NEWSLETTER
Sometimes you see a headline that is just so eye-popping that you know you misread it. Or it was clearly mischaracterized. Or there must be some critical context that explains why it isn’t as shocking as it seems.
Let’s start here:
The #Dodgers plan on staying under luxury tax threshold for at least the next four years, according to a document prepared for potential investors and reviewed by the Los Angeles Times. https://t.co/3xMHVzZ3c4
— Bill Shaikin (@BillShaikin) November 8, 2018
What in the … ? I mean seriously. It was shocking enough – though explicable – that the Dodgers would try to get under the luxury tax last year since they had a real chance to do so, and since they could reset the compounding penalties associated with being over the tax in multiple years. After all, they were CLEARLY going to blow out the budget this year for the big free agent class + re-signing Clayton Kershaw. This a club that has an $8 BILLION TV DEAL. How could they possibly justify NOT going over the luxury tax as a routine?
Well, read the LA Times piece and be shocked right along with me. The Dodgers declined to comment to the LA Times on it.
The Dodgers are claiming – in a document to potential investors – that they took massive losses the first four years of their new ownership (2013, 2014, 2015, and 2016), including over $200 million in 2015, alone. Thus, they plan to set payroll targets of just $185 million in 2019 and in 2020, then $191 million in 2021 and $196 million in 2022.
That’s not just below the luxury tax, it’s way below the tax ($206 million this year, before climbing progressively to $210 million in 2021, when the CBA expires). Obviously there’s some play with actual payroll versus payroll for luxury tax purposes, but if you’re dramatically limiting luxury tax payroll like that, your actual payroll is going to shrink as well.
So, here’s the question: is this real? Do we believe it? Would the Dodgers go so far as to orchestrate this level of subterfuge? Leaking fake investor docs to trick the market into thinking they are super hard up for money? Well, to me, given the efforts they’ve gone to in Latin America, I think that’s at least as plausible as their ownership actually trying to put on the extreme squeeze like this.
Or is this leaking out at a time when the news is so obscene in this country that the Dodgers hoped they could bury it?
Dodgers fans are going to be freaking out about this. I have no question. Because if this were a document purportedly from the Cubs seeking investors, I know that Cubs fans would be freaking out. Heck, Cubs fans are freaking out because the Cubs are apparently reluctant to spend over $246 million in luxury tax payroll.
In addition to Dodgers fans freaking out, you can expect this report to lead to more talk about collusion, especially if the Dodgers do not ultimately spend (which, let’s be clear, is what I actually still expect to happen). Would the Dodgers really sit out the Bryce Harper derby? And other top free agents?
This is pretty nuts.
