As we all recover from the great new about the Dodgers signing Mookie Betts to a 12 year/$365M contract we will take a quick glance at how it impacts the future. Before we do that it is important to realize how impactful a player like Betts will be in 2020 and for the foreseeable future. Having his skillset at the leadoff spot and right field is a game changer and will most likely be worth the contract he’s earned. His contract will take up significant room on the payroll and it will have a bit of a ripple impact on other players.
Mookie Betts seems at home in Dodger Stadium ?
— ESPN (@espn) July 21, 2020
Salary Rules for 2021
- Competitive Balance Tax Threshold: $210M
- There are various penalties for exceeding the CBT that begin at 20%. The number changes based on the number of consecutive years the threshold is exceeded.
- The penalties reset when a team stays under the threshold.
- A team that exceeds the threshold by $40 million or more are penalized in the draft. A team not in the top 6 of the draft will have their first pick moved back 10 spots.
- Penalties are calculated based on the Average Annual Value (AAV) of a multi-year contract.
- If the Dodgers exceed $250M in 2021 then they will have a draft pick penalty.
It is important to note that it has not been fully determined how the CBT will impact teams that have players opt out, such as David Price for the Dodgers.
All contract numbers in this article are based on the Average Annual Value (AAV) of the contract as that is how the CBT tax is calculated. There is an exception though.
Page 16: "The AAV shall be calculated by aver- aging the rates of pay contained in paragraph 2 of the con- tract (or any special covenants thereto) for each year of the contract. If deferred compensation is contained in any year of the multi-year contract…
— Jantoven (@JantovenNF) July 24, 2020
According to Eric Stephen of TrueBlueLA the AAV for Mookie’s contract is $25.6M.
Players Under Contract For 2021
- Mookie Betts – $25,600,000
- Kenley Jansen – $16,000,000
- Joe Kelly – $8,333,333
- Clayton Kershaw – $31,000,000
- Max Muncy – $8,666,667
- AJ Pollock – $12,000,000
- David Price – $15,000,000 (Red Sox are paying $16M)
- Chris Taylor – $6,700,000
- Total: $123,300,000
Players Arbitration Eligible In 2021
The below list is for players the Dodgers have eligible for arbitration in 2021. I am providing as estimate of their salary in 2021. The Dodgers are not obligated to offer any of these players contracts.
- Scott Alexander – $1,250,000
- Austin Barnes – $2,000,000
- Cody Bellinger – $16,000,000
- Walker Buehler – $8,000,000
- Dylan Floro – $900,000
- Adam Kolarek – $1,300,000
- Corey Seager – $13,000,000
- Ross Stripling – $4,000,000
- Julio Urias – $4,000,000
- Total: $50,450,000
Clearly the above list contains some excellent players and many of them will be very important towards the success of 2021.
This list will be the players eligible for free agency after the 2020 season. Included is their AAV for the 2020 season.
- Pedro Baez – $4,000,000
- Kiké Hernandez – $5,900,000
- Joc Pederson – $7,750,000
- Blake Treinen – $10,000,000
- Justin Turner – $16,000,000
- Alex Wood – $4,000,000
- Total: $47,650,000
Other Salary Obligations
There are other obligations each team has including paying non-arbitration players, trade obligations, the minor leaguers on the 40-man roster and player benefits. That total is estimated at $23,573,500.
Crunching the Numbers
If the Dodgers were to keep all the players above including keeping the free agents at their 2020 salary the salary commitment would be $244,973,500. This would put the Dodgers right near the maximum penalties including losing a draft pick. For the free agents, most of them would require a higher salary than they made in 2020. This is a great opportunity for them to make generational money and they should get all they can in free agency.
If the Dodgers were to let all the free agents go the CBT number would be $197,323,500. Each of the above free agents would need to also be replaced via trade or free agency. The ideal situation, from a payroll perspective, would be prospects filling those holes.
The lower number of $197,323,500 keeps the Dodgers out of the luxury tax with about $13M left over to add more salary. If the Dodgers are willing to go past the luxury tax then they could have around $53M available without draft pick penalties.
Players like Justin Turner, Joc Pederson, Kiké Hernandez and Alex Wood have played important parts of the Dodgers great run of success. They were also robbed of the 2017 World Series. If the Dodgers don’t win a World Series in 2020 it would be tough to see those players leave. They deserve better. If they win the 2020 World Series then it would seem a little easier to see them go. I like all of the above free agents so I’d like to see any of them continue with the Dodgers past 2020. So much depends on how the Dodgers want to work within the limits of the penalties. After 2021, the rules will all change with a new Collective Bargaining Agreement (CBA).
Something to consider is that Cody Bellinger, Walker Buehler and Corey Seager will all require higher salaries in 2022 so the Dodgers might want to reset the luxury tax in 2021. Given the strange times that COVID-19 has given us it is impossible to speculate on what the Dodgers will do. They will lose money in 2020, that is almost a certainty.
For now, it is exciting to celebrate the signing of Mookie Betts as he becomes a cornerstone of the franchise. To have a team filled with so much talent in 2020 should give the Dodgers a good chance to win it all in 2020. The future is unknown, especially in these times. The time is now!