MLB Rumors: Dodgers, All Teams Avoid CBT Luxury Tax Penalty

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The 2020 MLB season was an unusual one due to the coronavirus (COVID-19) pandemic with the schedule being shortened to 60 games but the postseason actually being expanded to include 16 teams.

Despite the uniqueness of it, the best team in baseball still ultimately came out on top with the Los Angeles Dodgers winning their first World Series since 1988.

The Dodgers finished with the best regular-season record in baseball at 43-17 before sweeping the first two rounds of the postseason. They then erased a 3-1 deficit against the Atlanta Braves in the National League Championship Series to reach the Fall Classic, where they defeated the Tampa Bay Rays in six games.

A big reason for the Dodgers’ World Series win was the acquisition of Mookie Betts, who they got in a blockbuster trade with the Boston Red Sox along with David Price. Players of Betts’ caliber don’t become available very often, but the Red Sox decided to deal their franchise cornerstone due to their desire to get below the luxury tax threshold in 2020.

While the Red Sox felt that was necessary to do in 2020 in order to avoid paying taxes, it turns out they wouldn’t have had to do that anyhow, via Jorge Castillo of the L.A. Times:

Payrolls for 2020 won’t be finalized until December, but none of the 30 teams will pay a CBT penalty this year. The Houston Astros, Chicago Cubs and New York Yankees, however, will qualify as CBT payers for determining draft pick compensation.

As mentioned to above, the draft pick aspect of this is also important and considering the Red Sox were repeat offenders of being above the luxury tax threshold, they would have lost picks if they did not get below in 2020.

With Price opting out due to coronavirus concerns and a midseason trade of Ross Stripling that also saved some money, the Dodgers were not above the tax threshold in 2020, which bodes well for their ability to spend moving forward.

The Dodgers also have some money coming off the books with Justin Turner, Joc Pederson, Kiké Hernandez, Pedro Baez, Blake Treinen, Alex Wood and others reaching free agency this winter. Of course, the team’s financial figures could easily change.

Kasten: Dodgers lost more than $100 million in 2020

Despite again avoiding the luxury tax, that does not necessarily mean the Dodgers will be big spenders this offseason. Team president and CEO Stan Kasten recently said the organization lost more than $100 million in revenue in 2020 due to the pandemic, and he is hopeful fans are allowed back in stadiums as soon as possible.

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