The Rangers spent lavishly in free agency following the opening of their new stadium, inking Corey Seager (10 years, $325MM), Marcus Semien (seven years, $175MM), Jacob deGrom (five years, $185MM) to mega contracts. They also took on notable salary in trades (Max Scherzer, Jordan Montgomery) and doled out more modest but nevertheless notable guarantees for Jon Gray (four years, $56MM), Nathan Eovaldi (two years, $34MM) and Andrew Heaney (two years, $28MM), among others. Generally speaking, they were rewarded. Texas won the 2023 World Series — the first in franchise history.
The sheer magnitude of those expenditures added up, however, resulting in the Rangers paying the luxury tax both in 2023 and 2024. Texas has spent aggressively at times in the past, but not to this extent. As they face the potential of a third straight season as a luxury tax payor, Evan Grant of the Dallas Morning News writes that one of owner Ray Davis’ top priorities this winter — perhaps even his No. 1 priority — is to duck under the $241MM luxury threshold in order to reset the team’s penalty level.
For those unfamiliar or simply in need of a refresher, the luxury tax is calculated based on the combined average annual salaries of the players on a team’s roster (plus player benefits and a mandatory payment into the league’s pre-arbitration bonus pool). The tax threshold climbs every season — at predetermined levels stipulated in the collective bargaining agreement — and carries escalating penalties for teams that cross the tax barrier in consecutive seasons.
First-time offenders pay a 20% tax on the first $20MM by which they exceed the threshold. They’re then taxed at a 32% rate for the next $20MM. If they cross into the third tier of penalty, that results in a 62.5% tax on the next $20MM and sees the team’s top pick in the following year’s draft dropped by 10 spots. Exceeding the tax threshold by more than $60MM results in being taxed at 80% or any dollars spent thereafter.
That’s just for first-time offenders, however. Each of those penalty levels increases by at least 10% for a team that crosses the tax line in a second season. For a club crossing the tax threshold in a third straight year, the penalties become more burdensome: 50% for the first $20MM, 62% for the next $20MM, 95% for the next $20MM (plus the same draft pick penalty) and 110% for any dollars thereafter. That’s the set of potential penalties the Rangers would be facing if they cross the tax line again in 2025.
To this point, the Rangers’ penalties they’ve paid have been light, relatively speaking. They paid just $1.8MM for their first year of penalty in 2023. This year’s total has not yet been determined, but RosterResource estimates they were a bit more than $13MM north of 2024’s first-tier threshold of $237MM. At a 30% tax hit as a second-time payor, they’d be looking at roughly $4MM in penalties based on that number.
In theory, the 50% tax isn’t all that daunting, so long as the club only modestly exceeds the threshold once again. But the Rangers have quite a bit of work to do this winter, with as many as 10 players reaching free agency — pending option decisions on Nathan Eovaldi ($20MM player option), David Robertson ($7MM mutual option) and Andrew Chafin ($6.5MM club option). Eovaldi is all but certain to decline his option, as he can command something close to (perhaps even above) that same salary on a multi-year deal. Robertson will turn down his end of that mutual option after a strong season. Chafin’s is a borderline call, but if Texas wants to be conscious about its spending levels, that will probably be bought out for $500K.
At present, RosterResource projects nearly $189MM of luxury commitments already in place for the 2025 season — $52MM shy of next year’s $241MM threshold. That ostensibly leaves a fair bit of wiggle room — at least until considering the fact that the Rangers are losing three starters (Eovaldi, Scherzer, Heaney), their three top relievers (Robertson, Kirby Yates, Jose Leclerc) and several role players. They’ll not only need to remake a significant portion of the pitching staff but also look for ways to augment an offense that was among the game’s best in ’23 before growing stagnant in ’24.
Young has already called re-signing Eovaldi and/or Heaney “a priority” this offseason. Eovaldi, in particular, would eat up a significant portion of the funds available to the club this offseason. In a separate mailbag column, Grant suggests that if another team were interested in taking on the remaining year and $13MM of Jon Gray’s contract, the Rangers would pursue such an opportunity and could conceivably reallocate some of those funds to a reunion with Eovaldi.
Gray has performed reasonably well since signing in Texas but has been injured each season and watched his strikeout rate drop in consecutive years. The 32-year-old righty (33 next month) made only 19 starts this season and pitched to a serviceable 4.47 ERA with a 19.6% strikeout rate, 6.4% walk rate and 40.1% ground-ball rate. In three seasons with Texas, the hard-throwing former No. 3 overall pick carries a 4.16 ERA in 387 1/3 innings. His contract is hardly an albatross, but there also isn’t much (if any) surplus value on the deal.
