The Current State of 2021 Team Payrolls

With Qualifying Offers decisions made, the non-tender deadline at our backs and free agency still just getting started, it’s a good time to check in on every team’s payroll before the offseason reaches full bore. With this year’s 60-game season came a substantial reduction in revenues as well as player pay. How much owners plan to cut team payrolls for next season is uncertain, but substantial reductions are expected. To get a sense of where current major-league payrolls fall, here are our projections from our RosterResource payroll pages:

There are a few things to keep in mind here. First, these figures are salaries for 2021, not the average annual value numbers used for the competitive balance tax payroll, which we’ll get to in a bit. In addition, these figures don’t include buyouts for this past year or next season, which stand at around $40 million total potentially owed as of the end of the season. These numbers do include estimates for arbitration-eligible players, as well as an expected number of minimum-salaried players to make it through a season. They do not include the roughly $2 million per team that will be spent on players on the 40-man roster who aren’t in the majors, or the roughly $15 million per team that will be spent on player benefits. Both of those figures will be included in the competitive balance tax numbers below.

The defending champs top this list by a healthy margin with an expected payroll of roughly $190 million if the season started today; they also seem to be well-equipped for another run next season, as they are about five wins clear of every other team in our Depth Charts. The Dodgers could still conceivably add to their infield, bring Justin Turner back, or add some depth to the rotation or bullpen, but by signing Mookie Betts to a contract extension earlier this year, they ensured the best potential free agent in the game will call Los Angeles home next season.

After the Dodgers come most of the usual suspects when it comes to higher-spending teams, with the bulk of the smaller markets at the end of the line. Compared to this point last year, teams are down by $16 million on average, a 13% drop. Every sort of team has dropped, but the biggest changes have come at the extremes. The top-third has dropped by 15% and the bottom-third by 14%, while the middle-third has dropped by around 9% compared to a year ago. Because of their generally higher payrolls, the difference in the top-eight payrolls account for half of the $476 million drop from a year ago.

Where things go from here is difficult to say. Last winter, Gerrit Cole, Stephen Strasburg, and Anthony Rendon all signed monster contracts exceeding $30 million per season, with Zack Wheeler, Josh Donaldson, and Hyun Jin Ryu all getting at least $20 million per year. The top of this year’s free agent class looks like last year’s without the big-three. There is also considerably more depth at the bottom of the year’s class, but we don’t yet know how that will translate to salaries this winter.

As for individual team changes, it is probably more helpful to look at where teams ended up with their 2020 payrolls after free agency was complete, but without pro-rating salaries for the pandemic. The graph below shows the difference between 2020 payrolls before pro-ration and 2021 projections based on spending thus far:

If the season started tomorrow, salaries would be down nearly a billion dollars compared to where they were last season. The teams that have seen their payrolls decrease the most are the Yankees, who seem likely to spend some money, the Rangers (who don’t), as well as the Cubs, Astros, and Phillies (spending unknown). The Blue Jays look like they might spend some; we don’t yet know about the Twins. The Tigers had Jordan Zimmerman‘s $25 million salary come off the books while the Cardinals have seen Yadier Molina, Adam Wainwright, and Kolten Wong hit free agency and Brett Cecil’s contract expire. The Mets are expected to spend with new owner Steve Cohen.

If spending last winter is matched this winter, payroll is going to be down about $450 million from where it was going to be last year before the pandemic. By sheer numbers, it would be the biggest decrease in history (though the players didn’t actually get paid the expected amount last year), and by percentage drop, we are likely to see the biggest change in payroll in at least 35 years. We could see what might be considered a normal offseason in free agency from here on out and there’s going to be a significant drop in payroll. Much of this has been coming, as owners have moved away from long-term deals and prepared for the potential of a stoppage ahead of the coming CBA negotiations for the 2022 season. The pandemic has possible exacerbated some of these changes, but the end result is likely going to be the lowest average payroll since 2015.

As for the competitive balance tax, every team has at least a little bit of space, with few teams in real danger of going over the $210 million tax amount this season:

The Dodgers might go over if they add a few players. The Yankees could go over if they spend significantly, but even the Angels, Red Sox, and Astros are more than $30 million shy of the tax level while the Cubs are still $46 million away the tax level and about $100 million shy of their 2019 payroll. We don’t yet know how much teams will spend this offseason, but for clubs that indicate they are going to cut payroll, keep in mind that they likely have already done so. On average, teams are more than $30 million below their projected payrolls for 2020 and eliminating even half of that deficit would still mean a pretty substantial spending cut next season.