MLB doesn’t have a hard salary cap like other major sports, and franchises like the New York Yankees and New York Mets take full advantage of that, spending an exorbitant amount of money on players to maximize their chances at a World Series.
The Los Angeles Dodgers have that luxury, too. It was clear they were willing to exceed the luxury tax for star talent, especially if it meant signing Shohei Ohtani and Yoshinobu Yamamoto long-term.
Between the two Japanese stars, the Dodgers shelled out over $1 billion in total contract value.
The Dodgers weren’t done there, however. They traded for Tyler Glasnow and subsequently signed him to a long-term deal. Los Angeles also brought in Teoscar Hernandez on a one-year deal and resigned Will Smith for 10 more seasons.
The franchise’s total spending on future contracts this offseason has comfortably surpassed the $1 billion mark. That doesn’t include any existing contracts on the books.
Here’s a look at the Dodgers payroll for the 2024 season and how that stacks up with the rest of MLB.
MORE: How good is Yoshinobu Yamamoto?
Dodgers payroll 2024
As mentioned, there’s no hard cap in MLB, but there is a luxury tax.
It’s known as the Competitive Balance Tax (CBT) and it’s in place to help small-market franchises compete with big spenders such as the Yankees and Dodgers.
The 2024 CBT is set at $237 million, according to Spotrac. Any team that surpasses this threshold has to pay taxes on each dollar over $237 million.
The percentage of taxes required is based on how many consecutive years that franchise has been above the CBT.
- One year: 20%
- Two years: 30%
- Three-plus years: 50%
There’s an additional surcharge based on how much the team is over the limit, too.
- $20-40 million: 12%
- $40-60 million: 42.5% (first year), 45% after
- $60 million-plus: 60%
The Dodgers are estimated to have an official payroll of $209.1 million, but because of deferred payments and other contract quirks, that number increases to $388 million after the CBT charges.
Shohei Ohtani contract details, deferred payments
Ohtani signed a record-breaking deal in American sports when he inked a 10-year, $700 million deal with the Dodgers in December 2023.
The two-way superstar was expected to earn $70 million per year, on average, but he opted for a unique contract structure. Ohtani will make just $2 million per season with the Dodgers, deferring the remaining AAV for when he finishes his contract.
From 2034-2043, Ohtani will receive $68 million per year.
The deal saves the Dodgers from an even heftier luxury tax since the AAV is just $2 million.
The Dodgers, however, were already over the CBT threshold and are now required to pay $46 million for Ohtani. Ohtani will still get his $2 million salary, but the CBT adds $44 million in taxes to MLB.
Teoscar Hernandez also has $8.5 million deferred on his one-year, $23.5 million contract. His adjusted salary for the 2024 season is lowered to $15 million, but the Dodgers are paying $20.5 million due to the CBT.
With deferments considered, the Dodgers’ payroll isn’t astronomical. It’s only ninth in MLB despite all the talent.
Since Los Angeles had already been above the CBT line before making its offseason acquisitions, its luxury tax payroll is much higher. If Ohtani and Hernandez did not have deferred payments, the Dodgers would easily have the largest luxury tax payroll in MLB history.
Highest payrolls in MLB
Below is a list of the highest payrolls in MLB 2024, per Spotrac.
| Rank | Team | Payroll |
| 1 | New York Mets | $301.7 million |
| 2 | New York Yankees | $293.7 million |
| 3 | Houston Astros | $237.3 million |
| 4 | Philadelphia Phillies | $236.2 million |
| 5 | Atlanta Braves | $224.3 million |
| 6 | Toronto Blue Jays | $221.9 million |
| 7 | Texas Rangers | $220.3 million |
| 8 | Chicago Cubs | $216.3 million |
| 9 | Los Angeles Dodgers | $209.1 million |
| 10 | San Francisco Giants | $187.9 million |
Below is a list of the highest tax payrolls in MLB 2024, according to Spotrac.
| Rank | Team | Tax payroll | Payroll after CBT charges |
| 1 | New York Mets | $336.5 million | $413.3 million |
| 2 | Los Angeles Dodgers | $324.5 million | $388 million |
| 3 | New York Yankees | $309.9 million | $349.3 million |
| 4 | Atlanta Braves | $263.2 million | $268.5 million |
| 5 | Philadelphia Phillies | $257.9 million | $259.1 million |
