The financial implications of adding Chris Sale for the 2024 Atlanta Braves

Atlanta's perilously close to the third luxury tax threshold, which would trigger additional penalties, both financial and MLB draft-related

Lindsay Crosby | Dec 31, 2023

Part of the reason that the Atlanta Braves' acquisition of starting pitcher Chris Sale from the Boston Red Sox is so appealing is because of the modest financial cost owed to Sale - a $10.5M cash payroll for Atlanta, with $10M of that being deferred to 2039.

Sale's owed $27.5M for 2024, the final year of his contract extension signed with Boston in March of 2019. Boston is chipping in seventeen million dollars towards Sale's salary, meaning Atlanta's on the hook for the remaining $10.5M. And owing to the structure of the deferred salary, the Braves don't need to fund that $10M until July 1st of 2026, giving them time and flexibility in how they make that payment. Atlanta's actual cash outlay to Sale in 2024 could be as low as $500,000.

But there's a yet to be discussed aspect of Sale's contract that could potentially cause some discomfort for Atlanta - the luxury tax figure.

Per MLB's Collective Bargaining Agreement, any contract that is traded gets re-amortized for luxury tax purposes to only account for what the new team is required to pay. Adjusting for the future value of the deferred money, Sale's CBT hit to Atlanta for 2024 is reduced from $27.5M to "only" $24.1M, per Fangraphs.

But the addition of that $24.1M on Atlanta's CBT calculation brings them perilously close to the third tax threshold of $277M, with Fangraphs estimating Atlanta's tax payroll at $275,698,334 as of Sunday morning.

(Important to note this is an estimate - these figures aren't public, and we're all doing our best to figure this out without MLB's confirmation.)

Crossing the third of four tax thresholds brings increased penalties outside of the additional tax surcharge of 42.5% for all dollars spent over $277M, most notably with regards to the MLB Draft.

If Atlanta exceeds $277M in CBT payroll, they would see their highest draft pick moved back ten spots in the 2025 MLB Draft, a penalty that the New York Mets, San Diego Padres, and New York Yankees are all facing for the 2024 MLB Draft.

One of the big determining factors here will be arbitration awards. Atlanta's done a robust job at shedding most arbitration eligibles on the roster, with Nicky Lopez ($3.9M), Michael Soroka ($3M), Kyle Wright ($1.4M), and Nick Anderson ($1.6M) all estimated, per MLB Trade Rumors, to be receiving salaries out of line with both their contributions in 2023 and their expected contributions in 2024. Those arbitration hearings will all be done with their new clubs, as all four players were traded after the season.

But there's two outstanding arbitration decisions that could loom large for Atlanta's future draft position - Max Fried and AJ Minter. The lefties are projected to receive a combined $20.9M in arbitration, with the starter Fried being estimated at $14.4M and the reliever Minter being estimated at $6.5M.

(Huascar Ynoa is also a first time arbitration eligible and estimated to receive $1M, but it's close enough to the MLB minimum - $740k in 2024 - and he's not working with any on-field track record last season that it's reasonable to assume either Atlanta settles with him or he doesn't receive more than the projection.)

Atlanta has a mixed track record with Fried's hearings, having both won and lost in recent seasons. Minter has never had an arbitration hearing with the Braves, having settled prior to the offer deadline in each of his previous three seasons.

Atlanta's a "file and trial" club, an organization that cuts off negotiations once the arbitration tender deadline of January 12th come and figures have been exchanged, preferring to go to the hearing. It'll be interesting over the next two weeks to see if Atlanta can get a deal done with either Fried or Minter, and what those figures come in at for the 2024 season.

It could impact the team two seasons from now.