The Washington Nationals payroll exceeds $175 million and they already are over the luxury tax. Financial flexibility is an issue going forward.
Without most of you realizing it, the Washington Nationals payroll is already at a record pre-season high.
Last season, the Nats ended with the fifth-highest obligation at $202.2 million after starting the year with $164.3 million payroll. Because of how certain contracts are structured, Washington is over the competitive balance tax by $4 million.
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Major League Baseball looks at the average annual value of a contract and not the actual dollars spent in a year. With this year’s level at $197 million, Washington’s $201.5 million is subject to tax. Only the Boston Red Sox join them over the limit.
Although the Nats ownership carries deep pockets, the Lerner family is under no obligation to spend beyond their means. Yes, the team carries a special relationship with super-agent Scott Boras. No, they need not sign every client of his.
Already a crafty crew designing contracts with deferred monies, Washington starts 2018 at the top end of their budget. For every extra million they spend, add another $300k in tax. That adds up quick. Cots Baseball Contracts estimates Washington will pay an extra $1.2 million already.
Why are they over again?
Max Scherzer and Stephen Strasburg get huge raises in 2019. Scherzer will get $42 million while Strasburg figures around $38 million. However, for tax purposes, their contracts count for $28.7 million for Scherzer and $25 million for Strasburg. Those tax numbers are the same every year. Those figures are this year’s tax numbers too.
With escalator clauses for how many years a team can exceed the tax, and how far they go over, Washington finds itself in a position where they are hard pressed to expand payroll further. They went over last year. If they hit the limit in 2019, the tax rate hits 50 percent.
Oh, Bryce Harper is a potential free agent.
Although Arrieta is a nice daydream, it is not clear how the Nats can afford him. MLB’s salary cap, and a luxury tax is a cap, is soft. Washington exceeds it. But, it comes with teeth. The longer it is flouted, the sharper the bite.
Washington’s October problems are not on ownership refusing to spend money. The roster can win a championship on paper. How to turn potential into reality is the bigger question.