Speculatively speaking, the Rangers could look to free up money in other ways if they feel crunched. Righty Dane Dunning’s projected $4.4MM salary (via MLBTR contributor Matt Swartz) makes him a potential non-tender or trade candidate after a rough season. Leody Taveras ($4.3MM projection) also had a tough year and could be moved with younger outfielders Wyatt Langford and Evan Carter both in the majors now (and hopefully healthier in 2025). Nathaniel Lowe’s $10.7MM projection isn’t unreasonable, but Texas could hypothetically move him and turn first base over to a prospect like Justin Foscue or Dustin Harris (or a cheaper first base option in free agency, such as Carlos Santana). It’d be hard to sell low on Adolis Garcia coming off a down season, and Grant suggests such a scenario isn’t likely.
Any of those trades would only open further holes, though the Rangers have the type of MLB-ready young players (Langford, Carter, Foscue, Harris) to try to address them internally. They also have some young arms on which they could lean in the rotation — Kumar Rocker, Jack Leiter — but Leiter struggled in 2024 and Rocker will be on an innings limit in 2025 as he continues working back from Tommy John surgery. The need in the bullpen is arguably more acute, and the in-house options aren’t exactly plentiful.
It’ll be a challenging offseason for president of baseball operations Chris Young. The Rangers should have some money to spend, but the number of holes are as daunting as they are surprising for a team that’s just 12 months removed from hoisting a World Series trophy.
Texas Outlaw
I see a rough year ahead for the Rangers. They need many young pitchers to step up. Best case is they get hot and sneak into the wild card… but I see it as a re-tooling year.
NYCityRiddler
Oh my goodness, $4M in penalties! How in the world will they ever be able to come up with that kind of money? Sit down, shut up & pay the man! I guess everything ain’t bigger in TX. Ahahahaha!
TerryTurnbuckle
You knew it wouldn’t last.
drprofsps
This fan is crying. I agree we need a TV deal ASAP. But we cannot let those cheating losers in Houston beat us again!!! Go Rangers!!!
LordD99
I think the Astros are heading towards a rebuild.. Maybe not a full rebuild, but they have issues.
solaris602
They still have a hole at 1B, Bregman is a free agent, and Tucker enters his walk year. Addressing all 3 of those issues could be very expensive. Verlander is cooked, and everyone else is a year older. They’re still the favorites to win the West, but tomorrow isn’t nearly as bright as it once was.
getrealgone2
They’re a flash in the pan.
Paleobros
More like the Texas Get-Out-of-the-Luxury-Tax Rangers amirite
Acoss1331
At least they got a championship out of their big expenditures. I would take that every day of the week.
SewaldSwansonSwoon
They were never for real in the first place. They are the epitome of the “got hot at the right time” fluke.
jhonny
They had 6 all stars in 2023, and 2 top 3 MVP finalists, and a legendary Manager. Not a fluke. They were a very strong team in 23.
fred-3
SewaldSwansonSwoon is right. The MLB postseason doesn’t determine who is the best team is in the given year. It’s about who gets hot at the right time.
Texas was a good team, but not a great one. They wouldn’t even have made the playoffs in most of the old postseason formats.
jhonny
They had the second best run differential in the American League, And they were hurt by key injuries down the stretch. They should have won the division
fred-3
Either way, both could be true. Texas were good enough to win the WS and they got hot at the right time. Just like how the Dodgers and Yankees are good this season and have gotten hot when it matters.
dudeman40
Getting hot at the right time wins championships!!
Please stop; go back to reading the Houston Post
thickiedon
I miss the Post!!
Clofreesz
That’s a thing that I’ve heard way too much from other fans.
JoeBrady
Unlike some of the Ranger fans in here, I’m betting on the over.
They had 5 good performers on offense last year with Semien, Seager,Wyatt, Smith and Lowe, with four more guys that could do well in Jung, Aroldis, Carter, and Taveras.
The rotation should be Gray, Bradford, Leiter, Rocker, Mahle and maybe Eovaldi. It’s a little shaky but with upside.
I wouldn’t bet on Yates and Robertson repeating their seasons, but the Rangers are not without talent.
Blackpink in the area
Yates and Robertson are free agents that’s the problem. They need a rather large bullpen makeover.
LordD99
I’m expecting Wyatt Langford and Evan Carter to make significant impacts next year, and Jung should also take a step forward. Growth from their young hitters will help drive them. Jacob deGrom will likely still be deGrom. His velocity was back.
I view the Rangers similar to the Padres last year. The Pads underperformed in 2023, so even while losing Soto, I saw an improvement coming. To me the Rangers underperformed this year, so they’re an early candidate to step forward if they patch a few holes. Concerns might be Semien beginning to age out, and Garcia’s strike-zone judgement issues accelerating.
Blackpink in the area
Some teams have a window to win and the Rangers are one of those teams. They gave Seager and Semien contracts that are all but guaranteed to go wrong down the road so the time to win is now. Of course they did win in 2023 so the pressure is off but they still gotta be in win now mode.
LordD99
Agreed. It’s why they can’t be passive this offseason.
darkknight920
Does anyone know which teams are over the threshold?I would guess the Dodgers and Yankees, but that may be it. I think the Madres and Mets are under, for now.
