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Where the Dodgers stand regarding the competitive balance tax after all the arbitration deals

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MLB: Los Angeles Dodgers at Arizona Diamondbacks
Yasmani Grandal and Joc Pederson signed 2018 contracts on Friday.
Mark J. Rebilas-USA TODAY Sports

The Dodgers signed deals with all seven remaining players eligible for salary arbitration on Friday, giving us a clearer picture of where the team stands relative to the competitive balance tax threshold for 2018.

There are 18 Dodgers under contract for this season and for those players the Dodgers payroll for competitive balance tax purposes is $149,569,286. The CBT measures the average annual value of contracts rather than the amount paid each season.

For the last five years the Dodgers have paid for exceeding the competitive balance tax threshold, a total of $149.7 million in all, including $36.2 million for 2017. As a repeat offender the Dodgers’ highest tax rate under the current collective bargaining agreement is 95% for every dollar spent over $40 million over the threshold. Their initial tax rate for exceeding the threshold is 50%.

Getting under the tax threshold for a single year resets that initial rate to 20% for the next offending season. It didn’t seem possible the Dodgers could get under the $197 million threshold for 2018 until they pulled off the shell game reallocation of assets that was the Charlie Culberson trade, an accounting trick of a transaction with the Braves that traded three onerous contracts for one — Matt Kemp — that was spread over two years.

The seven contracts reached Friday by the Dodgers totaled $24.1 million, slightly more than the $23.3 million in total projected by MLB Trade Rumors for Yasmani Grandal, Alex Wood, Joc Pederson, Tony Cingrani, Josh Fields, Kiké Hernandez and Pedro Baez.

With those added in, here is an estimate of where the Dodgers stand in 2018 with the competitive balance tax threshold.

Dodgers 2018 competitive balance tax payroll

Pos Player 2018 $$ Comments
Pos Player 2018 $$ Comments
SP Clayton Kershaw $30,714,286 7 years, $215 million
OF Matt Kemp $20,000,000 8 years, $160 million
SP Rich Hill $16,000,000 3 years, $48 million
3B Justin Turner $16,000,000 4 years, $64 million
CL Kenley Jansen $16,000,000 5 years, $80 million
2B Logan Forsythe $9,000,000 option exercised
SP Kenta Maeda $3,125,000 8 years, $25 million
RF Yasiel Puig $6,000,000 7 years, $42 million
SP Hyun-jin Ryu $6,000,000 6 years, $36 million
C Yasmani Grandal $7,900,000 1-year deal
SP Alex Wood $6,000,000 1-year deal
LF Joc Pederson $2,600,000 1-year deal
LHP Tony Cingrani $2,300,000 1-year deal
RHP Josh Fields $2,200,000 1-year deal
RHP Tom Koehler $2,000,000 1-year contract
IF/OF Kiké Hernandez $1,600,000 1-year deal
RHP Pedro Baez $1,500,000 1-year deal
RHP Yimi Garcia $630,000 1-year deal
SS Corey Seager $600,000 pre-arb estimates
1B Cody Bellinger $575,000 pre-arb estimates
CF/IF Chris Taylor $575,000 pre-arb estimates
LHP Scott Alexander $575,000 pre-arb estimates
C Austin Barnes $560,000 pre-arb estimates
OF Andrew Toles $560,000 pre-arb estimates
1/3/O Rob Segedin $560,000 pre-arb estimates
Money to Braves $4,500,000 Culberson trade
Money to Padres $3,500,000 Kemp 2014 trade
Money to White Sox $2,000,000 Avilan trade
Minor leaguers on 40-man $3,000,000 estimate
Team benefit costs $14,044,600 estimate
Totals $180,618,886

Our previous estimate included a $15 million assumption for player benefits, an amount that is the same for all 30 teams. The Associated Press on Friday had a more precise number for those benefits at $14,044,600, which was included here.

Also included is the $4.5 million sent to the Braves in the Culberson trade, $2 million sent to the White Sox in the three-team deal that sent Luis Avilan to Chicago, plus $2.5 million that bought out Andre Ethier‘s 2018 club option.

I filled out the remaining seven slots on the active roster with assumptions, some — Corey Seager, Cody Bellinger, Chris Taylor, Austin Barnes, Scott Alexander — safer than others — Andrew Toles, Rob Segedin. All seven have salaries somewhere near the $545,000 minimum salary for 2018.

There is also the matter of paying the rest of the 40-man roster, which will mostly be minor league salaries but will likely include at times covering for major league players on the disabled list. For now I estimated that at $3 million.

That gives us a current total of $180.6 million, just over $16 million shy of the 2018 threshold. But there are other things to consider and budget for as well.

Bonuses

Throughout the season players could earn more money with incentives built into their contracts.

Chief among them is Kenta Maeda, who earned $4.9 million in bonuses in 2017 when he made 25 starts and pitched 134⅓ innings. He made $8.9 million in 2016, with 32 starts and 175⅔ innings. Maeda can earn up to $10.15 million annually in bonuses though that would require maxing out at 32 starts and 200 innings. His biggest jumps are $1.5 million for each of 25, 30 and 32 starts.

Maeda making 25 starts and pitching 150 innings — after making the opening day roster, of course — would earn $5.4 million in bonuses, for instance.

Clayton Kershaw gets $1 million for winning the Cy Young Award, and $500,000 if he finishes second or third. He has finished in the top three in the National League in six of the last seven years.

Even Tom Koehler has bonuses built into his deal, with incentives beginning at 10 starts, 40 games pitched and 20 games finished. The most likely maximum for Koehler is $500,000 if he pitches in 60 games.

In-season trades

The Dodgers added just over $6.2 million in 2017 salary when they traded for Yu Darvish, Tony Watson and Cingrani on July 31, then added another $1-2 million in acquiring Curtis Granderson*.

*Granderson had just over $3.6 million remaining on his contract but the Mets paid an unknown amount, believed to be roughly half.

It works the other way as well. Sergio Romo, Chris Hatcher and Scott Van Slyke all had contracts of at least $1 million last year and were traded mid-year, with the Dodgers clearing roughly $1.5 million in total for that trio.

In 2016 it was more of the same, adding roughly $4.7 million at the non-waiver trade deadline with deals for Rich Hill, Josh Reddick, Jesse Chavez and Josh Fields.

Summary

In other words, that $16+ million the Dodgers have left under the CBT threshold isn’t all it’s cracked up to be. They likely have to budget $10-12 million for bonuses and midseason deals, which leaves them just $4-6 million for further additions this offseason.

That means they have to be creative, and any bigger ticket items — like Yu Darvish returning, for instance — would require a Herculean effort in even moving more salary, which makes those type of deals all the more unlikely.