March 2, 2011
AL East Payroll Projections
The Rays, Blue Jays, and Orioles are not usually part of the conversation when it comes to the financial arms race that is the American League East. Though none of the three will outspend the Yankees or Red Sox any time soon, Baltimore is the only team in the division that figures to start 2011 with a payroll higher than on Opening Day 2010. As the financial details begin to come into focus, let’s check out the projected 2011 payrolls for the AL East.
Tampa Bay Rays
The cost-conscious Rays followed up their 2008 World Series appearance by putting together two of the top three Opening Day payrolls in franchise history, passing the $60 million mark for 2009, then ballooning to a club-record $72 million in 2010. Tampa Bay’s year-end spending figure of $77.5 million in 2010 was enough to push the club out of the game’s bottom quartile, to 20th in baseball.
After a disappointing Division Series loss to Texas, the Rays were hit with a wave of off-season departures, resulting in a significant rollback in payroll for 2011. Gone are the top seven highest-paid Rays from 2010’s Opening Day roster: Carlos Pena, Carl Crawford, Pat Burrell, Rafael Soriano, Jason Bartlett, Dan Wheeler, and Matt Garza. Collectively, that group earned $47 million last season.
This spring, the Rays will take the field with a payroll that projects to be about $42 million, returning them to the back of the pack, battling San Diego and Pittsburgh for the penultimate ranking on the list of Major League Baseball spenders. The $30 million payroll reduction will be exceeded only by Kansas City’s $38 million cut, a figure aided by the sudden retirement of Gil Meche.
But there is a silver lining here. Tampa Bay will supplement its farm system with the prospects received in the Bartlett and Garza trades and additional draft picks for the loss of four departing free agents. In the meantime, general manager Andrew Friedman turned to the free-agent market himself, hoping to squeeze one more year of production from veteran left fielder Johnny Damon ($5.25 million) and designated hitter Manny Ramirez ($2 million). Friedman restocked the bullpen with free agents Kyle Farnsworth ($3.25 million) and Joel Peralta ($925,000), as well as righty Adam Russell and lefty Cesar Ramos, two relievers who came from San Diego in the Bartlett deal. J.P. Howell returns on a $1.1 million deal after being non-tendered in December.
The five members of Tampa Bay’s home-grown starting rotation—David Price, James Shields, Jeff Niemann, Wade Davis and Jeremy Hellickson—are all under the club’s control through the at least the 2014 season. With less than $30 million committed to players beyond 2011, the Rays enjoy the flexibility to bump payroll going forward—assuming the franchise can continue to remain viable playing in Tropicana Field.
New York Yankees
The team with the highest Opening Day payroll has come from the American League East every year since 1993, with the Yankees checking in at No. 1 for 16 of those 19 seasons, including the last 13 in a row (1999-2011).
The last club to outspend the Yankees was the 1998 Orioles, the last Baltimore club assembled by GM Pat Gillick. The Blue Jays topped the list in both 1993 (the final year of the Gillick era in Toronto) and 1995. Notably, the Yanks have not placed as low as third in spending since ’93.
The trend doesn’t figure to end anytime soon. With a projected 2011 payroll of $203 million, the Bombers will outspend each of the next two clubs on the list, Philadelphia and Boston, by about $40 million. And in terms of financial commitments for 2012 and beyond, no team comes within $100 million of the Yankees, who already are locked in to pay nearly half a billion dollars ($490 million, to be exact) in salaries through 2017.
One other indication of New York’s financial strength: This fall, once they pick up their option for second baseman Robinson Cano, the Yanks will be committed to pay 10 players a total of $165 million next season, a total which would rank ahead of every other 25-man roster in 2011.
However, every so often, the Yankee payroll actually does drop. It happened after the 2005 season, when Kevin Brown came off the books and Bernie Williams took an eight-figure pay cut. And it happened again after the ’08 season, as Jason Giambi’s contract expired and Andy Pettitte agreed to an incentive-laden deal. This offseason, the culprits were Pettitte’s retirement and the failure to land free-agent prize Cliff Lee. GM Brian Cashman reallocated his resources, pouring money into extensions for Yankee icons Mariano Rivera ($30 million for two years) and Derek Jeter ($51 million for three years). With a limited market for starting pitching beyond Lee, Cashman shored up the bullpen with free-agent deals for closer-turned-setup-man Rafael Soriano ($35 million for three years) and lefty Pedro Feliciano ($8 million for two years).
Cashman does have some flexibility going forward. Catcher-DH Jorge Posada, who will earn $13.1 million at the age of 39 this season, will be a free agent after the World Series. Nick Swisher and his $9.1 million salary could be gone as well, though New York holds a $10.25 million option for 2012. And the Yankees’ financial commitments drop to “only” $125 million for 2012 before falling all the way down to the $70 million range for 2013 and 2014—numbers that should comfort Albert Pujols and his agent should the St. Louis first basemen hit the open market himself this fall.
