Today's epic pre-Winter Meetings mailbag covers the Dodgers' postponements, the golden AB idea, the Padres prospects traded and the Blue Jays' failure to extend Vladimir Guerrero Jr., Triston Casas and Boston's future path, the Cubs' plans, the Giants and draft pick forfeiture, and much more.
Elden asks:
I recently read that the Dodgers now have over $1 billion in deferred salary on the books, even with no one else under contract. I admit they have pretty deep pockets and can weather almost any financial storm, but why isn't this a manipulation of the CBT rules? Granted, prices rise over time, but their money deferred alone is four times the first tax threshold. How is this good for baseball?
I don't want to pick on Elden, but fans don't have a seat at the collective bargaining table between owners and players, so “good for baseball” is largely irrelevant. At this table there is “good for the owners” and “good for the players”.
Players like the ability to defer money. In February, union leaders Tony Clark told “We want the players and their individual representation to have as many tools in their tool bag as possible to work with the teams and find common ground.”
Many teams also like this option. Yes, the Dodgers have set aside a lot of money, more than any other club in recent memory. But all types of treaties involved significant deferrals, for example that of Boston Rafael Devers Extension or signing by the Nationals Max Scherzer. Andrew Friedman, Dodgers president of baseball operations “I think the Shohei Treaty was just very extreme. But putting the Shohei contract aside, the rest are all within the norm and standard operating procedure that many teams have used. But I think the Shohei Treaty is just irritating people because it's so different and I think the others are just unfairly lumped together, but I think it's kind of a lazy narrative.”
If there's one thing casual fans love, it's a good, laid-back narrative. But why do the Dodgers do so much of it? wrote about it in March, suggesting benefits such as “reducing their short-term cash obligations, being able to discount luxury tax amounts and providing flexibility when negotiating with players.”
I'm not a financial expert, but I would say the main benefit is reducing short-term cash obligations. After two years, teams must deposit the average annual value into an escrow account, but they can invest and grow the entire amount until the player needs to be paid. And of course, if you just actually pay Shohei Ohtani Currently, if you pay $2 million, you can spend more on player than if you paid him $46 million.
It is also important to remember that the bill will come due at some point. If the Dodgers owe retired players $150 million in 2035, for example, that would seem to limit their flexibility, even if the money was invested on the side. But what about the Dodgers' tax manipulation?
Unlock subscriber-exclusive articles like this with a Trade Rumors Front Office subscription
- Access weekly, subscriber-only articles from Tim Dierkes, Steve Adams and Anthony Franco.
- Join Anthony for exclusive weekly live chats.
- Remove ads and support our authors.
- Access GM-caliber tools like our MLB Contract Tracker
