MLB Opening Day Payrolls Down from 2017

Now that real baseball has finally started, we are very likely going to spend a lot more time here at FanGraphs discussing the game on the field. That’s a very good thing for all of us who love the sport. Before wading too deeply into the new season, however, let’s take one more look at how this offseason affected payrolls.

This past winter was an unusual one, with a number of free agents receiving significantly less than expected, and players and teams holding out for contracts all the way until the season’s start. Most of our pieces contained a general caveat that we would need to wait until all players had signed to really determine the effects of this offseason. I even spent some time wondering if we would have to wait until after next offseason to determine the longer-term effects of this past winter.

As we have now reached Opening Day, we have the opportunity to look at current payrolls and compare them to the same point last year. Here’s where we sit on Opening Day, per Cot’s Contracts.

The Boston Red Sox are well out in front of all teams, followed by the San Francisco Giants, Los Angeles Dodgers, Chicago Cubs, and Washington Nationals. Notable by their omission, the New York Yankees don’t appear among the top five. This is notable for several reasons.

  • The Yankees haven’t placed outside the top three in MLB payroll since 1992, the year Marlins owner Derek Jeter was drafted. Melido Perez and Danny Tartabull were the team’s top-two players.
  • The Yankees haven’t been outside the top two in MLB payroll since 1994, the last time a baseball season ended without a World Series.
  • The last time the franchise had an Opening Day payroll lower than $167 million before this season was 2003, before Alex Rodriguez had ever played a game for the club.

For the most part, we see all the big markets at the top and the small markets at the bottom. That looks fairly normal. Now, let’s compare these figures to those from the same point last year. Here are the gains and drops by percentage.

The graph above makes it appear as though payroll might be increasing this season. Appearances can be deceiving, and that is certainly the case here. The average of all the teams seen above shows an increase of 1.2%; however, payroll has not increased. It has actually decreased. The top-five teams with increases had an average payroll of $92 million last season. Meanwhile, the bottom-five teams had an average payroll of $157 million. An average percentage distorts the actual gains and losses. Here’s a graph showing the change in dollar numbers as opposed to a percentage.

This graph illustrates the impact of the payroll shed this offseason by big-market teams. The Detroit Tigers aren’t necessarily a big-market team, but they had large payrolls for many years. As they enter a rebuild, they have lowered salaries massively. The team’s $75 million drop is larger than the team’s entire payroll in 2005. It is larger than the current payrolls of both the White Sox and the A’s. To provide a little more nuance to the graphs presented here, let’s sort every club into one of three groups.

First, teams with increased payrolls.

Significant Increases in 2018 Payroll
Team Opening Day Payroll
in 2017 ($/M)
Opening Day Payroll
in 2018 ($/M)
Change in Payroll
from 2017 ($/M)
% Change in Payroll
from 2017
MIL 63.1 90.1 27.1 42.9%
ARI 93.1 131.5 38.3 41.2%
SDP 69.6 94.6 24.9 35.8%
HOU 124.3 159.8 35.5 28.6%
MIN 108.1 128.7 20.6 19.1%
BOS 197.0 232.4 35.4 18.0%
SFG 180.8 200.0 19.1 10.6%
WAS 164.3 180.8 16.5 10.0%

All of these clubs — with the exception of the San Diego Padres — could be called win-now teams. The Astros, Brewers, Diamondbacks, and Twins all experienced varying degrees of success in 2017, from the almost-playoffs Brewers to the World Champion Houston Astros. These teams are clearly trying to capitalize on their success from last season and either to maintain that level or improve upon it.

The Brewers and Twins were two of the most aggressive teams this offseason, while the Astros and Diamondbacks had a lot of players receive raises. Houston, of course, also added Justin Verlander in the middle of last season. The Red Sox stayed under the competitive balance tax last season so had no problems going over this year to sign J.D. Martinez. The Giants and Nationals are perhaps the ultimate win-now clubs. The former has an aging core, while the latter has multiple pending free agents including superstar Bryce Harper.

Here are the teams that maintained the status quo from last season, staying within 10% of the prior year’s payroll.

