3 reasons why the Angels getting under the luxury tax threshold in 2023 is a big deal

After months of waiting and crossing fingers, we've come to find out that the Los Angeles Angels did indeed creep under the luxury tax after all, according to Ken Rosenthal of The Athletic (subscription required).

The Halos went over the luxury tax for just the second time in Arte Moreno's tenure after their active trade deadline but saw the team instantly collapse in the month of August. With the Angels all but out of postseason contention by the time the month was over, the team placed six key players on waivers for other teams to grab essentially for free. The only catch was they'd be responsible for the final month of their salaries.

The Angels did this for a couple of reasons. First, they gave those players the opportunity to join a team in contention. Second, and most importantly, it gave them a chance to get back under the luxury tax threshold. Nobody knew if their plan to do so had worked, but according to Rosenthal's sources, it did. As hard as it was to watch at the time, it wound up working in the Angels favor. This is big news for the Angels for many reasons.

1) Getting under the luxury tax gives the Angels better draft pick compensation if Shohei Ohtani leaves

The big fish this offseason is the biggest fish we've ever seen, Shohei Ohtani. Where Ohtani goes and how much money he'll make remains to be seen, but in all likelihood he will not remain in Anaheim.

If Ohtani left with the Angels over the luxury tax in 2023, the team would've received just a fourth round pick in return. This is one of the many ways the league tries to discourage certain owners from jumping over the tax.

However, if Ohtani leaves now that the Angels are under the tax, instead of a fourth round pick they'd be receiving a pick in the second round. They'd be picking somewhere in the 70s instead of the 140s which, of course, gives them a much better chance at picking a player who will make an impact.

The Angels need as many solid prospects as they can get. Obviously their player development is subpar when compared to other teams out there, but they'd still have a much greater chance at drafting someone good in the second round compared to the fourth.

2) With the Angels under the luxury tax, they can now go over it in 2024 with less severe penalties

With the Angels not going over the tax in 2023, they now have more freedom to do so in 2024 with lesser penalties.

Teams that go over the tax for the first time are charged 20 percent on every dollar spent over the tax. For those who go over for the second time, that number jumps to 30 percent. This might not be a big deal for owners who are willing to go all out like Steve Cohen, but for the frugal Arte Moreno, this certainly matters.

Moreno might not have been willing to go over the tax had he done so in 2023, but this makes it at least a bit more likely that the Angels will do so in 2024.

Right now, the Angels luxury tax payroll sits at around $161 million according to Spotrac which is much lower than the $237 million CBT threshold. They have the wiggle room now, but if they were to sign Ohtani they'd be a whole lot closer without room to operate. Perhaps the fact that they didn't go over the tax in 2023 will make it more likely for Arte to bring the Angels over the tax at least in the event that Ohtani returns (should be either way, though). The Angels can now sign Ohtani and another high-priced free agent and not worry about the tax nearly as much.