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.
Craig Edwards can be found on twitter @craigjedwards.
You just know the Dodgers are going to do something ridiculous like convince a team that if they take on Joe Kelly’s contract they can get DJ Peters too. Some real black magic, hypnosis kind of stuff that shouldn’t work on anyone except a 7 year old playing fantasy baseball.
At least half the league is not trying to compete. There should be plenty of players that are helpful and easy to acquire.
The Nationals scare me a little bit. You have the 4th-highest payroll in the game and yet RF, 1B, arguably 2B and 3B, and SP4+ are all huge question marks. (I know Andrew Stevenson has been great when he plays but you probably want him as a fourth OF, not your leadoff hitter.) They have been theorized as a landing spot for Ozuna but looking at that second chart, Ozuna would likely take up more than half of their money and they’d have to get lucky with veterans and a Kieboom success for those holes to be plugged. Maybe Brantley would give them more wiggle room.
Soto’s already won a championship, but I’m scared he spends his best years (like Trout) on a team stuck with huge contracts. He’s young enough that the Nats can reload a bit as the pitchers come off, but there’s not a whole lot coming up the minor league pipeline that I can tell.
(Edit: It is fair to read that second chart as a _rough_ accounting of “money available” yeah?)
The Nats commitments beyond 2021 (not counting Arb guys) are big but few. Stras thru ’26, Corbin ’24, and Harris in 2022. Sure, Turner and then Soto are going to be spendy even in Arb but that’s it. The lack of a strong farm system is going to make acquiring cheap talent tricky, but if they wanted to hit a reset they could do it.
Personally I’d like for the Nats to go big on 1 year rental contracts. Sign a bunch of vets looking to weather the COVID-payrollpocalypse, and then enter the 21 offseason with a ton of roster holes but a pretty clean financial slate.
I originally thought that they would be spending a lot of money on a guy like Ozuna and now I’m thinking that is probably not happening, for the reasons you state. Their first priority is probably someone like Carlos Santana to plug the gaping hole at first base, then some pitching to round out the rotation, then someone to play the corner outfield. They have Castro for 2B and they do need to see what they have in Kieboom at 3B. But signing Ozuna to a really big contract doesn’t help them as much as a lot of other teams because the value of concentrating WAR in one player has to do with the marginal upgrade over a 2-win player. So it’s much more useful for them to try and find guys who have a shot at being a 2 win player.
The free spending Royals 🙂 beat the Nats to Santana today after you posted. On to Plan B.
I saw that. Dayton Moore must be loving having an owner who is willing to spend, but Santana is an…interesting…choice of FA to spend on given where the Royals are.
They have a ring and the ownership is going to be fine. Nobody needs to worry about them. Comparing Trout to Soto is silly. Trout is one of the all-time greats and has zero rings or even opportunities at getting rings – they have pretty much nothing in common other than.. well, I honestly cant come up with much – they both have two-digit numbers that start with 2 but that is a big club and they both technically play outfield… they both run the bases, and swing bats when they hit from opposite sides of the plate.
Expect payrolls to decrease league-wide. Last season was the epitome of where this train has been headed for a while now. It doesn’t matter how bad the on-field baseball is – it matters how it is marketed. This group of players is younger, better, smarter, better, bigger, better, stronger, better, younger, faster and better and younger – people are less concerned with the validity of that statement than they ever have been. Why pay for top talent when you don’t actually need to? People have never been less concerned with on-field baseball so why develop or pay for the talent or experience? This is how the endless progressive narrative ends. Baseball has become secondary to the off-field decision making and analysis – it doesn’t matter what they are analyzing or marketing as that really isn’t a problem. That is really the glass-half-full take. IMO it is more like the owners used an aimless, unsubstantiated progressive narrative in the short-term to market a better game while knowingly moving away from attempting to put together a good team and spend money on players. Whether it was intentional slight-of-hand is debatable I guess, but it all ends up resulting in spending less money on players and playing worse MLB baseball. While I think that saber-metrics were initially well intentioned they have been exploited to further profits at the expense of the players and the fans which is supposed to be who professional sports are for.
I don’t think you have a proper understanding of what Sabermetrics (or indeed moneyballing) actually means; it’s all about maximising value, and getting best value for your money spent. It’s not about being cheap. There will always be cheap owners, just as there will always be owners who spend big money on players who are unlikely to get value back.
It’s no coincidence that every team now has analytics departments. Teams that rejected the trend (Arizona, Phillies, Seattle) soon fired their GM’s after poor seasons and followed everyone else. Look how much Arizona improved after getting rid of Stewart.
Teams finally discovered a few years ago that veterans free agents provide far less value for money than than younger players, particularly since the end of the PED era. Most teams have staff who read Fangraphs etc, it’s why so many writers have moved onto working for teams; more quality writers will likely do the same, or at least consider offers from clubs.
The Dodgers are a great example of a big spending team who also get good value for money. They might take on bad contracts to obtain good prospects, or refuse to trade away highly rated players on the farm. They have also swapped bad contracts with other teams to spread similar costs over more years to reduce AAV. They really are an extremely well run ballclub. Yet, they still splashed out for Betts.
