In one of the most brazenly cheap and anti-competitive moves in recent baseball history, the Los Angeles Angels earlier this week placed six rental players -- Lucas Giolito, Randal Grichuk, Dominic Leone, Reynaldo López, Matt Moore, Hunter Renfroe -- on waivers in order to dump their salaries. Giolito, López, and Moore went to the Cleveland Guardians, Leone went to the Seattle Mariners, and Renfroe went to the Cincinnati Reds. Grichuk was not claimed.
Shedding those five players cleared approximately $5.9 million in the salary the rest of the season, though the real number is a bit less than that because those players had to be replaced on the roster. On Friday, Angels GM Perry Minasian acknowledged the Angels came close to ducking under the $233 million competitive balance tax (CBT) threshold with their waiver activity, but ultimately failed to do so.
"We'll get to that point when we start building the '24 roster," Minasian told the Orange Country Register when asked how failing to get under the CBT threshold will affect the team moving forward. "But from the conversation I've had, there will be no impact."
Minasian did not reveal how close the Angels came to getting under the threshold but the Orange Country Register reports it is less than the $1.7 million they would have shed had Grichuk been claimed on waivers. Cot's Baseball Contracts estimates the team's CBT payroll at $236.1 million while FanGraphs estimates it at $231.9 million, though those are just estimates using publicly available data, which isn't always complete.
There are valid baseball reasons to get under the CBT threshold, but, according to The Athletic, the waiver activity was financially motivated. Owner Arte Moreno was simply unwilling to pay the tax once his team fell out of the postseason race. From The Athletic:
In August, when the Angels made a furious all-in push to acquire the requisite talent to make the playoffs for the first time in nine seasons, Angels owner Arte Moreno exceeded the $233 million luxury tax threshold. But when the team endured an 8-19 month, Moreno was no longer willing to incur the penalty.
Moreno purchased the Angels from The Walt Disney Company for $183.5 million in 2003 and would surely be able to sell the team for north of $2 billion now. Only once during Moreno's ownership has the club exceeded the CBT threshold. In 2004, the Angels ran a CBT payroll just over the $120.5 million threshold and paid $937,000 in tax. The club has not exceeded the CBT threshold since.
The Angels will have to pay a 20% tax on every dollar over the $233 million CBT threshold. At the reported $1.7 million, that's a mere $340,000. A lot of real money, to be sure, but a drop in the bucket to an MLB franchise. The Angels will be taxed 30% on their overage next season as a repeat offender should they go over the threshold, which seems unlikely given Moreno's history.
As for the baseball reasons to avoid going over the CBT threshold, there are a few:
Worse draft pick compensation for losing a qualified free agent. This is especially notable because Shohei Ohtani is about to become a free agent. Because they're over the CBT threshold, the Angels will only receive a compensation draft pick after the fourth round should he reject their qualifying offer and sign elsewhere. They would have received a compensation draft pick after the second round otherwise.
Tougher penalties for signing a qualified free agent. Moreno rarely approves a payroll over the CBT threshold, sure, but to his credit, he does spend big on free agents (Albert Pujols, Anthony Rendon, etc.). He doesn't always spend wisely, but he does spend. If the Angels sign a qualified free agent this offseason, they will have to forfeit their second- and fifth-highest draft picks, as well as $1 million in international bonus money. Had they gotten under the CBT threshold, they would have surrendered their second-highest pick and $500,000 in international bonus money instead.
This period of Angels baseball has been marked by failure. Failure to get to the postseason with Ohtani -- they haven't even posted a winning record with Ohtani, and at 64-71, it seems unlikely they will do so this year -- failure to make the necessary impact at this year's trade deadline, and now failure to get under the CBT threshold after crashing out of the postseason race. The Angels now have a much, much worse long-term outlook than they did even five weeks ago.
There are baseball reasons to dump salary and get under the CBT threshold, sure, but Moreno's history suggests the recent waiver activity was motivated purely by money. He has put a cap on spending throughout his time as owner despite being a large market team with the resources to add more around Ohtani and Mike Trout. The Angels should be commended for going for it at the trade deadline, but that goodwill is gone after the blatant abuse of the waiver system to cut costs.
