Angels Remain Narrowly Above Luxury Tax Threshold

The Angels’ competitive balance tax number still sits narrowly above the $233MM base threshold, reports Jeff Fletcher of the Orange County Register. Los Angeles attempted to shed enough salary via waivers this week to limbo below that number but was unsuccessful.

On Tuesday, the Angels placed six players on waivers. Five of them — Lucas Giolito, Hunter Renfroe, Dominic Leone, Reynaldo López and Matt Moore — were claimed, with the other teams absorbing their salaries. Outfielder Randal Grichuk cleared waivers, however, as no team wanted to take what remained of the $1.7MM that the Halos had assumed on Grichuk’s contract when acquiring him from Colorado.

That’ll apparently be the difference, as Fletcher adds that the Halos would’ve indeed gotten under the threshold had Grichuk been claimed. The Angels could theoretically still try to cut some spending by placing someone else on waivers. Players claimed after August 31 wouldn’t be eligible for postseason work with an acquiring team, but the Halos have more controllable players making above-minimum salaries (e.g. Luis Rengifo or Carlos Estévez) who’d likely be claimed with an eye towards next season if the Angels simply wanted to clear them off the books.

It doesn’t seem that’s the plan though. Minasian told Fletcher he doesn’t believe that paying the CBT this year will affect the club’s budget during the upcoming offseason. The team will barely pay any extra money this year, as they’ll only be taxed at a 20% rate on the minimal amount on which they surpassed the threshold. Nevertheless, it’ll have an impact in a few ways.

Most notably, it subjects the organization to higher fees in the event they exceed the threshold in consecutive seasons. Teams that pay the tax for a second straight year are charged a 30% fee (higher than the 20% standard rate) on their first $20MM of overages the following season. The fees continue to escalate for clubs that exceed the tax for a third straight year and/or surpass the threshold by upwards of $20MM.

CBT payors also receive reduced compensation for losing qualified free agents. The Angels are going to make a qualifying offer to Shohei Ohtani, which he’ll decline. If he subsequently signs elsewhere, the Halos would receive a compensation pick after the fourth round in the 2024 draft. That’s typically around the 140th overall selection. Had the Angels gotten under the threshold, the compensatory pick would’ve landed between Competitive Balance Round B and the third round — approximately 70th overall.

The Angels will hope that latter point is irrelevant because they re-sign Ohtani. (None of their other impending free agents are candidates for the QO.) That won’t be known until the offseason, though an Ohtani deal would likely mean they’re nearing luxury tax territory yet again. Roster Resource projects the Halos’ 2024 CBT number around $131MM. That’s well shy of next season’s $237MM base threshold, but it doesn’t include arbitration estimates. Ohtani’s contract alone figures to tack on at least $40-45MM and could well pay north of $50MM per season. The Angels would obviously need to supplement the roster around Ohtani if they retain him, likely by adding infield depth, at least one starting pitcher and multiple bullpen arms.