I continue to read that Dodger Ownership/Management wants to get under the luxury tax threshold THIS year. That is certainly a laudable goal, and under normal circumstances I can see why that should always be the goal. But is 2018 the year to draw the line?
Sometimes you need to spend money to make money. In home building, finishes are upgraded to get buyers to sign. Buyers are visual…bling sells! In manufacturing, equipment needs to be updated to improve efficiency. R&D costs are large budget items in pharmaceutical companies, auto manufacturers, and IT operations. Venture capital companies exist to “invest” in what if and maybe. Companies spend these dollars to improve their eventual profitability. Sometimes they swing and miss, but sometimes they hit a grand slam. Sounds a lot like baseball operations.
I am a business man and detest the idea of paying a competitive balance tax. I get it. But there are times where you have to look at the tax as a cost of business, or even an investment. In economic terms this refers to marginal utility and diminishing returns. Yeah, I know boring stuff when all we fans want to see is a WS champion. But the Dodgers are a business and need to be concerned with such economic theories.
The Dodgers committed nearly $200M in three players in last year’s FA market, knowing this would take them well over the luxury tax threshold, but did so because they believed that the three players (Kenley, JT, and Hill) would help them get to and win the World Series. Well it accomplished one of those goals. Would they really consider letting the luxury tax be an impediment to their chances of reaching the ultimate goal in 2018, especially when knowing that they lose another $50M in dead contracts next year? Sure they have Clayton to re-sign if he decides to opt out. But he is already penciled in at $33M, so how much of the $50M savings would he need for 2019? Most of the remaining nucleus is team controlled…Seager, Bellinger, JT, Kenley, Barnes, CT3, Puig, Wood, Hill, Maeda, Buehler/Urias, Toles/Joc/Verdugo. So while the Dodgers can get under the luxury tax this year, they most certainly can for 2019.
The Dodgers as they sit right now have a formidable 40 man roster. They won 104 games last year and the only significant player loss would be Brandon Morrow. I have advocated resigning Morrow, but I am sure that Friedman and Zaidi believe they can find another Morrow, so will not overspend. We can all debate that point, but how many (other than me) advocated Brandon Morrow at all for 2017. Can Brock Stewart take that role? Wilmer Font?
I do not know if Giancarlo Stanton is the one to push the team across the finish line. But more importantly, I am not sure whether the Dodgers believe he is. Is staying under the luxury tax more important than Giancarlo Stanton? I submit that if the Dodgers believe that Stanton can get them across the finish line, but ownership insists on getting under the luxury tax, they can do both.
The Dodgers currently have a projected salary/benefits cost at $179.4M. That includes 20 players:
Starting pitchers (7) – Kershaw, Hill, Wood, Maeda, Ryu, McCarthy, and Kazmir
Relief pitchers (6) – Jansen, Avilan, Cingrani, Fields Baez, Garcia
Catchers (1) – Grandal
1B (1) – A-Gon
2B (1) – Forsythe
3B – (1) JT
SS – (0)
OF (2) – Joc, Puig
Utility (1) – Kike’
Of those 20, Yimi Garcia would appear to be the only player who would start out at OKC to get his baseball legs back after being out of baseball for the greater part of 2 years. That would leave 6 pre-arbitration team controlled players to make the 25 man. As it stands, that should be fairly easy…Seager, Bellinger, Barnes, CT3, Toles (3 options), and Stripling (2 options). Let’s assume that the cost for those 6 would be $4M. If Maeda starts and stays healthy all year, that could add $6M+ of incentives to the salary calculation. Let’s assume another $3.6M for September call-ups and players called up for players placed on the DL (Farmer/Buehler/Stewart/Urias/Verdugo/Garcia/Liberatore/Locastro/Oaks/Santana/???. If they do nothing else, that would be $193M or $4M under the luxury tax threshold. But with no changes and the loss of Morrow can they win the WS? The cynic in me says yes as long as Kershaw goes MadBum and dominates in the post-season.
