The Braves resetting the luxury tax in 2025? It's more likely than you might think
They haven't said it out loud, but they're laying the breadcrumbs. (And that's not a bad thing.)
Except for maybe the Steve Cohen Mets, every team is paying attention to the luxury tax. Even the Yankees. Sure, Alex Anthopoulos has said before that the Braves consider cash payroll, not luxury tax payroll, when assessing their budgetary room. But those taxes have to get paid. And the longer you stay in the luxury tax, the higher the tax rate.
Unless you reset. You drop down for a year below the first CBT threshold, you live a life of poverty for a season, you let the young kids get some run. And then, come next offseason, you’re back to spending big. The Dodgers attempted a variant of this in 2023, though losing their fight to get Trevor Bauer’s salary off their books foiled their plan.
The Braves are going to enter 2024 in the luxury tax for the second year in a row. Their moves make me think they want the flexibility to duck the tax in 2025. Let’s talk about how things set up for 2025, and then talk about why the Braves’ moves this offseason have helped them get there.
A primer on luxury tax calculations
For the purposes of the luxury tax, player salaries are calculated in terms of average annual value, with deferred money assessed in terms of what its value would be if it were distributed evenly in the term of the contract. (This is why Shohei Ohtani’s luxury tax figure is $46M even though he’s only pocketing $2M in 2024.)
All calculations here are thanks to Jon Becker and the FanGraphs team for the beauty that is Roster Resource.
How the Braves’ payroll can drop significantly next year
The Braves’ luxury tax figure for 2024 is currently $275.7M per Roster Resource.1 This puts them $1.3M short of the third luxury tax threshold. Not bad for a team that entered the luxury tax for the first time in ages last year. I wouldn’t be shocked if the Braves actually do enter the third threshold at some point over the 2024 season and incur the draft pick penalty; Anthopoulos has taken on salary at virtually every trade deadline in his tenure except 2020, and the team could probably use a fourth outfielder who’ll play for more than the veteran minimum.
The luxury tax thresholds increase each year to keep up with inflation; next year, the lowest threshold is $241 million. That’s our magic number.
To figure out the Braves’ projected 2025 luxury tax payroll, I’ll make the following assumptions; you can tweak any of them in your own head to reach a figure of your choice.
Atlanta does not trade away any player with a guaranteed 2025 salary. It’s plausible that they do make such a trade - e.g. some sort of Iglesias salary dump - but I’m not expecting it and things get messy when I start trying to guess who the team might trade.
Atlanta does not non-tender any arbitration-eligible player, and each arb-eligible player makes ~$2M. By my count, Jarred Kelenic and Huascar Ynoa are the only players in this category, and while it’s plausible that Ynoa isn’t on the roster next year, Kelenic almost certainly will be. Both these guys are owed extremely small potatoes and teams trying to get under the tax love players on cheap deals, so that’s even more reason to keep them around. My arbitration figures are just rough guesses for Kelenic’s ARB 1 and Ynoa’s ARB 2.
Atlanta declines team options for Tyler Matzek and Marcell Ozuna. $6.5M for a 34-year-old reliever and $16M for a 34-year-old DH are pricey figures. It’s not difficult to imagine a world in which they accept both or either - they should pick up Ozuna’s option if he replicates his 2023 season and Matzek’s if he replicates his 2021 - but I think the median outcomes for both players are that they aren’t worth their option amounts.
Atlanta accepts team options for Aaron Bummer, Travis d’Arnaud, and Chris Sale. Bummer’s option is for $7.25M and that’s a perfectly fair rate if he puts up his 2023 peripherals (and a steal if he’s more like he was in 2022). I think $8M is expensive for a backup catcher but I think the team likes d’Arnaud’s clubhouse presence too much to pinch pennies here. Finally, it seems very likely that Charlie Morton will retire, and if Chris Sale is even just similarly healthy/valuable to how he was in 2023, $20M is probably a fair deal for him.
