The luxury tax threshold. Much has been made of it, and owner Arte Moreno’s unwillingness to exceed it. Now that all the major pieces are on the roster, we can finally project the Angels’ opening day luxury tax situation for next season.
So, before we get to the spreadsheet, here’s a few things to keep in mind.
1) For luxury tax purposes, player salaries are calculated by the average (also referred to as AAV, or average annual value).
2) Each player has 6 seasons of service time to be fulfilled before he can become a free agent: usually the first, second, and third years are pre-arbitration (league-minimum salary) and the fourth, fifth, and sixth years are arbitration (either mutually agreed upon or determined by an arbitrator).
Here’s a simple explanation of service time and Super Two (a process by which a player’s year 3 becomes arbitration instead of pre-arbitration).
3) Unlike in other sports, the luxury tax threshold in MLB serves as a soft cap which teams can exceed but must pay a tax on the overage, which becomes increasingly stringent in subsequent years; with the new CBA, excessive overages result in forfeiture of draft picks and bonus pools. The threshold for 2017 is $195 million.
Here’s the spreadsheet (helpful for those on mobile):
2017 luxury tax situation
|Garrett Richards*^||$7,000,000||arb 4|
|Kole Calhoun*^||$6,900,000||arb 3||arb 4|
|Matt Shoemaker*^||$3,800,000||arb 2||arb 3||arb 4|
|C.J. Cron||$535,000||arb 1||arb 2||arb 3|
|Tyler Skaggs||$535,000||arb 1||arb 2||arb 3|
|Cam Bedrosian^||$535,000||arb 1||arb 2||arb 3||arb 4|
|Andrew Heaney^||$535,000||arb 1||arb 2||arb 3||arb 4|
|Jefry Marte||$535,000||$545,000||arb 1||arb 2||arb 3|
|Nick Tropeano||$535,000||$545,000||arb 1||arb 2||arb 3|
|Alex Meyer||$535,000||$545,000||$555,000||arb 1||arb 2|
|Carlos Perez^||$535,000||arb 1||arb 2||arb 3||arb 4|
|Jose Alvarez||$535,000||arb 1||arb 2||arb 3|
|Mike Morin||$535,000||arb 1||arb 2||arb 3|
|JC Ramirez^||arb 1||arb 2||arb 3||arb 4|
|Deolis Guerra||$545,000||arb 1||arb 2||arb 3|
|40 man in minors||$1,297,500|
|Opening Day TOTAL||$170,026,214||$59,548,714||$56,923,714||$56,368,714||$24,000,000|
|2017 ending TOTAL||$175,276,214|
*This player is currently in arbitration. These salaries are projected by MLB Trade Rumors.
^This player is or is likely to be a Super Two.
**The Angels will likely buyout Street's $1M option for 2018.
Players on the 40-man roster, while in the minors, get paid $86,500 at the very least (there would be approximately 15 such players). Player benefits are estimated and include health coverage and pensions.
As you can see, the Angels’ 2017 Opening Day payroll comes out to roughly $170,026,214. Their ending payroll, with the roster currently as constructed and all known incentives picked up, would be $175,276,214.
With the threshold at $195 million, that means the Angels are $19,723,786 under the threshold.
This figure isn’t set in stone, because arbitration salaries may slightly vary, but it provides one an idea of how that money can be allocated. This leaves the team enough money to add a player or two before the season starts and/or gives them salary flexibility to acquire the personnel they want in trades moving forward.