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March 16, 2011

Contractual Matters

AL Central Payroll Projections

by Jeff Euston

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About a third of the teams in baseball project to cut payroll for 2011, and three of those reside in the American League Central. The Tigers, Indians, and Royals will scale back to the tune of nearly $80 million combined this season, making the division home to three of the games’ six biggest cost-cutters. But the austerity measures do not extend to the Twins and White Sox, which each figure to make eight-figure payroll increases. Let’s check out the projected 2011 payrolls for the AL Central.

 

Minnesota Twins
Projected 2011 payroll: $113,665,000 (10th)
2010 payroll: $97,659,167 Opening Day (10th), $103,039,407 year-end (10th)
Future commitments: $65.75 million for 2012, $51.25 million for 2013, $29.57 million for 2014, $23.5 million for 2015, $23 million for 2016

Target Field has been good to the Twins, and not just because the roof will never fall in. When the defending Central champions moved into their new home to begin the 2010 season, the club bumped payroll by almost 50 percent, ultimately topping out at more than $100 million by season’s end. The hike pushed Minnesota’s payroll rank into the game’s top 10, all but completing the franchise’s transformation from the ranks of the Have-Nots to the heady company of the Haves—at least in the short term.

Another increase is in store for 2011, with the Twins projected to start the season in the top 10 again with a $113 million payroll, a bump of 16 percent over last year. More than 20 percent of the total will cover the cost of Joe Mauer, whose salary doubles this season as his $184 million extension kicks in. The mega-deal, hammered out in a span of about two months before Opening Day 2010, will pay Mauer $23 million in each of the next eight seasons.

Minnesota did have more than $23 million come off the books this winter in the form of departing free agents (Orlando Hudson, Nick Punto, Jon Rauch, Matt Guerrier, and Jesse Crain) and two players dealt to Baltimore (J.J. Hardy and Brendan Harris).

Twins general manager Bill Smith used the windfall on the free-agent market, re-signing Carl Pavano ($16.5 million for two years) and Jim Thome ($3 million with performance bonuses) and importing middle infielder Tsuyoshi Nishioka from Japan for $9.25 million over three years.

But a number of payroll issues loom. Justin Morneau begins 2011 hoping to return from concussion-related problems with three years and $45 million still left on his contract. Michael Cuddyer, Jason Kubel, and Matt Capps will be free agents in October, and the Twins hold a 2012 option on closer Joe Nathan at a cost of $12.5 million. Francisco Liriano and Delmon Young will remain under Minnesota’s control for one more year of arbitration in 2012 before hitting the open market for the 2013 season.

 

Chicago White Sox
Projected 2011 payroll: $127,100,000 (7th)
2010 payroll: $103,080,000 Opening Day (8th), $112,197,078 year-end (8th)
Future commitments: $89.25 million for 2012, $57 million for 2013, $37.5 million for 2014, $11 million for 2015, $1 million for 2016

Faced with the choice of cutting back in 2011 or ramping up payroll to keep the band together and win now, the White Sox chose to go for it. The result is a projected Opening Day payroll of $127 million, an increase of 23 percent and the largest leap on the South Side since the 36 percent hike after the Sox won the 2005 World Series.

In terms of raw dollars, only the Rangers ($26.5 million) and Phillies ($25 million) are taking bigger leaps forward for 2011 than Ken Williams’ club, which will boast the highest payroll in franchise history after a $24 million increase. Placing a premium on winning now puts the team “out on a limb,” to use Williams’ phrase. But he reduced his risk somewhat by spreading out Jerry Reinsdorf’s money among a group of players rather than investing in one—a strategy he spelled out after the fact in comments shooting down any possibility the Sox might pay $30 million to a player like Albert Pujols.

Williams kicked off his winter by acquiring a left-handed power bat, landing free agent Adam Dunn with a four-year, $56 million deal. Within a week, Williams had re-signed free agents A.J. Pierzynski ($8 million for two years) and Paul Konerko ($37.5 million over three years), both of whom agreed to backload their deals or defer money to help the club hold down spending in 2011.

The White Sox also went the free-agent route to help retool the bullpen, signing Jesse Crain ($13 million for three years) and Will Ohman ($4 million for two years) to replace departing relievers Bobby Jenks, J.J. Putz, and Scott Linebrink.

But the winter has not necessarily been all about 2011 for the Sox. Shortstop Alexei Ramirez agreed to a long-term contract extension that will pay him $32.5 million over four years once it kicks in for 2012. And reliever Matt Thornton parlayed his All-Star 2010 campaign into a two-year, $12 million extension, which includes a club option for 2014. The multi-year deals bump Chicago’s 2012-16 payroll obligations to about $195 million, a figure distributed among a dozen players. Though the Twins have roughly the same amount in future payroll commitments, Joe Mauer and Justin Morneau account for more than three quarters of the Twins’ total.

Williams will face more choices going forward. Two of his starting pitchers—Mark Buehrle and Edwin Jackson—will be free agents in November. Another, John Danks, remains under Chicago’s control for one more year before hitting the open market after the 2012 season.

