With the massive nine-player trade with the Red Sox nearing completion and the Dodgers adding the massive contracts of Adrian Gonzalez, Carl Crawford, and Josh Beckett, we should look at the 2013 payroll just so see if the Dodgers are approaching the competitive balance tax.
Per the collective bargaining agreement, any payroll over $178 million in 2013 (and over $189 million in 2014) will be taxed. First time offenders, which the Dodgers could be, get popped at a 17.5 percent rate for any amount over the threshold.
For purposes of the competitive balance tax, MLB uses average annual value rather than the amount paid during a given year. For instance, Matt Kemp is paid $10 million this season but the average annual value of his eight-year, $160 million contract is $20 million.
Adrian Gonzalez signed a seven-year, $154 million extension with Boston that began this season, but since it was signed in season in 2011, it is seen as an extension of his $6.3 million 2011 salary. So rather than a $22 million average annual value his contract has a $20.04 million average, or at least it did with Boston. I am unsure if the calculation changes upon a trade (for instance, would the AAV to the Dodgers be $21.17 million since there are six years and $127 million remaining?).
I am assuming for now that the average annual value counts the entire contract, and I haven't yet included any payments made from the Red Sox to Los Angeles. This is simply an exercise to see where the Dodgers stand in relation to the luxury tax.
Here are the 2013 numbers, in both actual payout and average annual value. Assumptions for arbitration-eligible and team controlled players are in italics. For more details, check the payroll worksheet.
|2013 Dodgers Payroll, Estimated|
|Pos||Player||Actual Payout||Average Annual Value|
|UT||Jerry Hairston Jr.||$3,750,000||$3,000,000|
|OF||Tony Gwynn Jr.||$1,150,000||$1,000,000|
|C||John Q. Backup||$1,000,000||$1,000,000|
It looks like the Dodgers are right at the luxury tax threshold, but adjust accordingly for any money received from Boston. It's something to consider that barring any trades, for any free agents the Dodgers might pursue this winter, they would be taxed an additional 20% for 2013 at least.
But with this new ownership group, maybe money is no object after all.