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Atlanta Braves: Busy Shopping Next Off-Season?

By Alan Carpenter

Sep 1, 2016; Atlanta, GA, USA; Atlanta Braves starting pitcher Mike Foltynewicz (26) delivers a pitch against the San Diego Padres in the first inning at Turner Field. Mandatory Credit: Jason Getz-USA TODAY Sportsa
Sep 1, 2016; Atlanta, GA, USA; Atlanta Braves starting pitcher Mike Foltynewicz (26) delivers a pitch against the San Diego Padres in the first inning at Turner Field. Mandatory Credit: Jason Getz-USA TODAY Sportsa /
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Aug 14, 2014; Baltimore, MD, USA; Newly elected commissioner of baseball Rob Manfred speaks at a press conference after being elected by team owners to be the next commissioner of Major League Baseball. At left is MLB commissioner Bud Selig. Mandatory Credit: H.Darr Beiser-USA TODAY Sports
Aug 14, 2014; Baltimore, MD, USA; Newly elected commissioner of baseball Rob Manfred speaks at a press conference after being elected by team owners to be the next commissioner of Major League Baseball. At left is MLB commissioner Bud Selig. Mandatory Credit: H.Darr Beiser-USA TODAY Sports /

The New CBA

There are two elements to the new MLB Collective Bargaining Agreement that I have in mind here.

  • The Luxury Tax
  • Free Agent (team) Compensation

Olney speaks to the first part in his INsider’s piece:

"But because a number of teams seem to be treating the newly negotiated luxury tax thresholds as a hard cap, the best players in the market could find the bidding for them stifled by concerns over how much budget space clubs want to devote to individual players."

The luxury tax threshold was $189 million for the previous 5 years.  That will now expand as follows:

  • $195 million for 2017
  • $197 million for 2018
  • $206 million for 2019

But it’s the penalties that matter here:

  • 20% tax for amount over the threshold (1st time violators)
  • 30% tax (2nd time)
  • 50% tax (3rd time)

…and the surcharges:

  • 12% additional tax if $20 million over the threshold
  • 42.5% additional if $40 million over; 45% if it’s your 2nd violation

Who Gets Hurt?

So why are the Dodgers being a bit tight with cash now?  Because they started 2016 with a $223+ million payroll.

Likewise, the Yankees and Tigers were above the mark in 2016.

Right now, the Tigers and  Red Sox are projected to be just under the threshold, and the Yankees a bit further under, leaving the Dodgers are the only taxed team for 2017 (near $230 million).

Olney seems to be right – even many of the higher-budget clubs are trying to stave off the tax man.

If the Dodgers were to exceed $235 million this season, for instance, their surcharge would jump from 12% to 45%… from $4.8 million to $18 million.  And that’s on top of their multiple-repeat-offender 50% tax this season (which would be $20 million at that level).

So that would be $38 million of penalties for a $40 million violation.  Imagine spending $20 million for a free agent and then getting a bill for another $19 million… is anyone in baseball worth $39 million a year?  Okay, except Mike Trout.

So after spending big to retain Justin Turner, Kenley Jansen, and Rich Hill, the Dodgers opted to trade for a much cheaper Logan Forsythe – having traded Howie Kendrick and Carlos Ruiz while letting Chase Utley walk away.

Who Wins?

So the effect is this:  instead of going for multiple free agents, these teams are trying to get younger and “settling” for maybe 1 premium name instead or 2 or 3.

That makes the market more open for other clubs… especially one such as Atlanta that is reading this market correctly and operating with the eye for using the primes years of a player’s career.

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