draft picks, there was no benefit to them doing so again in 2019 other than ownership saving money.
The Dodgers ownership group led by the Guggenheim Partners is one of the wealthiest in all of baseball. Los Angeles consistently leads the league in attendance, so it was a bit peculiar that they were unwilling to spend money to improve a team on the verge of winning a World Series for the first time since 1988.
The result was the Dodgers winning 106 games in the regular season, but they were upset by the eventual World Series champion Washington Nationals in five games in the National League Division Series to mark a disappointing end to their season.
Going into the offseason, the Dodgers are projected to be about $40 million below the 2020 tax threshold of $208 million. That would change if start free agents such as Anthony Rendon or Gerrit Cole are signed.
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