2017-2018 Hot Stove

One of the positives about getting to the WS and extending it to 7 games, is that there is only 5 weeks before the Winter Meetings in Orlando.  We are going to have to pack in a lot of thought and suggestions about the restructuring of a 104 win team into a WS champion.  We are all so much smarter than Friedman and Zaidi sitting in front of a computer without having all of the facts, but that is what makes the Hot Stove League the second best time of the year.  We all get to play MLB GM.

Before we start looking at a Giancarlo Stanton or any of the free agents, we need to understand the current financial picture of the roster, also while assuming that the organization wants to get below the Luxury Tax.  To review, the luxury tax per the new CBA is described as follows:

“A club exceeding the Competitive Balance Tax threshold for the first time must pay a 20 percent tax on all overages. A club exceeding the threshold for a second consecutive season will see that figure rise to 30 percent, and three or more straight seasons of exceeding the threshold comes with a 50 percent luxury tax. If a club dips below the luxury tax threshold for a season, the penalty level is reset. So, a club that exceeds the threshold for two straight seasons but then drops below that level would be back at 20 percent the next time it exceeds the threshold.

Clubs that exceed the threshold by $20 million to $40 million are also subject to a 12 percent surtax. Meanwhile, those who exceed it by more than $40 million are taxed at a 42.5 percent rate the first time and a 45 percent rate if they exceed it by more than $40 million again the following year(s).

Beginning in 2018, clubs that are $40 million or more above the threshold shall have their highest selection in the next Rule 4 Draft moved back 10 places unless the pick falls in the top six. In that case, the team will have its second-highest selection moved back 10 places instead.”

2017 will be the 5th consecutive year they will incur a luxury tax bill.  If the Dodgers final payroll exceeds $235M for 2017 (and it will), they will pay an additional 45% excise tax making it 95% of the amount that exceeds $235M.

I am using Eric Stephen’s salary chart located at TrueBlue.com as my source.  Eric does a great job at staying current with this information.  Currently the Dodgers have 17 players with committed contract obligations totaling $149.2 million.  This includes 10 or 11 expected to be on the LAD 25 man roster (depending on Kazmir).  Two assumptions I am making that will impact that number are, the Dodgers will exercise the $9M option for Logan Forsythe rather than $1M buyout, and that Andre Ethier’s Dodger career will come to an end and the Dodgers will buy out his option at $2.5M.  The Forsythe option is an additional $8M bringing the total to $157.2M:

Logan                  $1.0M or $9M option

JT                          $11.0M

Puig                      $7.5M

AGon                    $21.5M

Ethier                   $2.5M

Kershaw              $33.0M

Hill                         $16.0M

Maeda                   $3.0M

Ryu                         $7.0M

Jansen                   $10.0M

McCarthy              $10.0M

Kazmir                   $8.0M

There are 9 players eligible for arbitration.  MLBTradeRumors does a great job of projecting the potential arbitration values.  They have forecast that the nine Dodgers should get $26.3M, bringing the total salary levels to $183.5.

Grandal                  $7.7M

Avilan                     $2.3M

Wood                      $6.4M

Cingrani                 $2.2M

Fields                      $2.2M

Baez                         $1.5M

Kike’                         $1.3M

Joc                            $2.0M

Garcia                      $0.7M

 

We also need to take into consideration that Kenta Maeda’s contract is chalk-full of incentives.  Maeda earned an additional $11.5M on his incentives in 2017, and assuming he can earn a similar amount in 2018, that brings the total to $196.0M.

That leaves Corey, Cody, Barnes, Toles, Stripling, Stewart, Farmer, Buehler, Dayton, Liberatore, and Verdugo who are under team control and figure to be on the 25 man or fight for one of the positions.  That does not include Font, Paredes, Thompson, Culberson, Segedin, Dickson, Ravin, and Urias who are all on the 40 man.  While only ML service earnings count towards the salary/luxury tax, there is a cost associated with packing the dugout and bullpen in September.  And yes ML DL time counts towards ML service.

It is pretty obvious to see that without doing anything, the Dodgers will be in excess of $200M again in 2018.  So what do they do?  AGon is a sunk cost.  He cannot be moved.  Kazmir is another sunk cost who cannot be moved.  With the emergence of Austin Barnes, Grandal is a prime candidate to be moved saving $7.7M.  Can McCarthy be moved?  Maybe the Yankees or Orioles will take him for one year. I would not expect more than a mid-level prospect in return.  A real lottery pick, but $10M could come off the books. They would probably move McCarthy for a low level prospect to save the dollars.  Maybe Maeda can be moved (approximately $14.5M).  Ryu would be another candidate ($7M).  Joc will probably cost more than Toles and Verdugo combined, but $2M is not a big cost to absorb.  Joc will get moved if FAZ gets value in return.  I see no chance that Wood gets traded.  That leaves Fields, Avilan, Baez for some (minor) potential saving.