Little Change in 2018 Payroll
Team Opening Day Payroll
in 2017 ($/M)
Opening Day Payroll
in 2018 ($/M)
Change in Payroll
from 2017 ($/M)
% Change in Payroll
from 2017
CLE 124.1 134.3 10.2 8.2%
STL 148.2 159.7 11.5 7.8%
TBR 70.1 75.3 5.2 7.5%
CHC 172.2 183.2 11.0 6.4%
COL 127.9 135.9 8.0 6.2%
CIN 95.4 98.5 3.1 3.2%
SEA 154.3 157.4 3.0 2.0%
LAA 166.4 166.6 0.3 0.2%
NYM 154.4 150.0 -4.4 -2.9%
TOR 163.4 158.5 -4.9 -3.0%
ATL 122.6 118.3 -4.3 -3.5%
PHI 100.0 94.7 -5.3 -5.3%
BAL 164.3 148.6 -15.8 -9.6%
PIT 95.8 86.3 -9.5 -9.9%

Nearly half of teams have kept payroll within arm’s reach of last year’s Opening Day mark. The Cardinals were closer to the bottom of this list before adding Greg Holland. Teams like the Rockies and Phillies were pretty aggressive this offseason, but essentially added back payroll that just came off he books. The Mets were fairly aggressive, as well, and still managed to lower payroll. Even after the team added Alex Cobb, the Orioles still saw a decent drop-off form last year’s payroll. The Pirates made significant moves to reduce payroll this season in the hopes of contending in the future at the expense of this season. The Angels made a lot of moves this offseason, but Shohei Ohtani cost them almost nothing, while Zack Cozart and Ian Kinsler simply replace Josh Hamilton’s salary. The Blue Jays are trying to compete, but managed to avoid any large deal should they decide to rebuild starting next year.

Here are the teams with the biggest reductions in payroll.

Significant Decrease in 2018 Payroll
Team Opening Day Payroll
in 2017 ($/M)
Opening Day Payroll
in 2018 ($/M)
Change in Payroll
from 2017 ($/M)
% Change in Payroll
from 2017
KCR 143.0 121.4 -21.6 -15.1%
NYY 196.4 165.6 -30.8 -15.7%
MIA 115.4 95.8 -19.6 -17.0%
OAK 81.7 66.5 -15.2 -18.6%
TEX 165.3 130.5 -34.9 -21.1%
LAD 241.1 186.2 -54.9 -22.8%
CHW 97.8 68.7 -29.2 -29.8%
DET 199.8 124.6 -75.1 -37.6%

The Marlins, Royals, Tigers, and White Sox are still in some phase of rebuilding. Oakland is doing Oakland-type things. The Dodgers’ and Yankees’ intent to avoid the competitive-balance tax is clear. The Rangers very quietly did little/nothing to improve their team over the winter.

Overall, we see a decrease from last season of roughly $56 million, a 1.3% drop. That amount is essentially equal to the Dodgers’ dip from last year. Even if only the Dodgers, Rangers, and Yankees spent what they did last year, we’d see an increase of about 1.5%. If we added in the Tigers to that group, we’d see an increase of close to 5%, basically what was expected.

There are a large number of factors slowing down payroll and causing the fall in free-agent pricing. If some teams in the middle were a bit more aggressive, we might have had a typical offseason in terms of spending. The qualifying offer might have had some effect on the offers to players. It’s pretty easy to point a finger at the competitive-balance tax when typical spending by the Dodgers and Yankees would have meant an increase in payroll over previous years. Maybe some of the gap will be made up next season.

There’s been considerable discussion over the player share of MLB revenues. If we give MLB the benefit of the doubt and assume the numbers provided to Ben Lindbergh are correct — numbers which, notably, don’t include money from the billion-dollar BAMTech or ownership interests in the television stations that play MLB games — players received around 50% of revenue last season. If MLB revenues increase about 5% to $9.5 billion and player salaries do not go up, the player share of revenue is going to drop down to 47%, a significant drop for the players. Even if we are generous with the MLB figures, the player share of revenue is going to be at its lowest in several decades. Okay. Back to Baseball.

We hoped you liked reading MLB Opening Day Payrolls Down from 2017 by Craig Edwards!

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Craig Edwards can be found on twitter @craigjedwards.

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mikejunt
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mikejunt

Numbers provided to Ben by MLB and -verified by the MLBPA as accurate-.

I’m as big a supporter of more fair player compensation as anyone, but to just handwave the numbers Ben received as suspect because they came from MLB without noting that MLBPA verified their accuracy is misleading at best.

Ryan DC
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Ryan DC

Giving the MLB the benefit of the doubt just means acknowledging that they have an incentive to juke the numbers, but we are going to trust their numbers anyways because we have no specific reason not to.

mikejunt
Member
Member
mikejunt

Ben verified the numbers with MLBPA, the opposing party.

Any such incentive to fudge the numbers is irrelevant when the union says “yup that’s right”