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Dodgers: Salary Implications of Mookie Betts, David Price, Joc Pederson Trade Day

They are probably paying some luxury tax



With the huge news of the Dodgers trading for Mookie Betts and David Price on Tuesday, there comes the task of a lot of player salary to sort out.

Betts has $27M coming to him in 2020 and Price has 3 years at $31M due to him. We are hearing reports that the Red Sox are going to pay for half of Price’s contract over the next 3 years. As part of the trades of the day the Dodgers traded Kenta Maeda to the Minnesota Twins and are reportedly trading Joc Pederson to the Anaheim Angels.

As of this writing, none of these trades are official and the trade with the Angels is still missing some names.

There are rumors that the starting pitcher going back to the Angels may be “friend of the show”, Ross Stripling, but that is purely speculation at this time.

Now we’ll take a look at how the big trade day impacts the Dodgers payroll in 2020 and the future. The calculations are based on the Annual Average Value (AAV) of the contracts for luxury tax purposes.

Money Coming And Going

The Dodgers started the day with a 2020 payroll figure of $178M, which left them about $30M under the first luxury tax penalties. When you take into account some of the easier incentives for Clayton Kershaw, Kenta Maeda, Alex Wood and Jimmy Nelson it probably means that the Dodgers were less than $20M under the tax.

The money factors:

  • Mookie Betts + $27M
  • David Price + 31M – $15.5M (estimated paid by Red Sox)
  • Kenta Maeda – $3.25M and around – $5M in probable incentives
  • Joc Pederson – $9.5M in pending salary arbitration awards

2020 Luxury Tax Impact

My calculations have the Dodgers payroll coming in at $207.5M which is only $.5M under the luxury tax (see payroll sheet for more details on MLB’s luxury tax). This does not include the incentives for Kershaw, Wood or Nelson so the Dodgers as of now will most likely be into the luxury tax penalties.

If the Dodgers do send Ross Stripling to the Angels then it will lower their salaries by $2.1M. It would not surprise me if they make another trade or two to lower the luxury tax issues while accumulating more prospects. It was just a little over a year ago that the Dodgers dumped salary and ended up with Jeter Downs and Josiah Gray.

Yearly Salary Implications

  • 2020 before trades – $178M / after – $207.5M
  • 2021 before trades – $160M / after – $172M
  • 2022 before trades – $97M / after – $125M

My calculations contain my own estimates for arbitration to try and get a grasp on the real values. Most estimates you see just ignore arbitration but how do you discount stalwarts like Cody Bellinger, Walker Buehler, and Corey Seager? The Dodgers aren’t just going to cut those players so I include my own arbitration estimates. It looks like the Dodgers will probably be in the luxury tax brackets in both 2020 and 2021.

Summary

The Dodgers have made a huge trade to take on a lot of salary but didn’t have to give up as much prospect capital as most of us thought. I have to give credit to the front office for stepping it up to acquire elite talent. That elite talent costs money but the more money the Dodgers took on, the less they had to trade away. It does look like the Dodgers will be paying into the luxury tax in both 2020 and 2021 (barring other trades) but it has been over 31 years since the last World Series win for the Dodgers. Let’s go Dodgers!

NEXT: How Mookie Betts Fits in with Los Angeles

Written by Tim Rogers

A fan of the Dodgers since 1973 since I got my first baseball cards while living in Long Beach. I came to San Diego for college and never left nor did I ever switch my Dodgers' allegiance. Some know me as the "sweater guy". #ProspectHugger

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  1. Friedman doesn’t care about being slightly over and will always dance around the first level of the threshold. He’ll never exceed to the point where his draft slot is affected nor should he.

  2. Nobody says oops I went $10 over the limit, I guess I’ll pay all the penalties. This is where creative accounting comes into play. Restructure some contracts. Defer some salary. It’s easy to do when you’re this close to begin with. Trading Pederson for nothing was an arbitration salary dump for the future. Price at half price was a good move. I trust the moneyball abilities of the Dodger front office to stay under the luxury tax threshold, as we continue to compete for a WS title this year and for the foreseeable future. It’s tough to see Maeda and Pederson go, but they made the right moves to contend this year, with rookies firming up in the following years. Go Dodgers!

    • Without Verdugo and Pederson, Pollack will actually have more opportunities to play in left field. If he’s as lame as last year, Lux may spend some time there, as well as a shuttle of Taylor, Hernandez, Beaty, etc. Somebody will hopefully step up. Even if the Dodgers are relatively weak in left field, they will have the best outfield in baseball because of Bellinger and Betts. Right and center field should be totally stable. Roberts should just leave Bellinger and Betts alone, and not play the usual musical chairs thing.

  3. So to all the haters out there hopefully you are finally happy although I doubt it. The Front Office did a masterful job of only shedding Verdugo and Maeda for Betts. Incredible.
    Not surprised about Pederson as his projected salary is too much money for a part time player. I figure the Angels might get Stripling which would really help the Halos and Stripling will get a real chance to shine.
    This will open up slots for May and Gonsolin. Very happy that so far they have kept May, Gonsolin, and Gray as they will make a great Rotation in a few years. Maybe the Dodgers can pay part of their share of Price’s salary and stick the Angels with him! And he could help the Halos.
    With Rengifo coming to the Dodgers perhaps they trade Taylor or Kike as he is their clone.

  4. Good, bad or indifferent, the Dodgers made trades as if they cared about more than putting fans in the seats. These changes are good. Well done Dodgers.
    And a shout out to the author of this article for calling the Angels by their rightful name….the Anaheim Angels. The Angels are not based in or near Los Angeles. This does not disrespect Anaheim either and gives credit where credit is due. Anaheim, a really nice city and its surrounding areas

  5. Big credit to Friedman for pulling this off without having to sacrifice too much talent. Amazed they got the Red Sox to eat as much of Price’s salary as they did. This time, they went all in and I hope they are rewarded for it. My Red Sox fan friends are probably not too happy with this, but hard to see much of a downside from the Dodgers perspective.

  6. Does anyone here know something about Luis Rengifo other than he’s a utility INF? Because on the surface it looks like more of a salary lowering in total for the trade with Angels. But gredit is due to Dodger FO for not giving up those top prospects (Lux, May, Gonsolin, Gray, Downs) in this deal with Boston.

    • Well, Azul, we finally pulled the trigger. Overall, I like the deal though I am sorry we had to lose Joc and Stripling to the Angels. Between you and I, I am hoping that Beatty or someone in the farm system can play left field. Pollock left me with a bad taste in my mouth. Price will replace Ryu, and we have enough candidates to take Maeda’s place. The “acquisition” of Rengifo means little other as I do not anticipate him being with the team for any length of time. As you stated, we did not lose Gonsolin, May, Downs, Beattie, or even Garlick. Frankly, we do appear to be set, and now have a much-valued right handed bat. Now, if we can only beat the Yankees? Give PD Jr. my belated 2020 wishes!!!! Go Blue!!!

  7. Very good job getting Betts (for 1 season) and Price (for 3 seasons at half price). Good job decreasing
    outfield glut and lowing the $$$$ by sending Pederson to the Halos with Stripling. Loss of Maeda is
    sad but makes sense. Verdugo is a minimal loss. Rengifo from the Angels will be a plus as he is versatile and a strong prospect. Go Dodgers. Get it done.

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