How should they spend the savings?  One thing I believe they need to do is re-sign Brandon Morrow.  He will be in the 2nd tier of relievers with Mike Minor and Bryan Shaw behind the top relievers of Greg Holland, Wade Davis, and Addison Reed.  He is probably going to be in the 3-4 year $8M to $10M AAV.  Yes the Cardinals may want him, but to me, a bigger obstacle will be the SF Giants.  Morrow is from the Bay Area, and stayed in the Bay Area to go to Cal.  The Giants need a reliever badly, and they have Matt Cain $$$ coming off the books.  I can see SF going after Morrow big time.  I have not been shy saying how much I loved the Morrow acquisition, and I will consider it a mistake not to re-sign him.

Do they go after Stanton?  They cannot do it unless they unload other contracts, and I do not see the Marlins wanting any of the contracts the Dodgers want to unload.  If the Marlins do agree to assume some dead contracts (Kazmir) instead of retaining contract dollars, the Dodgers will have to give up multiple high level prospects.  I think the Dodgers can provide a lot of good prospects to make a deal, but will they?  They also do have the ability to absorb his $25M 2018 salary if they move other contracts, and then be good to go below the luxury tax completely for 2019.  But again, will they?

Stanton has a no trade clause, and wants to go to a contender. So I do not see him agreeing to go to Philadelphia even though the Phillies have the salary flexibility and prospects to make it happen.  The Giants (who seem to be the favorite) have some salary flexibility, but not the prospects.  Do the Marlins make a trade just to get rid of the contract?  I do not see how a new ownership can explain why they are trading Stanton just to get rid of the contract and no player prospects in return.  I still see new ownership needing to put behinds in the seats and would love to see Yasiel Puig as a Fish, notwithstanding the apparent chasm between Mattingly and Puig. To me it is a natural fit, but the Dodgers still have 2 years control of Puig to see how he finally comes together.

Or do they keep the salary below the salary tax level so that the penalty will only be 20% with the 2018 batch of free agents.  I would like to see Morrow in a Dodger uni next year as the only FA signing.  I believe the Dodgers have the prospects to trade for other needs/wants, and will do so.  The Dodgers have the budget and prospects to make them better for 2018.  This should be a fun Hot Stove League to follow and to discuss a multitude of trade scenarios (at least for me).

Posted by Always Compete

This article has 24 Comments

  1. There is also a possibility that Stanton will nix a trade to anywhere except the Dodgers… or GASP… Angels!

    A scout friend of mine predicts Brandon Morrow will get 4 years/$48 million as a closer. He’s usually pretty accurate… but not always.

    1. That’s David Robertson money, which is what I first thought. But then I read the top 50 FA from MLB Trade Rumors and they had Morrow at 3 years $24M, and right or wrong they are usually much closer to the pulse than I am .

      1. I suppose it depends on how the market develops this winter but I see Morrow leaving the Dodgers (unfortunately, as Morrow is one of the few relivers that makes a winnable difference). In an effort to get below the luxury tax to reset the penalty amount they will likely make some decisions based largely, if not wholly, on money this year. That probably will exclude the signing of Morrow.
        .
        Morrow’s performance this year will overshadow his age and injury history but those objections will lurk in the background. Accordingly, he might not get 4 years (unless a bid war materializes). Contract value is not my area of expertise (actually I have no area of expertise) but I won’t be surprised to see him get 3 years at 12-14MM per yer and would be surprised if it were anything under 10MM per year as is called out by MLBTR (8MM/yr) notwithstanding they are far more tuned in to this area than me.

  2. Great thing about baseball is, it never really ends. Just an endless succession of summers,spring trainings and off seasons. Something to be said about all of it. When your focus is on the team you’ve inherited or adopted as yours it gives you a much more fine point of light to enjoy. You cheer for your players and boo the opposition, and for some opposing players you give grudging respect. Baseball is almost too vast these days to take all of it in. Personally I have trouble expanding my baseball world past the Dodgers and their worthy opponents. Just too much information out there. Probably my old age showing. I would advise MLB to not fiddle too much with the formula that caused all the wonders all these years. In other words…don’t mess with the war between the rock and the stick. Let it find it’s own path forward please. I so enjoy the mastery of the pitchers and those boring (for some) pitchers duels. If anything, something needs to be done to protect arms from injuries. Looking forward to all the usual stuff, off season preparations,acquisitions and jettisons, spring trainings and long endless summers ad infinitum for the rest of my years. Long live Dodger baseball!!!!

    1. I see baseball much the same way and conduct my fandom much as you have described. I’m busy everywhere and only have a limited time to devote to sports. The Dodgers are going to get most of that sports time. And a big part of that comes right here reading at LADodgertalk. LADodgertalk has sort of become the starting point of my Dodgers information agenda and provides an assist to a few other sites for a varied view. Thanks to LADT management for providing the ad-free content and services. It is a very nice service you provide throughout the year to Dodgers fans.

