An Estimate of Every Team’s Payroll Room
Scott Boras’s life is currently populated by buses to Playoffville, a mythical creature named J.D. Kong, and squirrels in trees with nuts. It’s time, in other words, for teams to get out the checkbook and start paying his clients.
How much those teams can spend will become more clear over the coming weeks. But we can estimate now. By looking at how much every team has on the books currently, it’s possible to identify those teams in the best position to make major moves, either by taking on a contract like Giancarlo Stanton’s or signing a big-name free agent such as Jake Arrieta, Yu Darvish, Eric Hosmer, or J.D. Martinez.
Last winter, there was considerable uncertainty with regard to spending, as the new CBA hadn’t yet been formalized. The players and the owners eventually reached an agreement, and while the implications of that agreement have yet to be fully fleshed out, we have a greater understanding of its effects than we did last year at this time. Teams know how much they can expect to pay and receive in revenue sharing. Big-market teams, meanwhile, have a much better idea of how much they might have to pay in taxes with competitive-balance tax amounts and penalties all spelled out. That could lead to a little more spending this winter than we saw last offseason, but teams could also be saving up for next year’s superior free-agent class, trying to avoid some tax penalties, or simply rebuilding.
To start, let’s take a look at current payroll commitments as teams start to spend more for next season. The chart below depicts a combination of guaranteed salaries and estimated arbitration salaries for each club — plus whatever extra payroll would be required at the league minimum to create a full roster. Data care of Cot’s Contracts.
The figures we see here aren’t all that surprising. The big-money Dodgers, Giants, Nationals, Red Sox, and Yankees lead the way. Way down at the other end we find the the lower-revenue Athletics, Brewers, Padres, and Rays along with the rebuilding Chicago White Sox and the Philadelphia Phillies, the latter having committed less than one-fifth the amount of the Los Angeles Dodgers.
To provide some context to these numbers, we can use the 2017 Opening Day payroll figures in a couple of different ways. First, here’s a scatter plot of 2017 Opening Day payrolls compared to current commitments. As you can see, payroll from one season carries over pretty well to the following year.
So now let’s look for the anomalies. Below is the above information with team-by-team specifics.
For the most part, the 2018 numbers are lower than the 2017 figures. That’s to be expected, of course, because teams haven’t yet spent any money in free agency. Some of the teams with the biggest gaps include the Dodgers, Phillies, Rangers, Tigers, and Yankees. Not all those teams will necessarily return to the same level of spending next season, though they have certainly shown the capacity to add more payroll than they currently have committed to the 2018 roster.
At the other end, there are some teams with more current commitments than they possessed on Opening Day of this past season. The group includes your World Champion Houston Astros, the payroll-cutting Miami Marlins, the Diamondbacks, and Rays. Just like with the underspenders, we can’t necessarily assume that they’re planning to get close to their 2017 payroll figures.
To clean up the graph above a bit, let’s go ahead and assume that all teams are going to increase payroll by 5%, as that is generally how MLB has operated in the past. Then, let’s take that figure and subtract 2018 commitments. That should give us a rough idea on how much each team has to spend. We can then address the major differences and see whether they’re likely to stick with that number.
In theory, the Tigers have a ton of money to spend. In practice, we know that they’ve begun their rebuilding process and might cut payroll even further if they can move Ian Kinsler or perhaps find a taker for Jordan Zimmermann. The Phillies are in a really interesting position, and there’s a reason why there are rumors about their pursuit of Giancarlo Stanton. They could add Stanton’s salary, add another $100 million of free agents, and immediately contend this season. That said, they might be wise to wait things out one more year, see if J.P. Crawford and Rhys Hoskins can stick at the MLB level, and then get ready for 2019 after the Nationals (possibly) lose Gio Gonzalez, Bryce Harper, and Daniel Murphy.
After fully embracing a rebuild last winter, the White Sox shouldn’t be expected to get back to previous levels of spending for at least another season. As for Oakland, they’ll be losing some of their revenue-sharing money and don’t yet have a new stadium to compensate for the loss, so they might not be increasing payroll.
