The Los Angeles Dodgers made a splash earlier this week by completing a trade with the Atlanta Braves in what essentially was a salary dump for both teams.
The Dodgers rid themselves of a combined $47.5 million in salary in the form of Adrian Gonzalez, Scott Kazmir and Brandon McCarthy, while the Braves got out from under the two years and $43 million remaining on Matt Kemp’s contract. For the Dodgers, the trade was to get under the luxury tax threshold for 2018.
This past season was the fifth straight in which Los Angeles exceeded the threshold and were forced to pay a competitive balance. The percentage at which the Dodgers were taxed has increased as they remained repeat offenders.
According to Ronald Blum of the Associated Press, the Dodgers owe over $36 million in luxury taxes:
The Dodgers owe $36.2 million, according to final figures compiled by the commissioner’s office and obtained by The Associated Press.
Los Angeles, which has faced the highest luxury tax bill now in four straight seasons, will have paid nearly $150 million in taxes over the past five years. Their 2017 bill is far and away the tops in baseball, as the New York Yankees are second with $15.7 million in luxury taxes.
The Dodgers’ payroll this season, which for purposes of the luxury tax uses average annual values and includes benefits, was totaled at nearly $254 million. They faced a 50 percent tax for a third-time or more repeater, plus a 12 percent surtax on $40 million above the $195 million threshold, and 42.5 percent for the total amount above $235 million.
Should the Dodgers remain under the luxury tax threshold next season, they would reset their tax rate to 20 percent, which is timely considering the expected mega-free agent class next winter.
The Detroit Tigers, San Francisco Giants and Washington Nationals also face a luxury tax bill for the 2017 season. Checks are due to the commissioner’s office by Sunday, Jan. 21, 2018.