 

Detroit Tigers
Projected 2011 payroll: $106,536,000 (12th)
2010 payroll: $133,995,400 Opening Day (5th), $135,913,308 year-end (5th)
Future commitments: $73.875 million for 2012, $61.775 million for 2013, $54.1 million for 2014, $22 million for 2015

Detroit began 2010 with the fifth-largest payroll in the game. After a 20 percent cut this winter, the Tigers project to rank 11th in spending in 2011 with an Opening Day payroll of $106 million.

But the $27 million reduction is more a result of pricey expiring contracts than any grand plan to slash payroll to the bone. Among those coming off the Detroit books this winter were Johnny Damon ($8 million), Jeremy Bonderman ($12.5 million), Dontrelle Willis ($12 million), and Nate Robertson ($10 million).

The freed-up money allowed GM Dave Dombrowski to shop early, re-signing Brandon Inge and Jhonny Peralta to almost identical two-year contracts, then setting the market for setup relievers with a three-year, $16.5 million deal for free agent Joaquin Benoit. The Tigers then made the offseason’s first big splash by signing free agent Victor Martinez to a four-year, $50 million deal—the club’s fourth multi-year deal signed before the December Winter Meetings.

Dombrowski made two more free-agent acquisitions after the new year. He boosted the middle of his lineup by re-signing right fielder Magglio Ordonez to a one-year, $10 million deal after declining his $15 million club option. And starter Brad Penny signed an incentive-laden one-year deal guaranteeing him $3 million.

Like the Twins, the Tigers have placed their future in the hands of two players. Detroit already has more than $210 million on the books for 2012-16, with the lion’s share earmarked for Miguel Cabrera and Justin Verlander, who each will earn salaries north of $20 million for three seasons, beginning in 2012.

 

Cleveland Indians
Projected 2011 payroll: $47,304,167 (26th)
2010 payroll: $61,453,967 Opening Day (26th), $60,500,460 year-end (27th)
Future commitments: $13.5 million for 2012, $2.75 million for 2013

Before his off-season elevation to team president, Indians GM Mark Shapiro cleared the books of a few hefty salaries in July by trading Jake Westbrook, Kerry Wood, and Jhonny Peralta. Shapiro’s successor, Mark Antonetti, inherited a roster with just one player—Travis Hafner—signed beyond 2011.

Antonetti largely stood pat in the offseason, making shortstop Orlando Cabrera (one year, $1 million) and fourth outfielder Austin Kearns (one year, $1.3 million) his major free-agent acquisitions.

Hafner’s $13 million salary will represent more than a quarter of the Tribe’s $47 million payroll. Though Hafner will earn another $13 million in 2012, Antonetti enjoys considerable payroll flexibility going forward to make a run at signing a multi-year contract with right fielder Shin Soo Choo, a Scott Boras client who remains under Cleveland’s control through the 2013 season.

One concern for the Indians is the health of center fielder Grady Sizemore, who is returning from knee surgery in the final guaranteed year of his contract. A return to form could provide Antonetti with an attractive trade chip this July, but anything less could make a decision to decline his $9 million club option for 2012 an easy one.

 

Kansas City Royals
Projected 2011 payroll: $36,770,000 (30th)
2010 payroll: $74,985,210 Opening Day (21st), $76,781,350 year-end (21st)
Future commitments: $11.73 million for 2012, $9.88 million for 2013, $9.88 million for 2014, $1 million for 2015

At about $37 million, Kansas City’s Opening Day payroll projects to be half—half!—of what it was in 2010. Nine of the Royals’ 10 highest-paid players from the 2010 Opening Day roster are gone. The lone holdover, Joakim Soria—now the team’s highest-paid player—will make $4 million this season, a figure that would tie him for 12th on the White Sox.

A 50 percent cut in payroll would be enough for fans in many cities to take to the streets in protest, perhaps joined by a Steinbrenner or two. But the payroll reduction ballooned with the surprise retirement of Gil Meche, which resulted in a $12 million windfall for the club. And few Royals fans will be nostalgic for the likes of Jose Guillen, Yuniesky Betancourt, or Kyle Farnsworth anytime soon. Most importantly, there’s a method to the cost-cutting madness: the Royals’ top-rated farm system should begin graduating prospect to the majors this season.

GM Dayton Moore did part with some cash this winter, signing first baseman Billy Butler to a four-year extension worth $30 million. The deal positions the 25-year-old as the face of the franchise after the trades of David DeJesus and Zack Greinke.

Moore has filled holes in his roster with inexpensive, short-term gambles on starters Jeff Francis and Bruce Chen ($2 million apiece) and outfielders Melky Cabrera ($1.25 million) and Jeff Francoeur ($2.5 million).

 

AL Central Summary

With no looming ballpark or ownership problems, the Central is one of the game’s few divisions without a major issue that could disrupt the competitive balance. The Twins, White Sox, and Tigers all have placed expensive bets on a core group of players, while the Royals and Indians continue their rebuilding efforts by trying to develop young stars productive enough to get long-term contracts of their own.

Jeff Euston is an author of Baseball Prospectus. 
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