Why Dodgers are spending $44.3 million on Edwin Diaz in 2026

Matt Sullivan

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Why Dodgers are spending $44.3 million on Edwin Diaz in 2026 image

The Los Angeles Dodgers signed former New York Mets closer Edwin Diaz to a three-year free agent contract worth a total of $63.3 million.

On a per-year basis, Diaz's deal pays him $21.1 million, which is a very expensive contract for any player, let alone a closer. But that number doesn't tell the whole story for the Dodgers.

As Will Sammon and Ken Rosenthal of The Athletic shared, the Dodgers aren't actually paying $21.1 million on Diaz in 2026. Instead, the Dodgers are actually on the hook for $44.3 million.

While it's the Dodgers' fault for this increased deal, it's worth it.

Why Dodgers are spending $44.3 million on Edwin Diaz in 2026

"Their signing of free-agent closer Edwin Diaz," Rosenthal and Sammon write, "whose AAV after deferrals is $21.1 million, will cost them $44.3 million annually."

The reason for this increased contract is clear: the Dodgers have gone over two counts of the luxury tax, which has led to a penalty of 110 percent on any free agent contract they hand out.

Thanks to the Dodgers exceeding the base luxury tax threshold for at least three straight seasons, and also exceeding the threshold by at least $60 million, the Dodgers are on the hook for 110 percent of their free agent contracts.

That means Diaz's $21.1 million deal is now worth $44.3 million for 2026. If the Dodgers signed Kyle Tucker to a $40 million per-year deal, they would be on the hook for $84 million.

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It's a penalty meant to stop teams from spending without any consequences, though the Dodgers have not been afraid of soaring past the luxury tax recently.

This past season, their tax penalty was a record $169.4 million. But with a second straight World Series championship, it was more than worth it.

Los Angeles has been pushing its money into the future with deferrals, and clearly is willing to sacrifice future success to create an incredible team right now.

Diaz is a great closer, but he's not likely worth $44.3 million per season. But that number is only so high due to how great and expensive the rest of the roster is.

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