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January 28, 2010

Contractual Matters

AL Central Payroll Projections

by Jeff Euston

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Let's take a look at the payroll forecasts for 2010 for each of the five teams in the American League Central, the first in a six-part series spotlighting each of the divisions in Major League Baseball.

Minnesota Twins

The Twins will open Target Field in April with a payroll surpassing $90 million mark. Yes, the Twins. Ninety million. In a division where payroll for four of the five clubs will be cut or remain flat, Minnesota general manager Bill Smith has joined a high-stakes game. The Twins' spending will increase more than 20 percent this season, a jump from the 24th-highest payroll in baseball in 2009 to as high as 13th or 14th in 2010.

The problem now looming over the franchise is not the threat of contraction, but how to keep homegrown star Joe Mauer in Minnesota. That's an admittedly expensive proposition, but just the sort of challenge every team wants.

Fortunately, Smith has the financial flexibility to make a legitimate long-term offer to Mauer. Minnesota's eight-figure players-Justin Morneau, Mauer and Joe Nathan-represent 45 percent of the 2010 payroll, but they have been productive. And though the Twins will spend on the middle class with seven-figure 2010 salaries for players like Carl Pavano, J.J. Hardy, and Jason Kubel, Smith has neatly avoided doling out any bad contracts that could limit the club's options for 2011 and beyond.

The Twins have committed just $43.5 million to five players (Morneau, Nathan, Michael Cuddyer, Scott Baker and Brendan Harris) for 2011. With just $23.5 million committed for 2012, Smith conceivably has room to offer Mauer a contract approaching his value on the open market, which could reach $20 million annually if he were to become a free agent after the 2010 season.

However, an extension for Mauer would not come without hard choices. The Twins could have as many as 10 players eligible for arbitration in the next offseason, including most of the starting rotation. Kevin Slowey, Nick Blackburn, Glen Perkins, and Francisco Liriano all will be in line for raises in arbitration for 2011, placing a premium on the Twins' ability to continue producing major-league talent and the front office's ability to decide which players to hold and which to discard.

Detroit Tigers

In the 17-month period after their run to the 2006 World Series, Tigers GM Dave Dombrowski spent $384 million on multi-year contracts for eight players. Fast forward to 2010, and the Tigers are spending the offseason in cost-cutting mode, parting ways with Placido Polanco, Curtis Granderson, Edwin Jackson, Brandon Lyon, Fernando Rodney, and Marcus Thames, a group that earned a total of $16 million in 2009.

The Tigers' payroll is projected to be into the $125-million range for opening day 2010, down from $136 million for the 40-man roster in 2008 and $139 million in 2009. Unfortunately for Detroit, the 2010 budget is still weighed down by several high-priced contracts, many of which are remnants of Dombrowski's post-World Series spending spree.

Miguel Cabrera, 1B
2010 salary: $20 million
Future commitment: $106 million for 2011-15
What's up with that? Signed to a $152-million extension during spring training of 2008, Cabrera lived up to his record-setting deal until the final weekend of the 2009 season, when his off-field issues contributed to a disastrous series which ultimately cost Detroit the division title. Cabrera's salary jumps to $20 million this season as the expensive years of his back-loaded deal kick in. With a total of six years and $126 million remaining on the deal, the Tigers must hope his off-season visit to a treatment program for alcoholism, combined with the bitter memory of the 2009 season, will spur a return to form.

Magglio Ordonez, RF
2010 salary: $18 million
Future commitment: $15-million vesting option for 2011
What's up with that? Keep your Maggs playing-time counter handy again this year. Had Ordonez made one less start and 61 fewer plate appearances in the last two seasons, the Tigers would be out from under his contract. But Ordonez reached the playing-time targets that not only guaranteed him $18 million in salary for 2010, they've put Detroit in a similar situation again this season, because with 135 starts or 580 plate appearances in 2010, Ordonez' $15-million option for 2011 becomes guaranteed.

Carlos Guillen, LF-DH
2010 salary: $13 million
Future commitment: $13 million for 2011
What's up with that? Guillen was a shortstop when Dombrowski signed him to an extension for four years and $48 million in March, 2007. Moved to the corner infield spots for 2008, and the outfield for 2009, he'll play out the final two years of his deal as a $13 million DH making sporadic appearances in the field.

Jeremy Bonderman, RHP
2010 salary: $12.5 million
Future commitment: None
What's up with that? He's trying to rebound from arterial surgery, which makes him a $12.5-million rehabilitation project and the presumptive fourth starter in the Detroit starting rotation.

Dontrelle Willis, LHP
2010 salary: $12 million
Future commitment: None
What's up with that? Willis signed a three-year extension upon his December, 2007 trade to Detroit from Florida, and has spent the better part of two seasons battling both control problems and an anxiety disorder. He'll earn eight figures in 2010, whether he's on the mound in Detroit, Toledo, or Lakeland.

