Saturday, December 14, 2024

Blake Snell contract: How deferrals, signing bonus give Dodgers even more money to improve

Blake Snell contract: How deferrals, signing bonus give Dodgers even more money to improve

The World Series champion Dodgers are signing free-agent left-hander Blake Snell to a five-year, $182 million deal. The deal isn’t straightforward, though, and diving into the minutia helps give a better idea as to how the Dodgers can continue improving their ballclub the rest of this offseason. 

Snell breakdown

Snell gets a $52 million signing bonus along with $13 million per season in deferrals over five years, reports the New York Post. The signing bonus helps to give back Snell some of the present-day monetary value lost in deferring $65 million until later. Snell gets a check for $52 million as a signing bonus, but that value is spread out across the five years of his contract in the Dodgers’ books for CBT purposes.

In terms of the competitive balance tax, the deferrals don’t change things much. The CBT counts an average annual value instead of the exact figure the player makes per season in an effort to prevent heavily backloaded deals creating extra room early in the contract. 

Through the signing bonus and deferrals and everything, the average of $182 million over five years ($36.4 million) does shrink a little bit to $32 million and change for the CBT. 

Deferrals

If the CBT truly taxed teams on the full value of the contract per season as an average annual value during the length of the deal, Snell’s figure would be $36.4 million. Shohei Ohtani’s 10-year, $700 million deal would obviously be $70 million per season. Ohtani’s CBT figure is $46,076,768, though, thanks to all of his deferrals.

So while there’s a limit to how much can be circumvented, some creative accounting has been done here by the Dodgers with these deals. 

Room left to maneuver

The Dodgers are obviously one of the richest teams in baseball, but it should be noted that they spend their money. On The Score, Travis Sawchik created what he called the “Scrooge Index” to show how many teams just pocket a ton of money and then cry poor to their fans. It usually works. While the Dodgers were second in baseball in spending 67% of their revenue on payroll (the Mets were first at 102%), the Rays, A’s, Tigers and Reds all spent less than 40% of their revenue on player payroll. Some other large-market teams like the Red Sox (40%) and Cubs (43%) don’t show well, either.

The Dodgers, though, are more interested in winning and that’s better for the fans spending money on the product. 

They’ve got more to spend, too, in all likelihood. 

As things stand right now, sure, the competitive balance figure it over $300 million, so the Dodgers will be taxed (meaning they’ll cut checks to a bunch of those teams crying poor).

But the actual payroll for 2025 right now sits in the ballpark of $260 million due to signing bonuses and deferrals mentioned above. 

In looking at the roster right now, the 7-9 hitters appear to be Gavin Lux, Andy Pages and James Outman. They could easily fit a reunion with Teoscar Hernández in here without blowing up their budget. We’ve heard plenty of rumors linking them to Juan Soto, too. If he’s up for it, maybe that becomes a heavily deferred contract.

Let’s also keep in mind that Roki Sasaki, the NPB ace set to be posted this winter, will not garner a monster contract due to his status as an amateur free agent. He and the Dodgers have been linked all offseason.

All of this is to say that, yes, the Dodgers can still add after the Snell signing. They could still grab Soto if they wanted to. Perhaps more realistic is a reunion with Teoscar and a Sasaki signing. 

Regardless, the Dodgers aren’t done and they won’t even have to get outlandish with their payroll to continue adding. 

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