So doing the math, the Braves will have:
$144M in guaranteed contracts
$35.25M in picked up options
$4M in arb salary
$8.8M in pre-arb salary2
$2.5M in salary for 40-man players in the minors
$17.5M for player benefits
$1.7M contribution to pre-arb bonus pool
That puts the Braves at a $213.75M figure for 2025 payroll at the start of free agency. And it’s not an empty husk of a team, either. It has long-term, controllable players at C, 1B, 2B, 3B, LF, CF, and RF. It has good values at SS and SP2. It has all the ingredients for a great bullpen. Sure, you’ll want to acquire at least one starting pitcher (either re-signing Max Fried or replacing him) and maybe you’ll want to sign a cheap veteran bat to replace Ozuna if you don’t want to alternate your catchers in the DH spot. You have about $28 million of headroom to do those things. In this scenario, it might make sense to postpone the Fried replacement for a year, sign a cheaper veteran starter to a short-term deal and let the glut of young arms who will likely be ready (Smith-Shawver, Waldrep, Dodd, Vines, Schwellenbach, Kuehler) prove themselves in the rotation.
The overall point is that even without crazy trades or cuts, it’s possible for the Braves to slip under the CBT threshold while fielding a highly competitive team next year.
Why the Jarred Kelenic deal hints at a 2025 reset
I’m sure you’ve noticed that Alex Anthopoulos has been the king of the Eat A Bad Salary To Get a Player I Want trade this offseason. Atlanta acquired Jarred Kelenic by also acquiring Marco Gonzales and Evan White; it acquired Ray Kerr by also acquiring Matt Carpenter.
The prospects involved in these trades are not headliners. You would not have been remiss for never having heard of Cole Phillips (zero minor league innings in two seasons) or Drew Campbell (former 23rd round pick). Phillips is nasty and could become a guy down the line, but for simplicity, let’s think of these trades as salary dumps. In particular, let’s look at the Kelenic deal now that we’re on the other side of the flurry of minor trades it spurred.
To acquire Jarred Kelenic, the Braves roughly ended up taking on $18.25M of bad contracts for 2024 and $3.25M of bad contracts for 2025.3 Kelenic himself will make league minimum in 2024 then go through four years of arbitration till he hits free agency.
So in a way, the Braves signed Jarred Kelenic to an implied contract as follows:
2024: $19M
2025: $5.25M
2026: team option at ARB 2 salary (no buyout)
2027: team option at ARB 3 salary (no buyout)
2028: team option at ARB 4 salary (no buyout)
The Braves clearly think Kelenic is worth this deal, and the market does too, or else the Braves wouldn’t have had to give up a prospect for the right to ‘sign’ Kelenic to it.
But here’s where things get interesting. If the Braves had actually signed Kelenic to this deal in free agency, the luxury tax figure would be calculated based on the AAV. So in both 2024 and 2025, Kelenic’s tax number would be $14 million.4 However, two of the three bad contracts (Gonzales, Stassi) that ‘bought’ Kelenic are off the books in 2025, and their luxury tax hits go with them. So instead Kelenic’s implied tax hit will be $7.5 million. Given that they only have about $28 million to work with in the first place, saving $6 million - while still getting to keep the player they paid for - is a fun little win.
Closing thoughts
Sometimes, a fun deal structure is a hint of something to come. Sometimes, a fun deal structure is just that. Maybe the Braves really don’t care about the repeater penalties for the luxury tax; maybe they’ve decided that while they’re in their competitive window, they’ll shoulder the tax burdens.
But if we assume that the team has a finite budget - a fair assumption - then it’s a good thing to get under the tax occasionally. Because a tax reset lowers the tax rates for the next year, which means more of the budget will go to paying players and less will go into the league’s tax coffers.
And this year, the Braves found an interesting way to spend a decent amount of money on a left fielder in a way that allows them to do that.
Some folks over at /r/Braves have suggested that Roster Resource’s number for Chris Sale might be slightly off because it doesn’t account for his partially deferred salary. We’re talking about a potential difference of less than $2 million, though.
This is Roster Resource’s 2024 estimate; I’m just blindly copy-pasting it for 2025.
Note that I’m basically valuing David Fletcher like he’d make $1M/year on the open market and deducting that from the bad contract number.
Observant readers will notice that this is slightly higher than (19+5.25)/2. That’s because while the $4.5M of cash considerations from Seattle for Evan White remain in Atlanta’s pockets, they no longer count towards defraying the Braves’ CBT figure because Atlanta traded White. Go figure.