There are a handful of large-market, high-revenue teams, including the Dodgers and Yankees, who seem to have a lot of money available, but probably won’t reach last year’s levels. The Dodgers spent their way out of a potential rebuild, taking on bad contracts while their young players developed. Their young players have developed and they have one of the best rosters in baseball without adding any money or payroll even as the dead money falls off the books. As for the Yankees, they seem determined to remain under the tax threshold next year to reset their penalties, which would save them a bunch of money in the future.
At the lower end, we can almost certainly expect the Astros to keep spending. The club’s salaries were purposefully low as the team returned from the depths, and they now have additional revenue to continue contending. We know about the Marlins’ intent to cut a bunch of payroll. The Rays are in a tough spot given they don’t really seem to have a lot of money, aren’t that far from contention, but already have a greater financial commitment than the one with which they entered the 2017 campaign. Moving Jake Odorizzi might reduce the payroll and keep them near .500, but the outlook isn’t great, and they will need some good fortune next season.
The Giants can probably spend more, but how much more — in light of the tax amount — isn’t clear. The Brewers should have plenty of room given their very low payroll during a rebuild. Boston might not have gotten under the tax amount last season, though they don’t seem to have restrictions right now.
The teams to watch are the mid- to upper-market teams that both (a) have space and yet (b) aren’t near the tax threshold. The Rangers have clear needs in the rotation, but they have a lot of money to fill those holes. The same is true in Baltimore and for the Chicago Cubs and Los Angeles Angels. There aren’t a lot of good starting-pitching options on the free-agent market, but there do appear to be quite a few teams in need. Other teams that could or should spend are the Cardinals, Mariners, and Mets — and keep an eye on the Twins after their surprising run last season. In all, there is about $700 million to be spent, which should make for an exciting winter.
Craig Edwards can be found on twitter @craigjedwards.
Regarding your Nationals estimate: I have read elsewhere that you can’t leave out the deferred money, at least if you’re looking at this from the MLB salary cap perspective. The Nats heavily use deferred money so they are already at the border for the tax limit.
Cots contracts accounts for all expenditure that is public.
The point is that the deferred money counts towards payroll during the actual term of the contract. Cots just lists tracks yearly outlays.
I don’t think this is true. Cots spreads the total contract value evenly over the actual term of the contract for luxury tax calculations. Directly from the site:
The only thing Cot’s doesn’t track is performance bonuses, which doesn’t matter much in most cases. Maeda is probably the biggest exception in the league, Cot’s lists him at his base + signing bonus spread out, $3.125mil per year. He can earn another $10.15mil per year based on IP, GS, and making the opening day roster.
Cot’s provides two different spreadsheets for teams with larger payrolls. One is the opening day payroll which uses the salaries for that season, and one is a “tax tracker” which uses the average annual value of contracts including signing bonuses. It also adds in the $ 13 million in player benefits that count towards the tax threshold.
Cot’s shows both the cash payroll and a separate calculation for luxury tax on two separate tabs. (I think Cot’s might exclude the luxury tax tab for some teams that are way under the luxury tax threshold). Here are those two tabs for the Nationals going forward from 2018, for example – https://docs.google.com/spreadsheets/d/1-t4BlpC_npBSj6KFivtDkuqtmEu5Vlk2yPvMZD_UkuQ/pubhtml#
And yes, you’re correct that the luxury tax calculation is different. For one, it’s based on contract AAV, which picks up deferred payments and also smooths out long-term contracts that escalate salary over time or include signing bonuses. Each MLB team’s contribution to player pension and health benefits also counts for luxury tax purposes. That’s a non-trivial number that’s estimated by Cot’s at $13.5 million per team for 2018.
So Cot’s estimates the Nationals to be at about $193 million for luxury tax purposes in 2018, including estimated arb salaries, which is about $22 million more than the estimated 40 man cash payroll (excluding benefits, but also including estimated arb salaries).