Dodgers To Pay Luxury Tax Bill In Excess Of $26 Million

The immediate course of action when the Guggenheim partners purchased the Los Angeles Dodgers was clear — assemble a competitive roster at any cost. There was the trade with the Boston Red Sox that added more than $250 million in salary and more recently, Clayton Kershaw’s much-deserved seven-year, $215 million contract.

While the Dodgers were aggressive in adding to the team with little regard for the cost it was coming at, president and CEO Stan Kasten has provided reminders in recent months that the team’s focus was shifting to building within while shedding some salary.

Heading into the 2014 season, the Dodgers’ payroll was projected at $235 million, which was well ahead of the New York Yankees, who failed to be MLB’s top spenders for the first time since 1998. As a result, the Dodgers will need to pay a $26.6 million luxury tax bill, according to ESPN:

The Los Angeles Dodgers have ended the New York Yankees’ 15-year streak as Major League Baseball’s biggest spenders and owe more than $26.6 million in luxury tax.

The luxury tax threshold was set at $189 million, up from the $178 million threshold in 2013. As repeaters in exceeding the luxury tax, the Dodgers are penalized more heavily and thus are paying roughly $15 million in luxury tax this year than they did in 2013.

Although the Dodgers’ directive is to shed salary while remaining competitive, they likely will be among the leaders in team payroll next season and are in danger of exceeding the threshold ($189 million) for a third straight year at which point their luxury tax bill would come with a 40 percent rate.

Luxury tax bills are due Jan. 21 and the money collected is used for player benefits and MLB’s Industry Growth Fund.