On Saturday, the Braves and Dodgers completed a four-for-one trade, swapping players who by the end of 2019 will have made more than $410 million on their current contracts alone.
The Dodgers acquired the “one,” a left fielder whose record includes two All-Star appearances, two Gold Gloves, two Silver Slugger awards, and an MVP runner-up finish. The Braves got the “four”: a five-time All-Star with four Gold Gloves and two Silver Sluggers; two pitchers who signed $48 million deals in back-to-back winters, one of whom is a three-time All-Star and was once baseball’s best left-handed pitching prospect, and the other of whom once appeared on the cover of ESPN The Magazine after leading his league in FIP; and a hitter who plays five positions and batted .500 with a .938 slugging percentage this past postseason, including a memorable 11th-inning homer in one of the most exciting World Series games of all time.
A day before that four-for-one, the Padres completed a one-for-one, trading a Double-A pitcher to the Phillies for shortstop Freddy Galvis, a zero-time All-Star with a career .287 on-base percentage and a 2017 salary smaller than the afterthought $4.5 million that the Dodgers sent to Atlanta to balance the books in the five-player trade.
Guess which of those trades included more combined 2017 WAR.
It’s the one you wouldn’t think. (Well, the one you wouldn’t have thought, if this weren’t such a transparent setup.) Galvis was worth 1.3 WAR last season. The five Braves or Dodgers with the long list of accolades and the combined GDP of a small island nation produced a total of 0.7 WAR, or about 1/26th of what they were worth in 2011.
Strip out the salaries and résumés, and Saturday’s blockbuster, if we can call it that, was an exchange of near non-entities whose former superstar status reminds us of our mortality and the cruelty of time. (Granted, the cruelty of time is more tolerable when you’re a millionaire many times over.) The Dodgers got 33-year-old Matt Kemp, a precisely league-average hitter last season who was also the worst outfielder and one of the worst baserunners in baseball. The Braves (whose general manager, Alex Anthopoulos, is a new addition from the Dodgers) got 35-year-old Adrián González, who slugged .355 last season when he wasn’t on the DL with elbow and back injuries, and spent the World Series on vacation in Europe while his team took on the Astros; Scott Kazmir, who missed the whole year with a hip injury; Brandon McCarthy, who made three trips to the DL and, when healthy, pitched pretty decently in 19 appearances; and Charlie Culberson, a utility player with a career big league line of .231/.272/.324 in the regular season before his heroics this fall.
As another player who was traded by the Dodgers once tweeted, life comes at you fast.
Two years ago I beat Corey Kluber 1-0....Today, I walked my 2 pugs while wearing a "pug life" t-shirt. Life comes at you fast.— dan haren (@ithrow88) October 26, 2016
Saturday’s swap featured perhaps the highest notoriety-to-talent and salary-to-skill ratios of any recent transaction. It’s tempting to say that the trade was barely about baseball, and there’s a way in which that’s true: The Braves will designate González for assignment the second they can, which will make him a free agent on Monday, and Kemp, who’s also a strong candidate to be DFA’d or regifted, probably won’t play for L.A. again. In another sense, though, this trade tells us more about baseball’s current competitive ecology than other moves with more immediate on-field implications. The Dodgers dealt a few former great players in an effort to afford future great players, and they did so because baseball’s conditions have changed in the years since they added González in an even more massive trade.
Even though this trade is lopsided in terms of the number of names on each end of the deal, it’s close to cash neutral. In effect, it’s a double salary dump in which the Dodgers shed short-term dead money and add long-term dead money: The players who went from L.A. to Atlanta (aside from Culberson, who’s still a pre-arbitration player making little more than the league minimum) are due slightly more than $50 million for 2018 but aren’t under contract for 2019, whereas Kemp is owed more than $43 million over the next two years. While the Dodgers aren’t saving much money overall, they are cutting costs in 2018—much more so, in fact, than the difference in next-season salary between Kemp and the González-Kazmir-McCarthy-Culberson quartet alone would suggest.
The most important number to know here won’t show up on any player page: It’s $197 million, the luxury tax (also called the competitive balance tax) threshold for 2018. Ever since the 2002 CBA instituted an annual threshold, teams that have spent more than that amount on player payroll have had to pay a penalty, the severity of which increases with each consecutive year over the limit. Subsequent CBAs have made the penalties more stringent: Because the sport’s high rollers were still routinely refusing to restrict their spending despite the system’s wrist-slaps, the 2012 CBA raised the maximum percentage tax on outlay above the luxury-tax line to 50 percent for teams that exceeded the threshold more than three years in a row.
The Dodgers, baseball’s biggest spenders since their $2 billion sale to the Guggenheim Group in 2012, have exceeded the threshold for five years in a row, and the resulting 50 percent penalty cost them more than $30 million this year. Although that wasn’t enough to stop them from fielding the National League’s (and maybe all of baseball’s) best team, even the Dodgers may be feeling financial pressure as MLB continues to try to promote parity, suppressing player salaries in the process—or just as likely, the other way around.
