As this offseason confirms, the way in which clubs spend their money has changed perceptibly over the last decade or so. Where it used to be commonplace for an organization to pay a player for what he had already done, teams have increasingly begun to compensate players for what they’re likely to do in the future. We see the emergence of this trend most clearly in long-term extensions for younger players, a development that has led to missing free-agent classes.
Of course, that doesn’t mean clubs have stopped signing free agents altogether or stopped exposing themselves to risk of any kind. Teams still need to address weaknesses, and one means to do that is by way of the open market. In some cases, the performances they expect fail to materialize. In some of those cases, teams decide they’re better off paying someone else to take care of the problem. This is how teams end up with dead money on their payroll.
Dead money is generally any money a team is paying out to a player who no longer appears on their 40-man roster. There are three types of dead money:
- Money paid to players who have been released. Those players are free to sign with other teams, but the team releasing the player still owes the money remaining on the contract.
- Money paid to other teams as compensation for players who have been traded. Generally, we see teams cover a portion of a contract to receive a better return in trade.
- Money paid to players who are still in the organization, but who have been removed from the 40-man roster. Any team could have claimed these players if they were willing to take on the contract, and the player probably could have elected fee agency, but then he would forfeit his right to the guaranteed money.
Last season, nearly $300 million of MLB payroll was of the deceased variety, a sum that was double the amount of the prior campaign. Over the past year, we’ve seen the contracts of Carl Crawford, Josh Hamilton, Jose Reyes, and Alex Rodriguez all come off the books. The result is a $100 million decrease in the amount of dead money from last year. The graph below shows the teams who are paying the most money this season to pay players not on their roster.

Boston takes the top spot this year thanks entirely to Rusney Castillo and Pablo Sandoval. The Los Angeles Dodgers’ dead money, meanwhile, is spread out over seven players. Because of their original trade with the Padres that removed Matt Kemp from their roster, they are actually paying an amount higher than his current salary after having reacquired him. And the Dodgers would actually place higher on this list if they had released Adrian Gonzalez instead of taking on Matt Kemp’s contract when their former first baseman was dealt to the Braves and then released. The team could also still increase its total if the front office decides Kemp is not a fit for the current roster.
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