Dodgers agree to $136.5M contract extension with recently acquired ace to make blockbuster trade official

The Dodgers and Rays finalized the four-player trade that will sent right-hander Tyler Glasnow, outfielder Manuel Margot and $4M in cash considerations to Los Angeles in exchange for right-hander Ryan Pepiot and outfielder Jonny Deluca.  News of the trade first broke a few days ago, with the final hurdle being the Dodgers’ ability to sign Glasnow to a contract extension.  That deal has now also been completed, with L.A. announcing that Glasnow has agreed to a new long-term pact worth $136.5M.  Glasnow is represented by Wasserman.

As per the terms reported by ESPN’s Jeff Passan, the new contract will see Glasnow earn $110M in new money over the course of the 2025-28 seasons.  Glasnow was already slated to earn $25M in 2024 according to the terms of his prior contract with the Rays, and the new deal with L.A. breaks down as $90M in salary over the 2025-27 seasons, and then the Dodgers hold a $30M club option on Glasnow’s services for 2028.  If the team declines that option, Glasnow can exercise a $20M player option for 2028.  Since Passan’s numbers only add up to $135M rather than the Dodgers’ announced figure of $136.5M, that extra $1.5M has yet to be accounted for, possibly a signing bonus or a bit of extra guaranteed money on one of the years.

Unlike Shohei Ohtani’s $700M megadeal with the Dodgers from last week, Glasnow’s extension doesn’t contain any deferred money.  As such, it will be entirely portioned out onto the Dodgers’ luxury-tax bills based on a $27.3M average annual value over the next five seasons.  According to Roster Resource’s calculations, Los Angeles has an estimated luxury-tax number of roughly $253.7M for 202 — still under the $257M secondary CBT tier, thanks to all of Ohtani’s deferrals lowering his tax-related AAV to $46M per season.  Still, with a number of roster needs still be addressed, the Dodgers’ tax bill could certainly still approach or exceed the next penalty tier of $277M between now and Opening Day.

Glasnow has been seen as a possible trade candidate basically since the moment he inked his previous two-year, $30.35M extension with Tampa Bay during the 2022 season.  Signed when Glasnow was recovering from Tommy John surgery, the deal saw $25M of the salary backloaded into the 2024 season, making it likely that the cost-conscious Rays would try to unload the right-hander beforehand.

The 30-year-old’s availability dovetailed with the Dodgers’ need for pitching this winter, as the Los Angeles rotation is full of injury-related question marks (i.e. Walker Buehler, and possibly Dustin May at midseason), pitchers without much big league experience (Bobby Miller, Emmet Sheehan, Michael Grove, Gavin Stone), and a swingman in Ryan Yarbrough who may be best suited for bullpen duty.  Pepiot was another member of that young crop of arms, but he’ll now head to Tampa Bay as he enters his third season of MLB duty.

In moving Glasnow and Margot and factoring in the $4M in cash considerations, the Rays unloaded $33M worth of salary for two players making the major league minimum, in a move reminiscent of many budget-trimming, sell-high types of trades Tampa has become known for over the years.  The Rays’ success rate in these deals is almost a cliche by this point, and has been a key factor in the team’s ability to keep fielding contenders, even if Tampa Bay fans have become weary of the team’s continual roster churn and perpetually low-spending ways.  Pepiot figures to step right into the rotation spot left open by Glasnow, while Deluca may not be guaranteed a spot in the Opening Day outfield, but he’ll at least be part of the shuttle heading back and forth between Triple-A since the outfielder has two minor league option years remaining.

The right-handed hitting Margot figures to move into a part-time role in the Dodgers’ outfield picture, acting as a complement to the left-handed James Outman and Jason Heyward.  Margot has played primarily as a center fielder and right fielder, thus lining up well with Outman and Heyward’s projected positions.  Mookie Betts will be taking over as the Dodgers’ new everyday second baseman in 2024, so it’s safe to guess that L.A. will aim to add more outfield depth if Betts will be spending most of his time on the dirt.

Jack Azoulay-Haron of MLB Nerds and Bruce Kuntz of Dodgers Digest first reported the four principal players in the trade.  Jon Heyman of The New York Post first relayed that a Glasnow extension was a possibility. Jeff Passan of ESPN relayed that the deal was agreed to, contingent on the extension.  Marc Topkin of the Tampa Bay Times first relayed the Rays’ inclusion of the $4M in salary offset.