If you haven’t heard, Trevor Bauer has signed a three-year contract with the Dodgers for $102M. The contract calls for him to earn $40M in 2021, $45M in 2022, and $17M in 2023. There are opt-outs after each of the first two years. For luxury tax purposes, the contract average over the three years is used which comes out to a $34M AAV Annual Average Value (AAV). This article is a follow up to a post I did in November regarding the payroll as we see how Bauer impacts the payroll along with any other transaction between November and now.
The Luxury Tax In A Minute
This summary is extracted from our Payroll Page:
- The thresholds for being taxed for the duration of the Collective Bargaining Agreement (CBA):
- 2020: $208 million (which they did not exceed)
- 2021: $210 million
- There are various penalties for exceeding the Competitive Balance Tax (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 for one season.
- 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 AAV of a multi-year contract.
Since the Dodgers did not exceed the lower tax maximum, they would count as first-time violators if they exceed it in 2021.
Bauer’s Impact To The Payroll
As of now, the Dodgers sit at a little over $239M for 2021. That puts them well into the luxury tax AND they still have not signed Justin Turner who made $16M in 2020 (prorated due to 60 game season). At $239M, that leaves the Dodgers a little under $11M before the harsher penalties like losing 10 spots in the draft and losing money to spend on international players. Let’s not forget there are other “real inside baseball economic stuff” reasons. Even with the number a little less than $11M away, there are also incentives with Clayton Kershaw’s contract to consider.
- $1M for games started at 24, 26, 28, and 30 marks
- $1.5M for Cy Young with $500K for 2nd or 3rd place finish
I really doubt the Dodgers want to go over $250M but I still think they want to sign Justin Turner (editorial note: I want him back). The issue clearly becomes how they can keep JT and stay under the $250M target.
Salaries To Move
The Dodgers have plenty of high-salaried players. However, they are not trading Cody Bellinger, Mookie Betts, Walker Buehler, Clayton Kershaw, Max Muncy, Corey Seager, Chris Taylor, or Julio Urias. Still, there are some possibilities to consider.
- Scott Alexander – $1M
- Kenley Jansen – $16M
- Joe Kelly – $8.333M
- Corey Knebel – $5.25M
- AJ Pollock – $12M
- David Price – $31M
- Blake Treinen – $8.75M
The Dodgers are a little short in the bullpen with left-handers and Alexander has had some good moments. His salary is fully guaranteed for 2020 so for any of it to be off-set they’d have to trade him for someone that would not be on the 40-man roster. It seems a trade for a low-level minor-league wild-card to a team that lacks bullpen depth might be a possibility.
This is obviously a bit controversial but adding Kenley to this list seems like the right thing to do. First off, Kenley has full no-trade rights as a player with 10 years in the league and his last 5 years with the same team. Clearly, this makes a trade difficult. However, if the Dodgers were to let him know he is no longer the closer he might be open to a trade. Now, what team would want Kenley for his $16M contract in 2021? Here are some ideas:
- Trade some good prospects, along with Kenley and his full contract for a bucket of baseballs.
- Trade Kenley and his full contract to a team with someone making about half of Kenley’s contract to satisfy a bullpen need. This would be similar to the Homer Bailey inclusion in the Josiah Gray trade.
- Trade Kenley, some lesser prospects, and half of his contract for some prospect wild cards.
The hero of the first part of the 2020 season for the Dodgers is owed $8.333M in 2021. The Dodgers do have an abundance of right-handed relievers so he could be made available.
The Dodgers just traded for him and he will make $5.25M in 2021. I had to include him if they need to trade him to make room for JT. However, Knebel looked great in September and I think he will be a bargain.
Trading Pollock to clear space for JT seems like robbing Peter to pay Paul. The Dodgers need right-handed bats so I don’t see this happening.
My heart wants the Dodgers to keep David Price.
— 2020 World Champs – Tim Rogers (@SDDodger) February 5, 2021
From a money perspective, Price is the most obvious guy to trade. The Dodgers are only responsible for $15M of his contract so that makes him much more tradeable. With 2020 being a short season and many of the Dodgers not having many full seasons under their belt, I think the Dodgers should keep all seven of their major league starters. I’m working on another article about how the rotation might look like in 2021.
I would be shocked if the Dodgers traded him but I also do not put anything out of Andrew Friedman’s range. If they see a trade that improves the team they would even trade Treinen. I see him as a big part of the bullpen’s success in 2021.
We heard that Justin Turner was interested in a four-year deal from teams other than the Dodgers. Well, one way to get around the upper luxury tax thresholds would be to offer a longer contact with a lower AAV. How about something like five years at $45M? $14M for the first three years, then the rest of the $3M over the last two seasons. That makes the AAV only $8M per season. Or, just make those player options after the three years are up? There are many ways Andrew Friedman can make this work and I can guarantee you he has been thinking through many different scenarios.
I am still in shock that the Dodgers went out and paid so much for Trevor Bauer or most any other player. This does elevate the starting rotation from very good to insanely good. Now they need to find a way to get Justin Turner while staying under the $250M amount. Or, they could just blow off that number in 2021 and find a way to reset it in 2022. Many of us are happy to see the Dodgers making big moves like with Mookie Betts and Trevor Bauer. They are careful on who they spend big money and prospects on but I hope that also includes Justin Turner.