The Los Angeles Angels and the 2015 Luxury Tax

Posted By on Jul 31, 2014 | 4 comments


With the Angels not adding any more payroll for the 2015 season at the deadline, I decided to take a look at how the team’s luxury tax payroll has shaped up for 2015. When it comes to the luxury tax, it uses the average annual value (AAV) for players who have signed free agent contracts or extensions. This stops teams from back-loading contracts in order to get under the tax for the upcoming season. As of now, the luxury tax threshold is $189M. The first time a team goes over this amount they are taxed 17.5% on the money above the threshold, and the rates increase for each consecutive year a team is above it. The rates are 30% for the second time, 40% the third, and 50% for each time after that. If a team gets below the luxury tax, their tax rate is reset back to 17.5% if they go above it again. I broke down the roster into three main sections (with some exceptions): post-arbitration (extensions and FA contracts), arbitration, and pre-arbitration.

I will note that while doing this that I had a few assumptions and do not have a solid way to predict arbitration salaries. My assumptions were that the Angels let Jason Grilli, Joe Thatcher, and John McDonald leave via free agency and decline Sean Burnett’s option as well.

Post-Arbitration

Player
AAV
Final Year
Total $140.14M N/A
Josh Hamilton $25M 2017
Mike Trout $24.08M 2020
Albert Pujols $24M 2021
Jered Weaver $17M 2016
C.J. Wilson $15.5M 2016
Erick Aybar $8.75M 2016
Howie Kendrick $8.38M 2015
Huston Street $7M 2015
Joe Smith $5.25M 2016
Chris Iannetta $5.18M 2015

Yes, you are reading that correctly, $140M. That is how much is allocated to a mere ten players (perspective: 25% of the 40-man roster takes up 75% of the luxury tax payroll). Some of these deals are great, some are ok, and some are plain awful. About $20.5M from this group will come off after the 2015 season, and $46.5M after the 2016 season.

Arbitration

Player
AAV
Final Year (Arb Year)
Total $20.8M N/A
David Freese $7M 2015 (3)
Kevin Jepsen $2M 2016 (2)
Fernando Salas $1M 2016 (2)
Garrett Richards $4.5M 2018 (1)
Hank Conger $1.2M 2017 (1)
Collin Cowgill $1M 2018 (1)
Vinnie Pestano $1M 2017 (2)
Hector Santiago $900K 2017 (1)
Michael Kohn $700K 2017 (1)
Tony Campana $700K 2018 (1)
Brennan Boesch $700K 2016 (2)

The really interesting case here is Garrett Richards, who has had only one season of note (this year in which he has been an elite starter) and will also be a Super 2 candidate (gets an extra year of arbitration later on). Along with Richards, the only player with a noticeable salary is David Freese. Freese earned just over $5M in arbitration for this year, and a raise to $7M is probably a bit high, but I preferred to be slightly over than under. All players going through arbitration must have their contract tendered, and if they do not then they become a free agent. This could be an option with Freese, since his production in 2013 could be matched by someone like Grant Green, but at the minimum salary. The only players outside of Freese who have a chance to be non-tendered in my opinion are Brennan Boesch, Michael Kohn, and Tony Campana (although they just acquired him along with Thatcher). Adding the post-arb and arb players puts the Angels at about $161M

Pre-Arbitration

The pre-arb guys do not get a fancy chart, simply because there are twenty players and they all make roughly $500K. Only some of these players will make it to arbitration with the Angels (Kole Calhoun and Tyler Skaggs are some examples) and the rest will simply be replaced by other minimum salary players. Although you have to account for every player on the 40-man roster, the actual numbers counting towards the luxury tax are prorated between what they make at the major-league level and the minor-league level. If the twenty players each made the entire major-league salary, the total would be slightly over $10M, bringing the total to $171M. However, since players earn just a few thousand dollars for the time being, that numbers is probably closer to $5M, adjusting the total to $166M.

On the books, but not the roster

Burnett’s option being declined results in a $500K buyout, rather than a $4.5M salary. Along with Burnett, the Angels will still owe Joe Blanton $1M for the 2015 season. This would bring the total to about $167.5M, but teams also must make a payment towards the player benefits, each team contributing $12M. This runs the final bill up to the range of $179.5M, which is $9.5M below the tax threshold.

The Angels could create more room with a few moves, like the non-tender of David Freese which would save somewhere around $6-8M. They may also have to see if there is any interest in some of the post-arb players, since they would actually make a difference. As of now, the Angels are bringing back essentially their entire roster for 2015, which is not exactly a bad thing. The decisions they will face are: is $9.5M enough to fill any holes, and if going slightly over the luxury tax is possible (a big no-no for owner Arte Moreno)? Because they are bringing back a significant portion of their roster, they may not need as much money for this free agent class.

Contract information can be found here:

http://www.baseballprospectus.com/compensation/cots/al-west/los-angeles-angels-of-anaheim/

http://www.baseball-reference.com/teams/LAA/2014-payroll-salaries.shtml

4 Comments

  1. Does this also count the final year that we owe vernon wells his money?

    Post a Reply
    • Robert Livingston

      2014 is the final year in which the Angels have to pay Wells, so no longer have to worry about that

      Post a Reply
    • Robert Livingston

      They could, but I don’t see them doing something like that

      Post a Reply

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