MLB: Dodgers – Braves Deal and the Luxury Tax

In one of the most unusual deals I can remember in all my years as a baseball fan, the Dodgers shipped of Adrian Gonzalez (since released), Brandon McCarthy, Scott Kazmir, and Charlie Culberson to the Braves for OF Matt Kemp, who also is likely to be released sometime between now and the beginning of the 2018 season.   There are a lot of “names” in that trade, but none of them are significant anymore, beyond the numbers of zeroes that appear on their paychecks.   Gonzalez, who has now been a part of three big trades since 2010, battled injuries for the first time in his career in 2017, finishing with a pedestrian .242/.287/.355 triple slash in 71 games for the Dodgers.  His biggest contribution was that his injury opened a spot on the field for Cody Bellinger, who went on to have a Rookie of the Year season.    Heading into 2017, however, he was still an effective player.  In his four seasons with the Dodgers before his collapse, he averaged 157 games per year, while hitting .282/.344/.465 (124 OPS+).   Gonzalez is going to earn $22M+ in 2018, but that salary will be picked up by the Braves (with a little help from the Dodgers).  Somebody will try to get him on  a cheap one year contract, and hope that he can produce to previous levels.

McCarthy, Kazmir, and Culberson all figure to hang around Atlanta for the 2018 season.   When healthy (which is almost never), McCarthy is still a productive pitcher.  He produced a 3.98 ERA (3.28 FIP; 105 ERA+) in 92.2 innings for the Dodgers in 2017, and if he can stay healthy (big if) for the first half of 2018, he can be trade bait for the Braves, if they aren’t in contention for the playoffs.  I have no such hopes for Kazmir, who didn’t pitch at all in 2017 after posting a 4.56 ERA in 136.1 innings back in 2016.    Kazmir showed his trademark ability to strike hitters out during his last season of action, but it is hard to imagine Kazmir being much of a factor in 2018.    Culberson gives the Braves some infield insurance, though his career to date has hardly been inspiring, given his .231/.272/.324 career triple slash in 443 plate appearances.    He has appearances at all infield positions and left field, so there is some use in his ability to play a bunch of positions, even if he can’t hit a lick.

Kemp was an albatross in Atlanta, given his poor defense and declining offensive skills.   The former MVP runner-up did produce a .463 slugging percentage in 115 games, but his 103 OPS+ was just slightly above league average.  To put it simply, given his inability to play the field well, he needs to hit better than that to be useful.  Since he will likely be cheap for any team that eventually signs him, somebody will take a chance on him.

Nobody won or lost this trade.  Both teams got what they wanted out of it, though since the Braves will actually be holding on to a few of the players they acquired, I guess they “win”?  It doesn’t matter.

The Bigger Picture

Now that the trade specifics are taken care of (this trade wasn’t made because of the players – it was made because of the contracts), I have to explore what this means for baseball as a whole.   The two biggest-spending teams in baseball are trying to find creative ways to avoid needing to spend on talent in 2018, for the sake of getting underneath the luxury tax in time for the big free agent class coming out after the 2018 season.   The Yankees traded for Giancarlo Stanton, but his contract is not going to make a dent on their luxury tax aspirations, as they were able to dump Starlin Castro in that trade and Chase Headley in a subsequent trade.  The Yankees are only adding significant salary in 2018 if they can dump significant salary elsewhere.  They are reportedly willing to eat at least half of Jacoby Ellsbury‘s deal if a team would just take him off their hands, and rumors will likely persist on Brett Gardner, though I don’t think they will deal him.

The Dodgers took care of much of their salary concerns in one big deal.   I can’t see how this is good for baseball.  I guess, more accurately, I can’t see how this is good for baseball players, or smaller-market owners who continue to try their best to keep big market owners from having the ability to use their financial might to field teams.   The Yankees and Dodgers essentially have told smaller-market squads that their attempts to suppress spending are not likely going to work, as both teams may be active in the big free agent market coming up.   The Yankees could have a giant gap at third base heading into 2019.  The Dodgers will have the ability to give a big deal to Clayton Kershaw, while dipping their toes in the water for Bryce Harper, or perhaps Dallas Keuchel.    The Phillies are also ready to pounce, though they don’t have the luxury tax concerns in 2018 that the Yankees and Dodgers have.