YankeesBleacherCreature
Sportstrac has only the Yankees and Phillies over.
The A’s have $0 committed for ’25 and can non-tender their entire roster and roll out 26 guys earning the league min.
JoeBrady
You can’t always tell since some of the analyses are based on players opting in or out, and arb-eligile players getting an offer or non-tendered. But right now, the over teams are (per Cots):
Phillies #1
LAD
SDP
And the Houston & NYY are a rounding error under the cap.
Champ world champion Texas Rangers
Paul Goldschmidt Texas Ranger that is a Bochy and CY move.
Blackpink in the area
I think Goldschmidts best years are behind him. His biggest strength at this point is his defense and I believe Lowe is a good defender. How about Willson Contreras? He’s a better hitter as of today.
RodBecksBurnerAccount
Nah. Nate Lowe had a better year than Goldy. Goldy would have to take a huge pay cut to make it make sense.
Blackpink in the area
Mock trade
Rangers get
Willson Contreras
Ryan Helsley
Jojo Romero
15 million or do
Cardinals get
Sebastian Walcott
Ezekiel Duran
Rangers get a closer and a set-up guy plus a middle of the order bat who can backup catcher and help at 1b or DH. Cardinals get a stud prospect to eventually take over 3b and a filler piece in Duran.
DonOsbourne
I would rather have Leody Taveras than Ezekiel Duran. Cards need a RH hitting complement in CF and the Rangers would probably be happy to move his salary.
Blackpink in the area
Yeah I thought so too but I looked up Taveras’ platoon splits and his OPS is 70 points higher for his career against righties. I agree a right hitting center fielder is a need for sure.
jhonny
I’d be really surprised if the Rangers trade Walcott. He’s one of few legit position player prospects they have. I think they’d just try to trade for Helsley, and be less interested in Contreras.
I think they’d try to go more bargain-bin to find some mediocre veteran hitter who can maybe hit homers still.
Blackpink in the area
The Rangers have Seager and Jung what do they need Walcott for?
They are trying to ball on a budget. Their pen is a mess. Getting Helsley is really the key to the deal here.
Clofreesz
Walcott can be moved to second in case if Semien ages poorly. He can also get some reps at DH.
Blackpink in the area
Walcott is projected to be ready in 2026. They gotta hope Semien is still good at that point. And moving Walcott to 2b makes him less valuable.
jhonny
Walcott is only 18, so he won’t be in the majors till 2026 at the earliest. Seager will be getting older, and maybe move to first. Jung has had a lot of injury issues generally. Also there has been speculation that Walcott will be the Right Fielder of the future.
I’m just under the impression that Walcott is valued really highly by the Rangers.
I agree that the bullpen is a total mess, and will need to be addressed in part, via trade. I would love Helsley on the Rangers.
Champ world champion Texas Rangers
Like Paul
Blackpink in the area
Of course Walcott is valued highly. So is Ryan Helsley. Again teams have to pick a lane and the Rangers gotta go for it. The best way to stay in contention without spending like a madman is trading prospects.
I also think they should trade Leiter. Rebuilding teams would line up for him. Keep Rocker trade Leiter.
Clofreesz
Duran is not going to be enough. Give them Foscue and we’ll have something interesting.
Blackpink in the area
Foscue is worth about the same as Duran i think either one would be OK.
Clofreesz
The Rangers should sign a catcher (until Heim gets his groove back), a good righty bat, a utility man, some No 3./4s., and a solid closer. I expect a return to the playoffs in 2025, but I’m not getting my hopes up for another ring.
Blackpink in the area
Willson Contreras imo makes a ton of sense for them. The Rangers need catching help, a big bat in the middle of the lineup, a backup catcher and a backup 1b too and he can be all of that.
Captainmike1
Money without talented management is a waste
Clearly the rangers are yet another example that money wisely spent is always the best move
ckc12537
Jose Urquidy for Jon Gray?
Clofreesz
Heck no, for now.
TerryTurnbuckle
They shouldn’t have spent so much money on that aquarium looking stadium. Choctaw was perfectly fine. Typical of Dallas FortWorth mindset though. Build something gaudy like new money people do.
AlistairC
Bullpen arms are generally so fluky year-to-year outside a few studs it’s easy to talk oneself into a bunch of budget arms and minor-league-with-opt-out “prove it” guys could work, but the fluky part means more than one GM has been bitten hard by that choice. Of course so have GMs who spent lavishly to get hot arms. The only way to hedge somewhat is to have lots of potential options in minors and Rangers do not have that.
So here’s to hoping for one or two turnaround stories and maybe a hidden gem or minor leaguer who puts it altogether, but this drink is also raised for helping ease the pain if the long odds don’t pay off.
MPrck
Hilarious. Degrom. 18-8 for 165 million dollars in the last 5 years, baseball salaries are just too high. I pray Detroit doesn’t spend a fortune this year. It’s insane.