The Dodgers found out this December that their free-spending ways will end up costing them even more money, $11.4 million to be exact. That is the penalty they were charged for going over the luxury tax payroll limit in 2013.
They blasted past the $189 million limit set by the MLB and were handed the 17.5 percent penalty. No big deal, right? If you can build your ideal roster without money being a concern, then another $11 million should not get in the way too much.
With the amount player contracts are worth these days, $11 million is not going to get you far anyway. In the 2013 off-season it could get you either: four percent of Robinson Cano's total contract, eight percent of Shin-Soo Choo's total contract, 1.5 years of Juan Uribe, or one season of Dan Haren.
Seems like petty change to the Dodgers sky-high payroll. The only reason the luxury tax becomes problematic is when a team crosses the threshold for consecutive years.
In the second year it becomes a 30 percent charge, then 40 percent the next, and if you manage to go over $189 million in four straight seasons it is a 50 percent penalty from then on out. No team, no matter how rich, actually wants to pay that much to keep their dream roster.
The Dodgers are already committed to over $250 million in payroll for 2014, so a 30 percent fine is a given. But if they can drop below the luxury tax limit in 2015 or 2016, the penalties will reset.
The big question then is: will the Dodgers be able to control their spending in order to avoid the penalties further down the road? Unless some of their monster contracts are unloaded, the chances does not look good.
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In 2016 they already have $111 million committed to Adrian Gonzalez, Carl Crawford, Matt Kemp, Andre Ethier, Zach Greinke and Hyun-Jin Ryu. They still would need a shortstop, third baseman, four starting pitchers and an entire bullpen, all for under $78 million.
And let's not forget the ongoing talks surrounding extensions for Hanley Ramirez and Clayton Kershaw, each of whom are looking to make north of $20 million per season.
Obviously, the Dodgers front office is well aware of the situation they find themselves in and will either form a plan to get under the limit, or are willing to foot the bill.
Just look at the New York Yankees. Since 2003 they have paid over $250 million in luxury tax--that could have covered an entire year's payroll for them!
Just keep these penalties in mind in forthcoming years as fans complain that the Dodgers should have pursued the biggest free agent on the market, or whine when the team unloads a hefty contract via trade.