It’s no coincidence that several teams have raided the front office of the Rays over recent years. They really are the best in the business.
Younger players help teams win more for less pay than mid/lower tier free agents. Owners like wins and don’t like paying market value for them. If the MLBPA association wants the owners not to rely on young players, the MLBPA needs stop throwing the younger players under the bus at the expense of star free agents. Owners are going to exploit the young players as long as the MLBPA ensures they don’t get paid close to market value for the same amount of production.
To illustrate (very over simplistic), in a normal year, the price per WAR is over $9M/WAR and it takes over 90 wins in a normal regular season for a team to be strong enough to make playoffs and win the World Series. Since replacement level is 48 wins, a team relying solely on cash will need to buy at least 42 WAR. So a team would need a budget of $378M to have a World Series contender without young players.
The system setup by the CBA ensures teams need to either have a budget of $378M, or exploit enough players on artificially lowered salaries to offset a few key veteran salaries to win a World Series for whatever budget the owner sets.
The cheap, young player setup is a necessary evil to maintain competitive balance. What we really need to help the lesser free agents is a salary floor so that teams like the Pirates will be forced to spend on some of these guys as stopgaps even while rebuilding instead of running out AAAA guys just to save some additional money.
I disagree. I’ve thought a lot about a salary floor and my conclusion is when you get a team doing a reset (tanking) if there is a salary floor they will just trade for bad contracts and a prospect.
Projected for a 90 loss season and 18 million under the salary floor? Sure, I’ll take Pujols and two prospects. Then they cut Pujols in spring training.
What does that accomplish other than souring the whole process even more for the fans.
If teams used a salary floor to hand out “futures” contracts like Longoria or how Cleveland has with 1st/2nd year players, then cool, that’d be awesome, but I don’t see how to create a system with a floor that doesn’t end up as worse case scenario.
They will, but now the team that jettisoned a bad contract has (theoretically) more money to spend. Sure the Pirates, for example, might not be interested in signing real players for real money to not actually compete. But if they HAD TO meet a payroll floor, maybe they take on Pujols to buy a prospect or two. Then the LAAs turn around and spend $30M on real players to compete.
Forcing teams to buy “lesser” free agents might be a tricky business, but if the goal of the MLBPA was simply to make sure that $X was spent on total player contracts, a salary floor is a perfectly viable way of making that happen
Besides, most bad contracts like with Pujols are for players who are still decent enough MLB players that they wouldn’t just be cut, and even if they were they’d find at least one team willing to sign them for the MLB minimum. There are very few Chris Davis type players who wouldn’t even deserve an MLB job if it weren’t for their contracts. A team employing this strategy would have no reason to just release a high cost veteran who would at the very least serve as a superior bench player over the guys they have.
I actually think the problem is that there are no George Steinbrenners left, and there may not ever be. I mean, we still have Reinsdorf and maybe Cohen will be like that. But almost every other team cares almost solely about profit. It’s partly because they are run by investment funds and MBAs who want profit more than wins. (Both would be great, but if you have to choose, profit always takes precedence)
I’m not so sure that it is a problem really. Spending bucket loads of money is clearly inefficient, and teams are too smart to do that now, especially now rich, smart teams like the Dodgers will be able to outwit them.
The Dodgers have changed the game. Other rich teams will eventually follow suit. When a team wins using a new method, other teams will try to copy them. The fact that the runners up Rays use similar methods with less money is telling.
I don’t think I really agree with that. No one is willing to spend so much they lose money, but if you really want to maximize profits what you do is you avoid free agency like the plague, because that’s where the cost of a win is the most expensive. There aren’t that many teams who fit that description…Cleveland, the Rays, the Marlins, the Pirates, the A’s…I think that’s it. I guess we don’t know about the Tigers yet. You’ve got owners greenlighting all kinds of free agent deals that are ultimately bad for the profit margin. But even some smaller market teams like the Royals and Brewers and Reds spend.
There’s a certain level of team that owners want a certain amount they want to make, and that is calibrated differently for different owners.
It’s not about maximising profits, at least for most clubs, it’s about maximising value. Save money in one area by being efficient, and spend more on other areas that generate better value per dollar spent. I buy my food from cheaper shops so I have more money to spend on holidays.
It’s basic economics really. Baseball has just been late to the game than other industries, with the exception of a few teams.
Blue jays could easily force the Yankees over the CBT limit by offering Lemahieu 110 m over 5. With the Yankees still needing pitching they will be well over the limit if they match, as I expect they would.
But I think they would be much less likely to acquire pitching from the top tier.
I think that’s the whole thing with LeMahieu.
He turns 33 in July.
Nobody wants the age 36, 37 seasons unless there’s a ton of surplus value in the 33 and 34.
What’s he reasonably worth over the next five seasons? 10 WAR, upside 15, downside 5? Can’t see the Jays tendering anything close to 5/110 when IF is already a strength, not a weakness.
You missed the point. The idea is that Yankees will be forced to match and thus bump against the CBT. However , if they don’t I would be more than happy to have LeMahieu
Who is projected for 14 war over the next three years and has killed jays pitching.