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April 16, 2007

The Ledger Domain

A Look in the Black Book (Part I)

by Maury Brown

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Ah, to be dirty rotten filthy stinking rich, right? Be a big shot. Play the horses. Own a, yeah... a Major League Baseball team. Man, what I could do with that cash. Just need the cash to play with, and suddenly I'd be like that William Bean guy, or whatever his name is in that Funny Moneyball book.

See, it's Opening Day, and I found me a little black book full of numbers. No, not phone numbers, these numbers: the player payroll figures for all of them thar 30 MLB clubs. Yep, there's a bunch of money being thrown at players, and since you seem like the reasonable type, I thought I'd show you all the zeros in the book's ledger. Seems I have here the Opening Day payrolls for 2007. What? Well now, they seemed to add in 2006 and 2005 as well...

                          2007              2006               2005
-------------------------------------------------------------------------
N.Y. Yankees            $195,229,045      $194,663,079       $208,306,817
Boston                  $143,526,214      $120,099,824       $123,505,125
New York Mets           $117,915,819      $101,084,963       $101,305,821
Chicago White Sox       $109,680,167      $102,750,667        $75,178,000
Los Angeles Angels      $109,251,333      $103,472,000        $97,725,322
-------------------------------------------------------------------------
Los Angeles Dodgers     $108,704,524       $98,447,187        $83,039,000
Seattle                 $106,516,833       $87,959,833        $87,754,334
Chicago Cubs             $99,937,000       $94,424,499        $87,032,933
Detroit                  $95,180,369       $82,612,866        $69,092,000
Baltimore                $95,107,807       $72,585,582        $73,914,333
-------------------------------------------------------------------------
San Francisco            $90,469,056       $90,056,419        $90,199,500
St. Louis                $90,286,823       $88,891,371        $92,106,833
Atlanta                  $89,492,685       $90,156,876        $86,457,302
Philadelphia             $89,368,214       $88,273,333        $95,522,000
Houston                  $87,759,500       $92,551,503        $76,779,000
-------------------------------------------------------------------------
Oakland                  $79,938,369       $62,243,079        $56,186,000
Toronto                  $71,986,500       $57,568,333        $39,934,833
Milwaukee                $71,986,500       $57,568,333        $39,934,833
Minnesota                $71,439,500       $63,396,006        $56,186,000
Cincinnati               $69,154,980       $60,909,519        $61,892,583
-------------------------------------------------------------------------
Texas                    $68,818,675       $68,228,662        $55,849,000
Kansas City              $67,366,500       $47,294,000        $29,679,067
Cleveland                $61,673,267       $56,031,500        $41,502,500
San Diego                $58,235,567       $69,896,141        $63,290,833
Colorado                 $54,424,000       $41,233,000        $48,155,000
-------------------------------------------------------------------------
Arizona                  $52,067,546       $59,684,226        $62,329,166
Pittsburgh               $38,604,500       $46,717,750        $38,133,000
Washington               $37,347,500       $63,143,000        $48,581,500
Florida                  $30,507,000       $14,998,500        $60,408,834
Tampa Bay                $24,124,200       $35,417,967        $29,679,067

Well, ain't that something? The Yankees and Red Sox are #1 and #2 in payroll. Seems this has happened more than once in the past, if I recall. So, the Yankees had a total player payroll of $194,663,079, last season, with an increase of a scant $565,966-the second-smallest increase behind only the Giants, who went up $412,637 from the year before. Man, that's an increase of less than 1% (0.29%) from 2006 for the Yankees. What's that? Well, yeah, they actually lowered payroll from $208,306,817 in 2005 to that '06 figure, so looking at the fact that it's the Yankees and how they've been known to spend, this is some fiscal restraint. Maybe that Luxury Tax might actually be getting to Steinbrenner. Or, maybe that Brian Cashman fella is being allowed to develop from within--know what I mean?

You wanna talk green and the Yankees? When you add in reacquired Andy Pettitte, the four top players in terms of player salary (Rodriguez, $27,708,525; Giambi, $23,428,571; Jeter, $21,600,000; and Pettitte, $16,000,000) make up a total of $88,737,096, or 45.45% of the Yankees total Opening Day payroll.

