The CBT Dangers Ahead of the Dodgers

The Los Angeles Dodgers have a problem.

After winning 100 or more games in every 162-game season since 2019, making the playoffs 11 straight years, and winning their division 10 times in those 11 years, the natural and logical response to that statement is, “What problem could the Dodgers have?”

What could be wrong with a team that has accomplished all this and added two-time unanimous AL MVP Shohei Ohtani, three-time Sawamura Award winner starter Yoshinobu Yamamoto, starter Tyler Glasnow, whose 3.03 ERA is 10th-best in baseball since 2019, and two-time Silver Slugger Teoscar Hernández to a core already featuring 2023 NL MVP finalists Mookie Betts and Freddie Freeman? As if that wasn’t enough, the Dodgers will welcome back 10-time All-Star and three-time Cy Young winner Clayton Kershaw, two-time All-Star Walker Buehler, and shortstop Gavin Lux at some point in 2024. Apart from being too good, what problems could exist for the Dodgers?

Los Angeles’ level of talent is not an issue. Nor is there some underlying weakness on the roster waiting to nip the Dodgers in the bud. Is relying on relievers like Alex Vesia, Ryan Yarbrough, and Joe Kelly an imperfect solution? Yes. Is it a detrimental weakness when seven of the team’s nine position players have made an All-Star appearance and Yamamoto and Glasnow anchor their rotation? No. The Dodgers will rightfully enter 2024, 2025, 2026, and many years after as the World Series favorite.

So, what’s the problem? The Dodgers’ problem is how much they’re spending. Rest assured, this won’t venture into some crusade about the Dodgers and how MLB must impose a salary cap to stop them. The problem ahead for the Dodgers is not that they’re spending. It’s the long-term ramifications of it.

The Dodgers have a projected collective balance tax payroll of $321.3 million, per Cot’s. That number is well past MLB’s luxury-tax threshold of $237 million and will mark the third straight season the Dodgers will be a payor. Due to being $40 million over the threshold, MLB dictates, “Clubs that are $40 million or more above the threshold shall have their highest selection in the next Rule 4 (MLB amateur) Draft moved back 10 places unless the pick falls in the top six.” For example, in 2022, the Dodgers went $40 million over the threshold, resulting in their pick falling from No. 30 to No. 40.

Barring an unanticipated collapse with the talent signed for the long term, the Dodgers’ first pick will fall 10 places in every upcoming draft as long as the team exceeds this $40 million threshold. Given the AAVs of Betts, Freeman, Glasnow, Ohtani, and Yamamoto, the Dodgers will likely continue to cross that threshold. These five players alone will combine for roughly $157.8 million in the competitive tax payroll until Freeman’s contract expires in 2028. To avoid going $40 million over the threshold in 2025, the Dodgers would be left with $122.2 million to field the 21 other required roster spots. In 2026, the Dodgers would roughly have $125.2 million to duck that same level.

Sliding 10 spaces is a marginal fall on the surface, but its impact can be drastic. The team could go from picking in the 25-30 range routinely to the 35-40 range, leaving the Dodgers vulnerable to teams in the compensatory round and the competitive-balance round taking players the Dodgers might have eyed.

Though Betts, Freeman, Glasnow, Ohtani, and Yamamoto came to the team either in free agency or trade, consider players from within that helped build the Dodgers’ previous decade of success. First-rounders like Corey Seager, Buehler, Bobby Miller, and Lux have been integral to the Dodgers’ success. None of them might have fallen to the Dodgers had their first-round pick been under their current and future constraints. Seager was the 18th overall pick, Buehler was the 24th, Lux the 20th, and Miller the 29th. Should the Dodgers’ payroll cause their draft pick to continuously fall 10 spaces, damage can be done to the team’s farm system.

It’s an odd concern for one of the most talented teams in the sport’s history, but a team’s farm system is integral to its infrastructure. If a player gets hurt or underperforms, a prospect can step in and potentially improve that production. If a player is injured or underperforms, a great prospect can step in and improve the entire team. Otherwise, underperforming players are replaced by a depth piece or a veteran in Triple-A whose ceiling is likely predetermined. Should a player leave in free agency, a prospect can assume his position and cost drastically less. That last part is essential to Los Angeles’ future. The more prospects, the cheaper the payroll. The cheaper the payroll, the less of a chance of the Dodgers eclipsing the upper limit by $40 million and damaging their draft capital.