Thanks to the CBA that was finalized (but not fully phased in) last winter—which, despite MLB’s rapidly rising revenues, raised the thresholds only slightly—the penalties for profligate spenders are about to get even more onerous. Teams that spend more than $217 million in 2018 would pay an additional 12 percent tax on any amount over that limit in addition to the baseline 20, 30, or 50 percent tax (depending on the number of consecutive years over the threshold) on any amount more than $197 million. Teams that spend more than $237 million, meanwhile, would pay an additional 45 percent tax on any amount beyond that. If the Dodgers were to spend more than $237 million next year, as they have in each of the past three years, they’d owe a 95 percent tax—basically doubling their bill—on every extra dollar.
In addition, any team over $237 million would also see its first pick in the amateur draft slip 10 spots. The Dodgers, whose healthy regular-season records already relegate them to the end of the first draft round, would have to wait for the second round to make their first selection. That’s not a dealbreaker on its own—according to a study from 2014, the difference in expected value between a pick in the 26-30 range and a pick in the 36-40 range was only a little more than $2 million—but taken together, the incentives for teams not to spend at or above the Dodgers’ 2017 level ($241 million) are approaching a persuasive point.
These spending concerns are especially acute in light of baseball’s big 2018–19 free-agent class. Although that crop doesn’t look quite as drool-inducing as it used to, it’s still likely to include Bryce Harper, Manny Machado, Josh Donaldson, Charlie Blackmon, and—if he decides to opt out of the $70 million he’s slated to make in 2019–20 in order to line up a longer-term deal—the Dodgers’ own Clayton Kershaw. Right now, the Dodgers don’t need much; they already have the NL’s most robust roster, one that González couldn’t have cracked often, if at all, had he used his no-trade clause to veto this trade and stay in L.A. Next winter, though, they may have holes, and the market may offer appealing paths to plugging them. And if the Dodgers can stay under $197 million next year—which they now expect to do—they’ll not only avoid any penalties in 2018, but will also reset their tax on any future overage to the first-time offender rate of 20 percent, instead of the 50 percent (or worse) that they’d be saddled with otherwise. The more they expect to spend then, the more they stand to gain from making this move now.
Andrew Friedman: "I hadn't noticed. Is there a big free-agent class next winter?"— Andy McCullough (@McCulloughTimes) December 16, 2017
Atlanta isn’t helping L.A. play luxury-tax limbo out of kindness to the Dodgers; the Braves benefit from the trade, too, and not just because Culberson gives them an inexpensive utility player. Atlanta entered last season counting on Bartolo Colón, R.A. Dickey, and Jaime García to solidify a mostly young and unproven rotation; only Dickey finished the season with the team, and he’s a free agent. This trade restores some rotation depth, if not durability. McCarthy projects as the Braves’ second-best starter, and Kazmir gives them another veteran lottery ticket to pair with their 20-something uncertainties. Unlike the Dodgers, the Braves weren’t near the luxury-tax limit, and they’ll need payroll room in 2019 and beyond more than they will next year, when they won’t be competitive. Nor will they miss Kemp, who was worse than a replacement player last season and would have had to go regardless to make room for the best prospect in baseball, 19-year-old outfielder Ronald Acuña, who climbed from high A to Triple-A in 2017, improved with every promotion, and capped off his campaign with an Arizona Fall League MVP award.
No one becomes a sports fan because capology is exciting, but baseball is an accounting exercise as well as a physical contest. It’s no coincidence that this five-player deal looks a little like an NBA trade that can’t be parsed without a web tool that weighs all of the contract considerations. Although MLB still doesn’t have a salary cap per se, its soft spending cap keeps getting harder. If operating baseball’s highest-profile franchises is as lucrative as we think it is, the Dodgers should still be able to swallow even the maximum penalty without running into the red. But if they can win without incurring those extra costs—as the Dodgers’ (and Yankees’) commitment to developing young players now allows them to do—they’ll gladly accept the savings.
While it wouldn’t be bad for competitive balance if the Dodgers were being discouraged from spending far more than most teams can afford, teams strictly adhering to luxury-tax limits deprives players of some of the spoils of a profitable period for the sport. Fortunately for impending free agents and unfortunately for the rest of the league, the Dodgers and the Yankees—whose front offices are as savvy as they are flush—could both be free of payroll penalties next year and on the verge of dispensing enormous new contracts, a frightening prospect for their smaller-market competitors. Although this semi-austerity reflects a real trend toward harsher payroll penalties, the richest teams’ desire to squeak in under the luxury-tax limit could be a blip designed to enable spending sprees to come.
Almost three years ago, I wrote about how hard it was to envision the Dodgers’ demise. Three division titles and one pennant later, the end doesn’t look any clearer. When the Dodgers held a press conference in August 2012 to announce the trade that brought González (as well as fellow well-heeled Red Sox Carl Crawford and Josh Beckett) to the team, many of the questions concerned the team’s seemingly limitless budget. Asked if the Dodgers had a spending ceiling, principal owner Mark Walter said, “Somewhere, I suppose.” Later, team president Stan Kasten evinced a total lack of concern about the luxury tax, which Walter, he claimed, never mentioned. Stiffer penalties and a more cost-conscious front office may have altered the Dodgers’ strategy, but both thus far and for the foreseeable future, it hasn’t hurt their odds.