I mentioned that Billy Beane fella earlier, but all that Moneyballin' stuff may look a bit different this season. Nah, Beane's still doing his gig of getting undervalued talent, but owners Lew Wolff and John Fisher have bumped up the A's payroll from 21st last season to 16th in 2007, making them more a middle-of-the-pack club than a bottom feeder. I interviewed Wolff recently and asked him about the increase, and he said, "It was a conscious move started last year, not to go crazy, but to have some backup for some of our players. Billy made some very good choices last year and I think this year, too."

Makes you wonder if Wolff looks at the A's revenues, doesn't it? Well, in that same interview, he said, "[W]e don't look at revenues and then decide how much we want to spend. We want to build up from a zero-based budgeting-then see if it fits in with the revenues that we're anticipating. If it doesn't, then we have to pare down somewhere. But everything's been pretty consistent. We're somewhere 50-55% of revenues for salaries, which is sort of the commissioner's rule of thumb." Looking back on that other page, seems Jason Kendall has the highest salary for the A's this year at $13,429,623, with Eric Chavez coming in second at $9,500,000. And, that other catcher they signed... what's his name? Yeah, Mike Piazza, he comes in third at $8,500,000.

You know what though? Not everyone is spendin' more than they did last year. Nope, Ted Lerner and Stan Kasten with the Nationals decided to shed some contracts, and boy howdy, did they drop player payroll. How much, you ask? Well, in 2006, the Opening Day payroll was $63,143,000, which ranked them 20th out of the 30 clubs. This year, they dropped to 28th by shedding $25,795,500 in payroll. They'll open the season with a $37,347,500 payroll. You want to compare numbers further? The Nationals had an Opening Day payroll of $48,581,500 in 2005. You look up the word "rebuilding," and there's a picture of Stan Kasten.

But, here's the thing: along with the Nationals, only six other clubs lowered salary for Opening Day 2007 compared to eleven clubs last season. Here's what the book shows for those six clubs with their Opening Day figure, along with the decrease in total salary from the year before:

Team                  Decrease
--------------------------------
Nationals           -$25,795,500
Padres              -$11,660,574
DRays               -$11,293,767
Pirates              -$8,113,250
DBacks               -$7,616,680
Astros               -$4,792,003
Braves                 -$664,191

And if you look at those other figures showing Opening Day payroll from '05-'07 only one club-the Diamondbacks-lowered salary in each of the two seasons (-$7,616,680 from '06 to '07 and -$2,644,940 from '05 to '06). As for spending the most in consecutive seasons, the winner is not the Yankees, as I mentioned, nor the Red Sox, nor any other clubs in the upper or middle quartiles. Nope, the club shelling out more greenbacks than ever is none other than David Glass and the Kansas City Royals. Their increases of $20,072,500 between '06 and '07 (42.44% increase) coupled with $17,614,933 from '05 to '06 (59.35% increase) constitute the biggest leap in player payroll expenditures from over the last three years.

I'm going to have to run here in a minute, and we'll talk some more on this matter again soon, but take this in. This past Winter, I know everyone was talking about how GMs were really throwing the cash around, and they were. But, they weren't throwing it around this year. Nope, the money will come to bear in the next few years as many of the contracts were back-loaded.

This shows the average salary by year going back to 1989. Between 2006 and 2007, overall salary across Major League Baseball grew by 2.7%:

Year        Average        % Inc.
---------------------------------
1989          $512,804       NA
1990          $578,930      12.9
1991          $891,188      53.9
1992        $1,084,408      21.7
1993        $1,120,254       3.3
1994        $1,188,679       6.1
1995        $1,071,029      -9.9
1996        $1,176,967       9.9
1997        $1,383,578      17.6
1998        $1,441,406       4.2
1999        $1,720,050      19.3
2000        $1,988,034      15.6
2001        $2,264,403      13.9
2002        $2,383,235       5.2
2003        $2,555,476       7.2
2004        $2,486,609      -2.7
2005        $2,632,655       5.9
2006        $2,866,544       8.9
2007        $2,944,556       2.7

6106 salary chart

Now, keep in mind, I recall a strike in 1994 that caused the major dip in 1995, but it's interesting that leading up to the Collective Bargaining Agreement, salaries escalated, followed by the leveling off this season. Like I said, we'll talk some more on this, but this gives you something to ponder till next time. Until then, I gotta run... with the Black Book, of course.

Maury Brown is an author of Baseball Prospectus. 
Click here to see Maury's other articles. You can contact Maury by clicking here

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