Boston Red Sox
Like their rivals in the Bronx, the Red Sox will open 2011 with a modest cut in payroll. Then again, the 2010 Red Sox were the first club other than the Yankees to top $150 million in Opening Day payroll. And they’ll do it again this year.
What’s more, the reduction—from $168 million to $161 million—is likely to be only temporary. A long-rumored extension for newly acquired Adrian Gonzalez figures to elevate the first baseman from a 2011 salary of $6.3 million to an average annual value rivaling Mark Teixeira’s $22.5 million. By holding off on an extension until after the start of the season, GM Theo Epstein locks in Gonzalez’ salary at $6.3 million for the purposes of MLB’s Competitive Balance Tax. Gonzalez gets his hefty pay raise, and the Red Sox avoid exceeding the “luxury tax” threshold for a second consecutive season.
The Red Sox have taken creative steps that would make the New England Patriots’ salary cap experts proud, limiting luxury tax exposure by manipulating the timing or structure of recent contracts with Josh Beckett, Adrian Beltre, and Bill Hall. Boston’s 2010 year-end payroll of $170.65 million only slightly exceeded the $170 million CBT threshold. For each dollar over the $170 million mark, the Sox paid a tax of 22.5 percent to the Commissioner’s Office. Though the threshold increases to $178 million this season, the tax jumps to 30 percent for second-time payors. If Gonzalez were on the 2011 books at $22.5 million, the Red Sox payroll would jump to about $184 million—giving Boston a 2011 luxury tax bill of $4.2 million.
The payoff this offseason was the chance to pursue left fielder Carl Crawford, who signed a seven-year free-agent deal worth $142 million. Epstein also had the flexibility to improve the bullpen by signing Bobby Jenks ($12 million for two years) and Dan Wheeler ($3 million).
The financial flexibility increases this fall, when J.D. Drew ($14 million), David Ortiz ($12.5 million), and Mike Cameron ($7.75 million) come off the Boston books. With only Crawford signed beyond 2014, the Red Sox conceivably could have the space to be another player in the hypothetical Pujols sweepstakes.
Toronto Blue Jays
Like the “peace dividend” that somehow never quite materialized after the fall of the Berlin Wall, Toronto’s era of nearly unlimited payroll flexibility lasted less than a month. Just four weeks after getting the Blue Jays out from under $81 million of the $86 million left on Vernon Wells’ staggering contract by trading him to the Angels, Toronto GM Alex Anthopoulos paid $65 million to lock up 2010 home-run champ Jose Bautista.
The gamble is more than financial. Bautista exceeded even his 90th-percentile PECOTA projection with his monster 2010 season, as his True Average skyrocketed from a previous career high of .272 in 2009 to .335 in 2010. With Bautista a year away from free agency, the Jays could have had the luxury of re-signing him to a one-year contract and using spring training and the early weeks of the 2011 season to see if he can build on his breakout performance.
But swapping out Wells for Bautista does give Anthopoulos some flexibility. Bautista will earn just $8 million in the first year of his backloaded deal, while Wells’ salary was set to double to $23 million in 2011. Dealing right-hander Shaun Marcum for prospect Brett Lawrie saves the Jays about $4 million as well. The payroll space allowed the Jays to afford three new relievers Frank Francisco ($4 million), Jon Rauch ($3.75 million), and Octavio Dotel ($3.5 million), as well as returning free agent Jason Frasor ($3.5 million). Center fielder Rajai Davis, acquired in November in a trade from Oakland, signed a two-year contract worth $5.75 million, and Edwin Encarnacion returned with a $2.5 million deal.
The Orioles are the one AL East team increasing spending for 2011, jumping from $73 million a year ago to a projected $87 million, good for 16th in baseball.
The 18 percent increase includes an $18 million upgrade to the infield, where third baseman Mark Reynolds ($5.33 million), shortstop J.J. Hardy ($5.85 million), and first baseman Derrek Lee ($7.25 million) replace Miguel Tejada, Cesar Izturis, and Ty Wigginton, respectively.
Vladimir Guerrero should provide some pop from the DH spot at a cost of $8 million, pushing Luke Scott to left field. Orioles president Andy MacPhail lured reliever Kevin Gregg to town with a two-year, $10 million contract, giving his club two options at the back end of the bullpen. MacPhail also took a low-risk gamble on free-agent starter Justin Duchscherer, who will try to overcome a history of injuries to win a spot in Baltimore’s young rotation.
The Orioles do enjoy flexibility, with just $35 million committed for 2012. With Guerrero, Hardy, Lee, and Mike Gonzalez all potential free agents in the fall, MacPhail is likely to have multiple spots to fill.
AL East Summary
The Yankees continue to set the financial bar, with the Red Sox relatively close behind. The Rays, Blue Jays and Orioles will rely on the ability of their farm systems to produce cost-controlled young players who can provide affordable production.