So for Stanton to work this year, the Marlins have to take Kazmir in a trade, and other moves will need to be made. The only team that can realistically take Kazmir and his $15M hit would be the Marlins to move a $25M hit. Thus, if the Dodgers cannot make that trade happen, then I would expect them to DFA him after Spring Training to open a spot on the roster, and eat the $15M. I see no way he can make it into the rotation. Forget trading A-Gon. He is not going to waive his no-trade. I do not see him playing just to play, so I would expect him to retire after this year anyway (at 37). IMO he is going to take his $21.5M and “retire” this year. I would hope that the Dodgers would be able to DFA him, and he could then move into a Community Development position with the Dodgers where he would be outstanding.
What other salary saving moves can be made? Brandon McCarthy has value for teams looking for a #4 or #5, with a $12M hit. Yasmani Grandal has value and is projected at $7.7M. That is nearly $20M that can be moved and with only prospects in return, that would be a near $20M in savings. Combined with Kazmir, that is more than enough to trade for Stanton and get under the salary cap. I still believe that McCarthy and Grandal can move to a team that needs to be all in this year and benefit that club (Orioles???). With all of McCarthy’s flaws, he would be a #3 in that rotation as it is now. Grandal would be an excellent mentor for Chance Sisco as he adapts to MLB. They can go straight prospects and save, or they can include Luis Avilan and his projected $2.3M and take Zach Britton and his $12.2M hit. That gives the O’s 3 players (including a LH reliever) that will help them next year. After 2018, they have problems anyway. Even if the Dodgers assume Zach Britton, combined with Kazmir they could still acquire Stanton and get under the luxury tax. The Marlins want ML players under team control (Joe Panik), top tier prospects (Chris Shaw & Tyler Beede), and contract relief to move Stanton.
In addition to Kazmir, I could also project another $2M savings by including Joc Pederson in the trade. If the Marlins are willing to assume $45M in salary (as reported in the Giants proposed transaction), I would propose that in addition to Kazmir, they could defer the additional $30M in salary reimbursement by postponing the payment until Stanton decides whether to opt out after 2020. That is where the salary relief will be needed anyway. The Dodgers could also include Omar Estevez and take Derek Dietrich, giving the Marlins more salary relief, and the Dodgers the LH platoon 2B they could use.
I still do not believe the Dodgers will do it. I am simply stating that they can acquire Stanton and get under the salary cap, and get prospects in return in other moves to offset those that would be lost in the Stanton trade. I just do not think they will.
I would still propose they trade McCarthy, Grandal, Verdugo, Alvarez, and Avilan to the O’s for Britton, Austin Hayes and Hunter Harvey. Losing Verdugo and Alvarez would be a risk, but one I think would be offset by the prospects of Hays and Harvey. Both Harvey and Alvarez are high risk but high reward prospects. Verdugo could be an on base machine, but Hays is the RH OF power bat they could use. With a young RH hitting Trey Mancini in left, the O’s can afford to move Hays for the right opportunity. The Dodgers could get $10M in salary relief they can use to resign Morrow and stay under the luxury tax.
I might try to acquire Avisail Garcia. He would look great in Dodger Blue. Yes he is a RF but he could move to left just as easy as Stanton. Would the ChiSox take Joc, Rios, Ryu, and Thompson?
Or maybe they just look to simply move contracts for prospects (McCarthy, Grandal, Ryu), sign Morrow, Minor, and Austin Jackson and call it an off-season.
While they can acquire a bat like Stanton and get under the luxury tax, I do not believe they really want that contract, when I think they can make a lesser move in quality of talent and still be better than they were in 2017. There are just too many other options out there where they can improve, and still be able to sign Brandon Morrow.
Regardless as to what they do, the 2018 luxury tax should not be a concern when in all likelihood, the salary will get way below in 2019. If it means winning, what is the difference between $210M and $197M to the Dodgers? Even with a $6.5M hit on luxury tax, should that stop them from pursuing the best chance to win it all in 2018? I think the marginal utility of that additional $20M investment is well worth the risk.