Dating back to the mega trade with the Boston Red Sox in August 2012, the Los Angeles Dodgers have used their financial prowess seemingly whenever they see it fit. In acquiring Josh Beckett, Carlo Crawford, Adrian Gonzalez and Nick Punto from the Red Sox, the Dodgers added over $250 million in salaries.
They’ve since signed Clayton Kershaw to a contract extension, inked Zack Greinke as a free agent prior to the 2013 season, and invested in international talent, among other financial commitments.
Under president of baseball operations Andrew Friedman, the Dodgers have used their deep pockets to take on bad contracts as part of trades, and paid a portion of a player’s remaining salary in order to facilitate a deal.
However, Friedman and Dodgers president and CEO Stan Kasten have noted the organization’s spending would subside as the club became more reliant on home-grown talent.
Nonetheless, the Dodgers led the Majors in payroll during the 2016 season, which MLB calculated was $252,551,634.00, and thus the club’s competitive balance (luxury tax) bill amounted to $31.8 million, per the Ronald Blum of the Associated Press:
A record six teams are paying baseball’s luxury tax this season, led by the Los Angeles Dodgers at $31.8 million and the New York Yankees at $27.4 million.
Although they led the Majors in payroll a third consecutive season, the Dodgers did manage lower the amount from a record $291 million, which came with an all-time high $43.7 million luxury tax bill.
This season was the fourth straight in which Los Angeles exceeded the luxury tax threshold, set at $189 million in 2016. It’s set to increase to $195 million for the 2017 season under the new collective bargaining agreement.
By virtue of failing to again get under the luxury tax threshold a fourth consecutive year, the Dodgers and New York Yankees were levied with the maximum 50 percent penalty rate. From 2013-16, the Dodgers have faced $113.5 million in luxury taxes.
Penalties become more severe under the new CBA for teams that exceed the threshold, with as much as a 95 percent penalty for payroll that’s above $235 million.