However, let’s say the Dodgers forgo the financial costs and repercussions and continue to add through free agency. That comes with other problems for their draft situation. These big-name players will presumably come with qualifying offers from their previous teams. Signing any qualified players will make the Dodgers forfeit other draft picks to the signee’s last club. Since the Dodgers figure to pay the luxury tax for the foreseeable future, signing any player with a qualifying offer will lead to a forfeit of their second- and fifth-highest selection in the following year’s draft and $1 million in their international bonus pool, per MLB. If the Dodgers sign multiple qualified players, they will also forfeit their third- and sixth-highest picks.

Signing more free agents to compensate for potential draft losses will also push the Dodgers further over the collective balance tax. Fans and ownership can argue the team is so far past the thresholds that they’ve crossed the point of no return. But adding more money will only increase the inevitable bill. Ownership is comfortable footing it right now, but will it be comfortable paying as much or more until 2028?

Things can and will change once the collective bargaining agreement expires after the 2026 season. Starting in 2027, the rules and ramifications damaging the Dodgers could change either to their benefit or their detriment.

Until then, this damage to the Dodgers’ draft capital could catch up to the team’s player development system. But it could also catch up to the Dodgers World Series chances. At some point over these next five seasons, the Dodgers will need more. Whether due to injury, regression, or disappointment, the Dodgers will need more bats or arms to put them over the top or ensure they stay there. Will ownership OK an expensive midseason addition? Can baseball operations approach the next four years with a blank check? And if the quality and quantity of their prospects decline, who can the organization trade to acquire those necessary reinforcements? And at what point does the continual trading of prospects result in a farm system that has run dry?

It’s not a concern for the moment. The Dodgers still have prospects like catcher-first baseman Dalton Rushing and pitcher Nick Frasso, both among MLB.com’s top 100 prospects. Behind them are numerous others making up what Baseball Prospectus believes to be the third-best farm system, ESPN believes to be the eighth-best, and Baseball America believes to be the 10th-best. While this young talent fuels one of the best farm systems, a problem can arise if their futures with the franchise become expendable to meet the team’s current needs.

That said, if every Dodgers great had to be a former top-100 prospect drafted by the team, the Dodgers would’ve never become the Dodgers. Over the last 10 years, Dodgers president of baseball operations Andrew Friedman acquired and turned Max Muncy, Justin Turner, Chris Taylor, and Tyler Anderson from veritable no-names into All-Stars. All while pulling each player out of the scrap pile. Muncy was a minor league signee, as was Turner, Taylor was a ho-hum trade acquisition, and Anderson signed a one-year $8 million flier.

The four all became diamonds in the rough. Muncy’s 19.7 fWAR is second among all Dodgers position players since his Dodgers debut in 2018, Turner’s 34.0 fWAR is 10th in the franchise’s history among all position players, Taylor has played in 892 games, and Anderson went from a career 4.62 ERA to a 2.57 ERA with the Dodgers.

Other Friedman finds include waiver claim pickup Evan Phillips, minor-league signee Yency Almonte, and trade acquisitions like Rich Hill, or Kiké Hernández, or Trayce Thompson. While none of their ceilings reached that of Muncy, Turner, Taylor, or Anderson, they’ve all served their purpose. Phillips has a 1.59 ERA over 126 games and is still under team control until 2027. Almonte had a 3.35 ERA in 82 games before being traded to the Cubs. Hill had a 3.16 ERA in 68 starts and a 3.07 ERA in nine postseason starts. Hernandez played in 648 games and had a pinch-hit, game-tying home run in the NL Championship Series that sparked a Dodgers rally. Thompson played well enough in 2022 for the Dodgers to flip him to the Chicago White Sox for Lance Lynn and Joe Kelly.

No one in baseball arguably gets more out of their players than the Dodgers. It’s a credit to Friedman for finding them and the developmental staff for remaking them. With both staying put through this next era, there’s no reason to believe that will change. What will change is the importance of these fringe pieces.

 

International free agency is another source of player acquisition unaffected by the competitive balance tax the Dodgers will need to rely on. It’s an area the organization has shined in already over the last decade. Pitchers like Kenley Jansen, Julio Urías, and Victor González signed with the Dodgers as international free agents and blossomed into average or above-average contributors.

Prospects like outfielder Andy Pages, second baseman Miguel Vargas, and catcher Diego Cartaya can become the next wave of successful international signings. The three were all top 100 prospects just last season, according to MLB.com. The only reason they’re absent from the list in 2024 is Pages, Vargas, and Cartaya reached the majors last season. None of them project to rejoin the MLB roster to open the season, but their future success is paramount to the Dodgers, either as depth or trade pieces.

