Dodgers Hit With Giant Luxury Tax Bill for Leading MLB in Payroll in 2021
The Dodgers were unable to repeat as World Series champions last season, but they did manage to lead all of baseball in at least one envy-inducing statistic. They weren't shy with their checkbooks.
As MLB's top spender in 2021, LA had $262 million on the payroll for the year, which went over the cap and resulted in penalties. In addition, the Dodgers were also fined $32.65 million in tax costs for exceeding the competitive balance threshold of $210 million. This number is according to the Associated Press.
Overall, the LA luxury tax payroll was $285.6 million in 2021. Here, MLB Trade Rumors' Anthony Franco explains how fines are determined.
Teams are only subject to penalties on the dollars they spend above the threshold. The 2021 penalties for first-time payors checked in at 20% on every dollar between $210MM and $230MM, 32% on overages between $230MM and $250MM, and 62.5% on each dollar spent above $250MM. CBT figures are calculated by summing the average annual values of all of a team’s player contracts (plus benefits), not by looking at a team’s actual payrolls in a given season.
In 2022, the Dodgers are projected to pay almost $235 million in taxes. That's without factoring in Clayton Kershaw, Kenley Jansen, or any of the other numerous players who are still available on the open market.
