Braves won't let luxury tax hinder free agency plans
SAN DIEGO -- As the Braves provided lucrative long-term extensions to Austin Riley, Spencer Strider and Michael Harris II, they willingly increased the possibility of having to pay a penalty for exceeding the first threshold of MLB’s Competitive Balance Tax, commonly known as the luxury tax.
This should come as no surprise for those who remember a team executive revealed the Braves are aiming to soon have a top-five payroll. Business has been good over the past two years. Consequently, president of baseball operations Alex Anthopoulos hasn’t thought about the luxury tax as he has spent the past few weeks evaluating many of this year’s top free agents.
“[Luxury tax penalties] are not something that has prevented us from exploring things and having discussions,” Anthopoulos said. “So, in the right context, with the right deal, we’ll go past it.”
With the benefit of some enhanced financial flexibility, Anthopoulos has kept his options open while exploring many different ways to improve his team. He spoke recently with free agent Dansby Swanson, who wanted to get a better feel for whether he’ll be extending his reign as Atlanta’s shortstop. But that was just a conversation between friends. There hasn’t been any recent progress in negotiations between the parties.
This has created reason to wonder whether the Braves might end up signing a cheaper defense-first shortstop like Elvis Andrus and account for the absence of Swanson’s offensive void by acquiring a left fielder via trade or free agency.
Regardless of whether the Braves sign Swanson or any other accomplished free agent, it may be a challenge to keep their CBT figure below $230 million, the threshold where teams begin to be penalized. Per FanGraphs’ Roster Resource, Atlanta's projected CBT figure is $227,906,667.
The CBT figure is the sum of the average annual value (AAV) of the players on the 40-man roster, plus any additional player benefits. To better understand this, Riley will make $15 million next year, but the AAV of his 10-year, $212 million deal is $21.2 million. Strider will make $1 million in 2023, but the AAV of his six-year, $75 million deal is $12.5 million.
On the flip side, Ronald Acuña Jr. will make $17 million this year. But the AAV of his eight-year, $100 million is just $12.5 million.
If the Braves exceeded the CBT’s first threshold, they would have to just pay a 20 percent tax on all overages because they would be first-time offenders. A few million dollars won’t stop them from remaining competitive within the NL East.
With Trea Turner becoming the Phillies’ sixth player with a $20 million-plus salary and Justin Verlander gaining a $40 million-plus salary from the Mets, the willing-to-spend Braves may still end up with the division’s third-highest payroll. But top payroll hasn’t recently determined the finish of the NL East, which Atlanta has won five straight seasons.
“We’ve had discussions about players with which we would have gone over [the threshold],” Anthopoulos said. “It doesn’t mean that we will, but it’s certainly in play.”
With Turner off the board, Swanson’s market began to gain a little more steam on Tuesday, but the Braves still seem to be in wait-and-see mode. Swanson wants a six-year deal and there still seems to be belief he could draw $25 million per season. Atlanta likely won’t offer six years and $150 million. But there’s a chance its offer could end up strong enough for Swanson to opt to leave money on the table to stay in his hometown.
While the focus has been on Swanson, Anthopoulos has continued to explore various ways to improve his club. He at least inquired about Jacob deGrom, who ended up with the Rangers, and he will likely add at least one more $20 million salary to next year’s payroll. Time will tell whether that salary goes to Swanson or the player acquired to account for his departure.
“We have room to improve in every single area,” Anthopoulos said.