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Mookie Betts Trade: The Financial Fallout

So Mookie Betts is now a Los Angeles Dodger, as is David Price. There was a very big and complicated 4 team series of trades that went down in baseball, which dramatically shifted a couple of teams.

Dodgers Get: Mookie Betts, David Price

Red Sox Get: Alex Verdugo, Brusdar Graterol

Twins Get: Kenta Maeda

We are still waiting on final totals when it comes to dollars switching hands, and for the move to become official with players still passing physicals, but for now the move is done. The Dodgers get a lot better, and the Red Sox get a bit worse, while the Twins plug a hole. Financially, there are much bigger ramifications. Here's a payroll chart up to date as of 2/6/20:

Now a couple of weeks ago, I wrote about the MLB financial picture as teams try to get under the luxury tax threshold. After this trade, you'll notice that LA is now back over the limit, while the Red Sox are under. Meanwhile the Cubs continue to be every so slightly over. Boston was set to be over the limit a 5th year in a row, while LA was able to get under in 2019 and reset penalties. In three consecutive years, you've had the three most valuable teams in MLB reset their penalties. The Cubs are ranked fourth, and trying to get back under after only being over for a year.

I bring this up because luxury tax penalties are clearly real. Many fans and writers love to complain how their team's billionaire owner should be willing to shell out a few million in taxes to make their team as competitive as possible, but as we see with the above chart, only the top tier teams go above the threshold multiple times, and it doesn't last forever. Meanwhile, other teams ranked 5 or worse in value have gone over a collective 3 times in the last 6 years.

I'm not a financial whiz lawyer who can read through the current CBA to determine exactly what the penalties are and how they increase exponentially over multiple violations. Brett Taylor of Bleacher Nation did a dive, and estimated $20 million for the Cubs being over a second time in '20, and $50 million for being over a 3rd time in '21. I can only imagine how much worse those penalties get for the 4-5 year range, which the Yankees, Dodgers and Red Sox have all flirted with.

My conclusion is simple. If it was worth being over the luxury tax year in and year out to no end, someone would be desperate enough to do it. The Dodgers have spent billions in payroll and haven't won a ring in 30 years. The Yankees haven't done it in 10. The Red Sox have won a few times, but are constantly trying to one up the Yankees. Surely if these multiyear penalties weren't that bad, someone would stay above the threshold for the sake of winning.

Whether we like it or not, the Cubs will dip under the threshold again. I'd rather them do it now, if it means contract extensions for Kris Bryant, Anthony Rizzo and Javier Baez, among others. Short term pain, long term gain. And baseball has always been the long game.


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