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The Angels are holding themselves hostage with the luxury tax

As everyone keeps insisting on telling us, the Angels really need some starting pitching help. Yes, we know. We are fully aware of this need. It is the most obvious thing in the history of obvious things. Yet, for some reason, the Angels have yet to make a move or place a claim on a starting pitcher.

What? Do they think they are too good for Bartolo Colon and Scott Feldman?

Not too good, actually. It turns out that they might be too cheap.

OK, maybe “cheap” is a harsh term to use against a team with a $154 million payroll. But “cheap” incites a lot more fan fervor than the more appropriate term “fiscally responsible.”

As it turns out, the Angels reportedly are taking a pass on the likes of Colon not because he’s a bad pitcher or because he’s a fat steroid user, but because they don’t want to pay him $11 million in 2015. The same goes for Scott Feldman, only replace the fat jokes with “snail-like pace” jokes. Having either of those two players on their payroll would cause the Angels to either breach or come dangerously close to the luxury tax line in 2015. This is a line that Arte Moreno has supposedly vowed to never cross (even though he actually already paid it once in the 2004 season).

If that is really the case, Angels fans should be feeling a more than a little sullen right now. Not making a move this year will put a small dent in their chances to win the World Series. That stinks. It isn’t the worst part though. Truth be told, the Angels can get by in the regular season without acquiring a veteran, especially one that would probably be shifted to the bullpen once the playoffs start. The bigger concern is that Moreno’s luxury tax stance could but a huge dent in their chances of even competing for the World Series in 2015.

By my rough calculations, with the likely roster and projected raises and arbitration settlements factored in, the Angels’ tax number in 2015 could be as high as $182 million (or as low as $178 million, depending on how good my estimates are). That’s counting only current Angels who would be held over to next year’s roster. That gives them all of $7 million of tax room to work with to fill out the holes in their roster. Luckily, they won’t have many holes, but some additions will be needed.

For $7 million, the Angels aren’t going to be able to add a single impact player. They might not even be able to add two minor contributors. In other words, this current roster could very well be the exact same roster they roll with in 2015. Only it will be a year older and the last time I checked, their high-paid veterans weren’t exactly aging like fine wine.

That assumes that Moreno is actually going to stick to his luxury tax vow. Every time that we hear about Moreno’s tax-paying stance, it is couched by the statement that he might reconsider if they could make a move that would greatly improve their odds of winning a championship.

Aha!

Perhaps that is why they are balking at paying for Colon or Feldman. Neither of those two are going to “greatly improve” any odds in 2015. If the Halos are going to pay the tax, they are going to make sure they get their money’s worth. That means trying to go big after a stud pitcher like Max Scherzer, James Shields or Jon Lester. That’s a hopeful alternative, but it relies entirely on Moreno being willing to open his checkbook even further. There’s no guarantee that will happen.

If he does decide to remain a non-taxpayer, the Angels aren’t entirely without recourse. They could move a salary like that of Howie Kendrick. That would create just enough room for the Angels to pursue some lower tier free agents like Jason Hammel and Justin Masterson or trade targets like Mat Latos. Those are solid consolation prizes, but require a lot of machinations to make it happen.

Not that it is my money, but I fail to understand why the Angels are so afraid of the luxury tax. The penalty for going over the tax line is paying 17.5% of the amount they went over the tax threshold by. What that means is if a team goes over by $10 million, their penalty is $1.75 million. That’s not pocket change, but it isn’t worth crying over either. It’s basically the difference between having a quality veteran back-up catcher and having to rely on some unproven kid from your farm system.

To pay the tax for one year just isn’t that big of a deal, unless not paying the tax is seen as some sort of weird badge of honor. Some reports suggest that Moreno actually sees it that way, so I hope that helps him sleep at night when the Angels lose the Wild Card game after missing out on the AL West title by one game.

The luxury tax penalties don’t start getting punitive until a team exceed the threshold two years in a row. That should be much easier for the Angels to avoid once they actually have some real contracts come off the books after 2015. If they don’t, the penalty goes up and they might have to forfeit some of that precious revenue sharing money.

That’s an actually scary proposition. Getting dinged a million or two for one year isn’t, especially when the alternatives are hamstringing your ability to add talent and compete for a World Series.

I say damn the luxury tax consequences. Go get Bartolo Colon for this year and then go get Max Scherzer in the offseason, if you can. Suck it up and pay that tax penalty for one year. Go ahead and move Colon again in the offseason if you really want to, if only to clear the roster logjam and shave a little bit off the tax bill. With the aging roster of the Angels, their World Series window is only going to be open for so long, even with Mike Trout on board. Don’t go and prematurely slam the window shut on your own fingers just because it might marginally affect the team’s profit margins. I’m no economic whiz, but I’m going to guess that the financial windfall associated with winning a World Series will more than offset the luxury tax penalty.

Garrett Wilson

About Garrett Wilson

Garrett Wilson is the Supreme Overlord of Monkeywithahalo.com and editor at The Outside Corner. He's an Ivy League graduate, but not from one of the impressive ones. You shouldn't make him angry. You wouldn't like him when he is angry.

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