When is $100 million not really $100 million?
The decision-makers in the Dodgers’ front office will head to San Diego – site of the impact crater where their 2022 season crashed and burned – for the annual Winter Meetings beginning Monday with one of their most prized assets, payroll flexibility, in their pockets.
Expiring contracts, free-agent departures (so far only pitchers Tyler Anderson and Chris Martin), the decisions not to exercise Justin Turner’s club option and to non-tender Cody Bellinger have trimmed more than $100 million off the 2022 payroll when the Dodgers spent approximately $280 million (only the New York Mets spent more).
That payroll far exceeded the Competitive Balance Tax threshold, putting the Dodgers in the third tier of the tax penalties. As a repeat offender (they also exceeded the CBT threshold in 2021), the Dodgers paid another $30 million in luxury tax for 2022.
Thirty million dollars could buy you a pretty good shortstop for next season.
That also came with draft-pick penalties. For example, the Dodgers will receive compensation for Anderson’s departure to the Angels. Because of the Dodgers’ 2022 payroll, however, that pick won’t come until after the fourth round of next year’s draft. Their penalty for signing a free agent who received a qualifying offer will also increase due to their payroll. And, because they exceeded the CBT by more than $40 million, the Dodgers’ first pick in the 2023 draft will move back 10 spots.
The CBT threshold is expected to be approximately $233 million in 2023 and the Dodgers’ first moves this offseason have been informed by an acknowledgment that continuing to live above it is “not sustainable” (President of Baseball Operations Andrew Friedman’s phrase). Trimming $100 million from last year’s payroll and not spending it all on plugging the surprising number of holes on a roster that won 111 games last season would certainly be a big step toward re-setting the team’s CBT status.
“Going over it is something that we’ve done with regularity, and it adds costs,” Friedman said as the offseason kicked off last month at the GM Meetings in Las Vegas. “All of that gets factored in. It has never been, ‘Hey, we have to get under’ (the tax threshold). It’s been about putting the most talented team together.
“Now, again, obviously we have been aggressive the last two years, not just in terms of payroll, but in terms of taxes paid as well. And all of that just gets factored in. So as you’re nearing the threshold, just as we’ve done every other year, that’s just a factor in the decision on an acquisition, because as you’re approaching that or going over it, it’s not just the money on the contract, it’s additional money.
“It’s no different than any other year. We’re going to spend the next few months vetting all of our various options and trying to be as aggressive as we can be with balancing that with trying to give some opportunity to some of the talented young pitching we have, some of the talented young position players. … So we’re kind of weighing that against various acquisitions we can make. That’s no different than any other offseason. The last couple we haven’t had the upper level of depth that we have right now.”
The Dodgers have hinted at introducing young, homegrown players into the mix for the 2023 season multiple times this winter. But Friedman acknowledges there is “volatility” to adding too many young players at once.
“We need to figure out the right way and the right timing to integrate some of these talented young players. Since 2015, we’ve done that,” Friedman said. “And it’s critical for a team to be able to sustain success to do that. Whether that’s a couple of guys all at once, whether it’s a little slower and steadier than that is part of the art of roster construction.
“I’m not sure exactly which way that’ll play out. But I think the most important thing is having really talented players in your system to give you options and we’ll figure out how to integrate them into our core throughout the ’23 season.”
As strong as their farm system is, only top prospect Miguel Vargas would seem ready to take on 400 plate appearances at the major-league level for a team with the usual championship mandate in 2023. Outfielder James Outman showed promise in a very brief big-league cameo last season. Other top position player prospects (Diego Cartaya, Michael Busch, Andy Pages) might be ready to contribute at some point next season as would pitchers Gavin Stone and Bobby Miller, the brightest lights in a deep pool of pitching prospects.
But the temptation to fill the Dodgers’ multiple offseason holes by wading into the free-agent waters must be strong.
It is a long way to Opening Day. But as it stands now, the left side of the Dodgers’ infield is a big question mark with shortstop Trea Turner and third baseman Justin Turner both unsigned free agents. Could they really open next year with Gavin Lux at shortstop and Vargas at third base?
Bellinger’s likely departure leaves a void in the outfield rotation. And the starting pitching depth chart has subtracted Anderson with Andrew Heaney likely to head elsewhere as well and Walker Buehler almost certain to spend all of 2023 rehabbing from his second Tommy John surgery.
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If the Dodgers are going to stay under the CBT, there is probably only room for one big-ticket item. That could be one of the four free-agent shortstops (Trea Turner, Xander Bogaerts, Carlos Correa or Dansby Swanson) – or maybe pitcher Justin Verlander.
The 39-year-old Verlander returned from Tommy John surgery to win the American League Cy Young Award in 2022 (his third). Unlike the other top-end free-agent starters (Carlos Rodon and Jacob deGrom, who signed with Texas on Friday), Verlander did not receive a qualifying offer and would not cost his new team any draft picks. He is believed to be seeking a short-term, high-dollar contract – something the Dodgers have shown a preference for.
Two years ago, the Dodgers had less of a need in their starting rotation than now and signed Trevor Bauer to a three-year, $102 million contract. It will take more than that to land Verlander, who met with the Dodgers last week. Add in the anticipated return of Clayton Kershaw on a one-year deal and the possible return of Justin Turner and that leaves very little of that $100 million to spend elsewhere if the Dodgers are going to keep their payroll in check.
“I think every offseason, you have choices to make in terms of consolidating resources into one player or spreading it around,” Friedman said. “Some offseasons we go in having very few needs. Some, we have more. Right now we’ve got a number of spots to address. Again, some of them we can do internally. But it’s just balancing that.”