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Report: Dave Dombrowski can spend up to, but not exceed luxury tax threshold


Dave Dombrowski is the Phillies president of baseball operations. (Arturo Pardavila III)

President of baseball operations Dave Dombrowski will have one of the larger budgets in the sport as he attempts to build a playoff-caliber team, but there does appear to be a limit on how much he can spend in constructing the Philadelphia Phillies roster.

Matt Gelb of The Athletic wrote Sunday that while Dombrowski will have more room to spend than he did last season, he doesn’t currently have permission to exceed the luxury tax threshold:

Dombrowski would not elaborate on his revised budget, but sources indicated ownership had authorized Dombrowski to spend as he saw fit — so long as he did not exceed a $230 million budget. That did not mean the Phillies would spend right to that number, but it was permitted.

With the addition of veteran relievers Jeurys Familia and Brad Hand, Phillies Nation‘s Destiny Lugardo estimates that the Phillies currently have just over $33 million in space below the luxury tax threshold.

That space will decrease once we know the exact details of the deal that the Phillies signed to bring outfielder Odúbel Herrera back.

Seemingly, the Phillies still need to add a starting left fielder, along with more depth in their starting rotation and on the bench.

As is, the Phillies are currently projected to have the fourth largest payroll by FanGraphs. $230 million — or just shy of that — would give the Phillies the third highest payroll in baseball, behind just the New York Mets and Los Angeles Dodgers. In a vacuum, spending that much money, even if you don’t exceed the luxury tax threshold, should be enough to be a pretty certain playoff team in the new 12-team format, if not a World Series contender.

But the Phillies are a team built to win right now, who have gone 110-112 over the past two seasons. Not only are they trying to return to the postseason for the first time since 2011, but make a run when they get there. The roster that fell short in 2021 frankly wasn’t that close to being able to do that. And without a consistent pipeline of young talent coming to the majors, the best way to become that overnight is to spend.

The Mets are utilizing that strategy, having added Eduardo Escobar, Starling Marte, Mark Canha, Max Scherzer, Chris Bassitt and Adam Ottavino this offseason. Taijuan Walker, an All-Star a season ago, is projected to be their No. 4 starter in 2022. On paper, the Mets are loaded, and the division-rival Atlanta Braves are the defending World Series Champions.

A fourth luxury tax threshold was introduced as part of the new collective bargaining agreement, the so-called Steve Cohen tax, named after the aggressive owner of the Mets. Cohen acknowledged over the weekend that the Mets will “probably” spend more than $290 million, which would trigger an 80% tax on all money over that amount.

If the Phillies spent between $230 million and $249 million, it would trigger a 20% tax on all money spent over $230 million. We’ll see if they move in that direction, be it before or during the 2022 season. That’s probably their best path to competing with the Mets and other teams that figure to be National League heavyweights.

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