As for the players, a free agent market where the Dodgers and Yankees aren’t participating is a free agent market that loses two major bargaining chips.  The agent for Alex Cobb can’t go to teams and tell them that the Yankees are seriously pursuing his client, because other franchises know exactly what the Yankees are doing.   Is that what Tony Clark (head of the MLBPA) had in mind when he agreed to the luxury tax rules?   Did he really envision Mike Moustakas, an under-30 third baseman coming off of a 38 home run season, having trouble finding a market for his services?    Moustakas is the perfect example of why the system as it stands is problematic:   After trading Headley, the Yankees’ third base depth chart consists of utility infielder Ronald Torreyes and rookies Miguel Andujar and Gleyber Torres.   Torres is arguably the top prospect in baseball, while Andujar is also highly thought of.   However, the Yankees also have a hole at second base, and may not be willing to go with a young player at both second base and third base.   Moustakas is a left-handed power bat who happens to play a position the Yankees’ have a need at, and nothing.  Nobody is even attempting to leak a rumor that the Yankees have any interest at all in his services.    Why?  Because of the luxury tax.   The Yankees can afford Moustakas and still have enough money in their bank account to buy another MLS franchise (or even the entire league), but this has nothing to do with affordability or need.   It has to do with the luxury tax, and getting underneath it.

Some would say that this means the luxury tax is working.   It is working in that the talent will be spread out a bit.  Moustakas is going to get a big contract from someone (Giants?), so we shouldn’t feel sorry for him.  However, this is not about what a fan thinks:   I am thinking about it from the perspective of the PLAYERS, and not having the Yankees even making a courtesy call is alarming.  If I was a player I would not be liking the way the luxury tax has impacted the biggest spending teams.

Will this ever go away?

It doesn’t appear likely, unless the players want to go on a damaging strike the next time the CBA is negotiated.  The owners have been able to get this system in place, and will not want to give it up.   They would be more willing to bend on a 26th man on the roster or a National League designated hitter than they would be willing to bend on the luxury tax system.   The system could already be fulfilling a want to suppress salaries.   Moustakas will get a big contract.  It could have been bigger if the Yankees were involved in the sweepstakes.  Next year’s major free agents are going to get a bonanza, but if you are in the second and third tier of the market, you may as well buckle in and be prepared for a long ride before you are able to get your money.    Since the big markets will be mostly involved with the big free agents, those secondary free agents won’t be able to use the big boys as leverage, bringing up the same dilemma we have now.    The Yankees weren’t calling Jay Bruce even if Stanton went to Los Angeles instead.  The Yankees were not going to go after a secondary bat on the market just because they lost out on a primary bat.  This was not the norm a decade ago.

As noted in this piece on Fangraphs, baseball is as healthy as ever from a financial standpoint.  Teams are raking in cash hand over fist, but the percentage of revenues going to free agents is not keeping up with historical numbers.   So, while we lament the idea that Carlos Santana just signed for $20 million a year, keep in mind that when you look at the financials, this contract was likely a bargain.   Those big deals being handed out to relievers?  Likely not even making a dent in those franchises’ bottom lines.    The author of the article (Travis Sawchik) makes a compelling case for a salary floor, forcing teams to spend a predetermined minimum on player salaries.   I love this idea, because it has the potential to keep the market moving.  If the Marlins are forced to keep a certain payroll level, they would likely still try to get out of major salary commitments, but they be forced to make moves to replace those longer term contracts.  For example, deal Stanton, but sign a shorter-term and cheaper replacement like Bruce, or whoever they can use to fill in the gaps.

While it was universally thought that this was not a particularly good free agent class, it still is eye-popping to see so many good players still lingering on the market, some of which not being attached to any current rumor.  These free agents are at a further disadvantage because if they sign 1-year “let me prove myself” deals, they will find themselves in the middle of next year’s class, where they will be overshadowed.   For players like Moustakas, Cobb, Bruce, and others, the time to earn their big contract is now.  Not next year.

The Hot Stove is what makes baseball unique.  It is what makes the sport something that is “must follow” year-round.   I don’t think baseball is in any danger of losing this particular element of their charm, but they do need to start thinking of ways to make sure the free agent market doesn’t stagnate.   For years, there has been talk about how dangerous teams like the Dodgers, Yankees, and Red Sox could become if they ever figured out how to maximize their resources without needing to spend big every winter.  We may be finding that out.

 

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