  3. Tim Hyers, asst. hiting coach will be joining the Red Sox as their new hitting coach. I can see Shawn Wooten being named the asst. hitting coach. Seager, Joc and Belli all have “raved” about Wooten’s coaching. Honeycutt’s decision to stay/retire/move into a front office role has to still be decided and if he goes who will replace him?

    A lot of stuff to be decided before the winter meetings start. What will the 2018 budget be, who will fill out the coaching staff, who is out on the 40-man roster and who is DFA’d.

    1. I think Wooten would be an outstanding addition to the ML staff, but do not be surprised if Wooten finds himself in Philly with Kapler. He is an outstanding hitting coach.

  4. I think the front office believes the bullpen outside of Jansen doesn’t need big salaries. People like Morrow, Blanton, Maeda, Dayton, etc.

    Can be found inexpensively and be very effective for at least a year. The Padres did this for years a decade ago.

    1. While, I may not agree with the Front Office and their approach to the bullpen, I do agree with your insight. IMO their thinking is that we were looking for a Brandon Morrow when we found one, and we will do it again.

        1. I really have no idea if they will go after Morrow or not. I see merits both ways and they don’t tip their hats. The thing is: The Dodgers have a lot of young Electric Arms that could be ready as soon as 2018. You may be able to count on one or two a year. Can Morrow repeat what he did for another year or three? Maybe, but there has to be a limit on how much you are willing to pay. I would have never paid what FAZ did for Jansen. So far, it’s been soooo good! But will he keep it up? Relief pitching is so unpredictable.

  5. Exactly how are contracts treated for Luxury Tax purposes? As far as I know it’s based on AAV. So in the case of Justin Turner, he signed a $64 million 4-year contract beginning in 2017, which works out to an annual $16 million average. According to Baseball Reference the salaries are:

    2017: $13M
    2018: $12M
    2019: $19M
    2020: $20M

    For Luxury Tax purposes I would think that the Dodgers are charged for $16M in each of his 4 seasons, regardless of what he gets in each individual year. That being the case, I don’t think it makes a difference if a contract is front or back loaded for the purpose of calculating the Luxury Tax.

    Is that correct, or is there more to it?

    1. I always thought it was based upon the actual amount paid to the player in that calendar year, but if there is a signing bonus that is annualized through the life of the contract. I really am not certain.

    2. The signing bonus is amortized equally over the life of the contract, and added to the amount of the annual contract payment for that year. That is why the Jansen and Turner contracts were structured as they were. The lesser amount in 2017 due to Crawford/Ethier and 2018 for AGon.
      .
      JT – $4M signing bonus, amortized $1M each for 2017-2020. For 2018, JT’s salary will be $11M, making his salary cap $12M. His salary for 2019 and 2020 will be $18M and $19M, for a salary cap of $19M and $20M respectively.
      .
      Kenley – $4M signing bonus, amortized $800K each for 2017-2021. For 2018, Kenley’s salary will be $10M, making his salary cap $10.8M. His salaries for 2019 – 2021 are $18M, $18M, and $20M respectively. Add the $800K for each annual salary cap.
      .
      In addition to the salaries, benefits are also added to the luxury tax calculation, which is $13.96M annually for each team.

  6. No doubt that Morrow was a valuable piece in 2017, but I also wonder if he’s a talent with a long shelf life, or if, in fact, he might flame out as quickly as he burst upon the scene. $24 million for 3 years would probably be worth it, beyond that might be a bit risky.

    Given that he’s only been pitching since 2013, I still don’t see Baez as being a lost cause. And you never know when we’ll see a break through by one or two of our young pitchers, or another surprising acquisition like Morrow.

    Nothing would make me happier than to see Kershaw develop an effective changeup. If there’s one missing ingredient in Kershaw’s arsenal, it is the changeup. Come on Clayton, spend the winter and ST working on that new offering. It’s the pitch that made the difference for Cliff Lee and Pedro Martinez, among many others. And I think it’s the pitch that could completely transform Kershaw, and place him a level above his current lofty perch.

  7. Giants got some bad news. Johnny Cueto has decided not to opt out of his contract. That is $21M for the next 4 years, and combine that with $18M for the next three for Samardzija, that makes it a little more difficult to make a run at Stanton. That also does not take into consideration that Madison Bumgarner will need to be resigned after 2019.

  8. I read somewhere that Verdugo said he would be alright if he was traded. That bothers me. It shows a lack of maturity on his part. He was reprimanded by his teammates when he was late for practice in September. I hope I have this correct. If not please correct me. I would not want to say something bad about a Dodger if it is not true.

    I could really see Joc and Puig be traded if the right circumstances were presented. You trade when their value is high. Their value is high and both can be problems. Would Miami take Joc, Puig and Verdugo for Stanton. Put Toles in Left. We would have Toles, Taylor and Stanton in the outfield.
    Taylor
    Toles
    Seager
    Stanton
    Turner
    Bellinger
    Forsythe
    Barnes
    Kike, Culbertson. And Farmer on the bench. Try and sign Watson and Morrow. Make Baez develop a slider or curve. Starters are there. I would go with that group.

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