The Los Angeles Dodgers roster has taken over the past week and a half with the official addition of Trevor Bauer on a three-year, $102 million contract, and reported re-signing of Justin Turner to a two-year contract worth more than $30 million.
As it stands, the Dodgers are the only team in baseball projected to exceed the $210 million luxury tax threshold for the 2021 regular season. The Boston Red Sox currently have the second-highest payroll at about $50 million below L.A.
Roster Resource estimates the Dodgers’ competitive balance tax payroll to be approximately $257.4 million, while Cot’s Baseball Contract’s calculation is just below that at $254.4 million. Both figures include the two-year, $4.3 million contract Austin Barnes agreed to, avoiding arbitration.
Since the Dodgers remained below the luxury tax threshold last season, they are considered first-time offenders. Going off Roster Resource’s estimate, their tax bill would be about $13.3 million.
L.A. will be charged $4 million in taxes for the first $20 million over $210 million, $6.4 million in taxes for the next $20 million spent on payroll and $2.9 million in taxes for being over $250 million.
The Dodgers additionally would be charged a 20% tax on overages up to $20 million, another 12% on overages between $20 million and $40 million and a 42.5% tax rate on all the overages beyond that. If they fall in the top tax bracket, their first pick in the 2021 MLB Draft would fall 10 slots.
All-in-all, combining the Dodgers’ CBT payroll and taxes puts their total expenses at roughly $270.2 million. If the club managed to get their payroll under $250 million by the end of the season, they would avoid the harshest penalties.
Dodgers president Stan Kasten was mindful of exceeding luxury tax threshold
Prior to the Dodgers’ recent spending spree, president and CEO Stan Kasten acknowledged that exceeding the $210 million luxury tax threshold factored into the organization’s decision-making this winter.
From 2014-17, the Dodgers were tabbed with the highest luxury tax bill, paying nearly $150 million in taxes when also including 2013. L.A. reset penalties by remaining below the threshold in 2018, and stayed there for the 2019-20 seasons as well.
But after winning their first World Series in over three decades, it is clear the Dodgers are just as motivated to defend their title and become the first team since the New York Yankees to win consecutive championships.
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