Payroll implications of the Toronto Blue Jays selling at the July trade deadline

As MLB’s July 30, 6 p.m. ET Trade Deadline looms — the last point during the season at which players can be traded from one club to another — the Toronto Blue Jays front office has an opportunity to start retooling their roster for the 2025 season and reset their luxury tax payroll to avoid further penalties this season.

As per MLB, “Prior to 2019, July 31 was referred to as the non-waiver Trade Deadline, and players could be traded after that date if they first cleared revocable trade waivers.” That old rule is how the Blue Jays found a way to trade former AL MVP Josh Donaldson to Cleveland for a player to be named later (PTBNL) on August 31, 2018.

As of 2019, there's only one Trade Deadline. Players may still be placed and claimed on outright waivers (see the Los Angeles Angels’ waiver moves last year), but trades will no longer be permitted after that date. Hence the timeline tightens should a front office hope to move players for something in return.

Chance to get the payroll back under the $237M luxury tax threshold

With seven pending free agents after this season, and with the team dead last in the AL East, the Blue Jays have some roster management to take care of. They also have an opportunity at the Trade Deadline to get their competitive balance tax (CBT) payroll number back under MLB’s $237M luxury tax threshold this season.

Given it sounds like they want to retool the 26-man roster to take one final shot at a World Series in 2025, with Vladimir Guerrero Jr., Bo Bichette and Chris Bassitt before those three core players all become free agents, it’s fair to say that the most likely trade candidates this month are Yusei Kikuchi, Danny Jansen, Yimi García, Trevor Richards, Kevin Kiermaier and Justin Turner.

Those six players are being paid a combined $48.35M by Toronto this season, and can all walk as free agents in November. Assuming the front office is able to trade these rental players to contending teams without any cash considerations included, they would remove those salaries from the books for the final two months of the regular season and potentially save as much as one third of that total, or ~$16M.

Why that amount becomes important is because the current Blue Jays’ CBT payroll — after trading Cavan Biggio and designating Daniel Vogelbach and Tim Mayza for assignment — stands at $240.5M, or just above this year’s luxury tax threshold of $237M. Removing ~$16M more in salary gets the Jays under $225M.

If the Blue Jays are able to get that CBT payroll number under $237M at the Trade Deadline, it resets their luxury tax penalty to zero. As per MLB, “A team’s Competitive Balance Tax figure is determined using the average annual value of each player's contract on the 40-man roster, plus any additional player benefits. Every team's final CBT figure is calculated at the end of each season.”

Practically, that means that they wouldn’t pay a luxury tax again for second consecutive season after paying $5.5M in luxury penalties on their 2023 payroll for a third place finish in the AL East. If they remain above the $237M tax threshold at the end of this season, they would pay a 30% luxury tax on the amount above that threshold given a second consecutive season above the limit. The current $240.5M CBT payroll would trigger an estimated $1.06M luxury tax (30% of the $3.5M overage).

If the club dips below the luxury tax threshold for a season, the penalty level is reset. That means the Blue Jays would only pay a 20% tax on any overages above the 2025 luxury tax threshold, which rises to $241M.

That also means that, should the Blue Jays hold on to Kikuchi for example, and make him a qualifying offer (QO) after the season based on the mean salary number of MLB’s 125 highest-paid players in 2024, they would be eligible for draft pick compensation in next year’s amateur draft after Competitive Balance Round B if Kikuchi were to reject the offer.

It also means that, should the Blue Jays sign another player who hypothetically rejects a QO after this season, a list which could potentially include Juan Soto, Corbin Burnes, Alex Bregman, Pete Alonso, Willy Adames and Teoscar Hernández, they would only lose their 2nd-highest selection in the 2025 draft, as well as $500,000 from their international bonus pool for the upcoming signing period instead of their 2nd- and 5th-highest draft picks, as well as $1M from their international bonus pool.

Which matters if you’re a front office trying to both retool your 26-man MLB roster, and improve your poorly ranked farm system. And from a payroll perspective, the Blue Jays would have much more capacity to go after free agents and extend their existing core by trading away those salaries.

With the luxury tax threshold rising to $241M next year, and only $130M committed in contracts prior to adding back in the salaries of players who will still be arbitration eligible in 2025 (including Guerrero, Jordan Romano, Daulton Varsho, Alejandro Kirk and Davis Schneider, who are being paid a combined $37M in 2024 but will be due raises for next season), the front office has potentially ~$60M or more in payroll capacity to work before triggering luxury taxes in 2025.

Given ownership has already shown a willingness to pay luxury taxes on their payroll last year, trading away their pending free agents from the current flawed and mediocre team by July 30 is just smart asset and roster management.

Clearly, the Seattle Mariners are already in the market for bullpen depth and a bat. They might take Turner (wRC+ of 113), too, if the Jays can package him with García, who has 37 strikeouts in only 28 innings, to go along with a 2.57 ERA (ERA+ of 156) and 0.79 WHIP?

Kiermaier carries value as a defensive player. His DRS this year in 425 innings in CF is +7. The Dodgers - as a team- have a DRS in CF of -8 in 763 innings. If GM Ross Atkins and his front office can’t figure out a trade with the Dodgers for Kiermaier, they aren’t doing their job very well.

Meanwhile, Kikuchi and his +1.8 fWAR is this year’s version of J.A. Happ, who was traded to the Yankees at the July 2018 Trade Deadline, while 29-year-old Danny Jansen has a .715 OPS in only 163 at-bats, along with a wRC+ of 105, i.e. he’s 5% better at creating runs than average. Trevor Richards has a 2.49 ERA in 43.1 innings (ERA+ of 160), and has only allowed 20 hits for a WHIP of 0.83. These players all carry trade value.

If the Blue Jays brain trust truly are looking to retool for another shot at a World Series in 2025, trading these rental players above would reset their luxury tax penalty, bring back some prospects in return for players who can just leave as free agents after the season, and focus the front office on improving this team for next year. Win, win, win.