Trading away unknown, international talent for help at the major-league level is a familiar occurrence for Friedman. Over the last decade, he’s traded outfielder Yordan Alvarez, shortstop Oneil Cruz, catcher Keibert Ruiz, and outfielder Yusniel Díaz. Alvarez and Cruz became stars elsewhere, while Ruiz helped the Dodgers land Max Scherzer and Trea Turner, and Diaz was the headline piece in the Manny Machado trade.

The Dodgers know how to sign overseas. Presuming some death for the Dodgers’ developmental system due to adverse effects on their draft positioning is premature. But like their trades and waiver claims, the importance of these international signings will only grow with time. And for as good as the Dodgers have been signing overseas, it’s not an exact science. For every Jansen, Urías, or Cartaya, there is a Starling Heredia, Romer Cuadrado, or Yadier Álvarez, prospects the Dodgers paid handsomely whose development died on the vine.

Regardless of how the Dodgers plan to combat the competitive balance tax, it isn’t a problem that can be fixed easily. If they wanted to get under the competitive balance tax, reset their penalties, and return their draft picks to their rightful places, the Dodgers would have to remake the roster. But with so much of their future course already charted to this destination, doing so would run antithetical to the franchise’s long-term goals.

As ready-built as the Dodgers seem, numerous players could hit free agency within the next two years: pitchers Buehler, James Paxton, Dustin May, Blake Trenien, Ryan Brasier, Kelly, and position players Hernandez, Muncy, Will Smith, and Jason Heyward’s contracts all expire by 2026 at the latest. That’s three starting pitchers in Buehler, Paxton, and May, three relievers in Trenien, Brasier, and Kelly, two everyday outfielders in Heyward and Hernandez, an everyday catcher in Smith, and an everyday infielder in Muncy.

Two options emerge to stem the tide. Los Angeles’ first option is to re-sign the players worth investing in, like Buehler and Smith. They stand out as dependable long-term difference-makers. Re-signing both players will not come at a discount. Due to their respective credentials, Buehler and Smith have every right to command top dollar at their positions. For Buehler, that number is between Gerrit Cole’s $36 million AAV and Carlos Rodón’s $27 million AAV. For Smith, that number is more likely than not around or past J.T. Realmuto’s $23.8 million AAV. Buehler and Smith will also command long-term contracts tying them to the club for the rest of their careers. Signing them will further balloon the Dodgers’ collective balance tax and lock two more players into an unchangeable core.

The second option is to let both players walk in free agency. Their departures would give the club much-needed financial and roster flexibility. That said, the question becomes, how do you replace two integral, great players? In-house, the Dodgers have multiple young arms in players like Frasso, Gavin Stone, and Emmet Sheehan. They’re all highly rated prospects with bright futures. But choosing them over Buehler asks one, if not all three, to mimic the production of a two-time All-Star and a pitcher whose 2.88 ERA is fifth-best in baseball since 2017. It’s a high bar to set for newcomers that’s made even higher with the constant championship expectations surrounding the franchise. This assumes these three players are even part of the organization by 2025. It’s not implausible to think either one of Frasso, Stone, or Sheehan could be shipped out at a trade deadline in return for an established player.

Replacing Smith’s production with catching prospects like Cartaya or Rushing is a viable option. It, however, comes with the same pressures. Smith’s 13.9 fWAR is the third-most among all catchers since 2019. He routinely makes 125 or more starts, posts an .800 OPS or better, and scores well in some advanced defensive metrics. Do the Dodgers, amid a decade of all-or-nothing baseball, want or need to take the risk that two young players can replace that production?

These are not easy questions to answer. Juggling today’s needs versus tomorrow’s concerns is the nature of any team with championship dreams. The Dodgers are not strangers to it. Nor were they previously adverse to bold moves that jeopardize their farm system, whether it be the acquisition of Yu Darvish in 2018, Machado in 2018, or Scherzer and Turner in 2021.

This new era is different from the rest because of Ohtani’s signing. That is why they’re in this situation. They cannot and should not want to take it back. But with Ohtani comes the pressure of fulfilling his and the franchise’s joint dream: To win a World Series. To see that through, the Dodgers cannot employ half-measures. They cannot enter the regular or postseason content with what they have. It’s an ambitious, almost unrivaled undertaking whose attempt will test the franchise’s sustainability.

The Dodgers need to have the best roster. If they don’t, they need to improve it. To improve it, they need prospects. To have prospects, the farm system has to maintain its strength despite the disadvantages against it. If it doesn’t, no improvements can be made, and no exit doors await the Dodgers.

Things need to be perfect. And that’s the biggest problem. If they do all this, empty their pockets, erase their prospect pool, and still don’t win the World Series, what then?