Nate Robertson, LHP
2010 salary: $10 million
Future commitment: None
What's up with that? Robertson enters the final year of a three-year, $21.25-million contract signed before the 2008 season. Paid like a third or fourth starter, he'll vie for the fifth slot in the rotation or a spot in the bullpen.

Jose Valverde, RHP
2010 salary: $7 million
Future commitment: $7 million for 2011, with $9 million club option for 2012
What's up with that? Dombrowski snared his new closer with a two-year deal guaranteeing Valverde $14 million, the biggest contract for a reliever signed this offseason.

Brandon Inge, 3B
2010 salary: $6.6 million
Future commitment: None
What's up with that? At a price tag of $24 million, Inge has provided little more than durability and versatility during the course of his four-year deal, which runs through this season.

However, for all of that, there is good financial news on the horizon for Detroit. The club is out from under its commitment to Gary Sheffield, who received $13.6 million from the Tigers to play for the Mets in 2009. And the 2011 payroll outlook is much more favorable, with Dombrowski locked in to only $40 million in commitments for Cabrera, Guillen, and Valverde. That should give the club the flexibility to pursue a long-term deal for ace Justin Verlander, if not now, then next offseason when he'll still be a year away from free agency.

Chicago White Sox

No team in the AL Central has committed more money over the next five seasons than the Chicago White Sox. With the acquisitions of right-hander Jake Peavy and outfielder Alex Rios in late 2009, the White Sox added nearly $112 million in payroll through 2014. But Chicago GM Ken Williams managed to keep payroll basically flat for 2010 by parting ways with four veterans who represented nearly 40 percent of the 2009 payroll: Jim Thome ($13 million), Jermaine Dye ($11.5 million), Jose Contreras ($10 million), and Octavio Dotel ($6 million). In their place, the Sox added outfielder Juan Pierre ($3 million), third baseman Mark Teahen ($3.75 million), and reliever J.J. Putz ($3 million). Williams even had room for shelling out $4 million to upgrade the bench, bringing back outfielder Mark Kotsay and backup catcher Ramon Castro while signing veteran free agents Omar Vizquel and Andruw Jones.

The White Sox have committed more than $66 million to nine players for 2011, with most of the money reserved for Peavy ($16 million), Rios ($12 million), and left-hander Mark Buehrle ($14 million). Chicago also faces the prospect of expensive arbitration cases for closer Bobby Jenks, left fielder Carlos Quentin, and left-hander John Danks. But payroll flexibility will improve for 2012, with only $45 million committed to five players.

Like every other club, the White Sox need premium production from their players earning eight-figure salaries. Peavy is due $15 million this season, $16 million for 2011, and $17 million for 2012, with the club holding a $22- million option for 2013. Rios will earn $9.7 million in 2010, $12 million in both 2011 and 2012, and $12.5 million in both 2013 and 2014. Their ability to rebound in 2010 and beyond will go a long way in determining whether the White Sox can win and whether Williams' 2009 gambles were cost-effective.

Cleveland Indians

The youth movement in Cleveland, which began with the 2008 trade of CC Sabathia, starts in earnest in 2010. Indians GM Mark Shapiro began cutting payroll before the 2009 season ended, trading ace lefty Cliff Lee, catcher Victor Martinez, and reliever Rafael Betancourt despite holding 2010 options for each player. Shapiro also dealt pending free agents Mark DeRosa and Carl Pavano, adding to the club's stable of young prospects.

The end result is that Cleveland begins 2010 with a projected payroll of about $54 million, a drop of $20 million from 2009. Shapiro has been here before, slashing payroll by a total of $58 million in his first three offseasons on the job as he assembled a core of young players who eventually led the Indians to within a game of the 2007 World Series.

The 2010 Opening Day roster will feature several zero- to three-year players, perhaps as many as 15-17, a figure likely to be approached by only the Padres. A full 60 percent of Cleveland's 2010 payroll will go to three players: Travis Hafner ($11.5 million), Jake Westbrook ($11 million), and Kerry Wood ($10.5 million). Westbrook is entering the final year of his contract and Wood's deal includes an $11-million club option, which becomes guaranteed with 55 games finished in 2010.

With only Hafner's deal extending beyond 2011, Shapiro enjoys considerable payroll flexibility going forward. The Indians have just $26.6 million committed to three players for 2011: Hafner ($13 million), center fielder Grady Sizemore ($7.5 million), and right-hander Fausto Carmona ($6.1 million). Cleveland also holds a $7-million option on third baseman Jhonny Peralta for 2011.

With the club's payroll concerns addressed, the challenge now facing Shapiro and new manager Manny Acta will be forging a winning major-league club from the organization's collection of young talent.

Kansas City Royals

For the better part of the last decade, Royals owner David Glass has received heavy criticism for running a shoestring operation. But with the hiring of GM Dayton Moore in 2006, the Royals began spending in a number of long-neglected areas: Scouting, player development, front-office staff, a seventh minor-league affiliate, international talent and above-slot signing bonuses for amateur draftees. They even used their first pick in the amateur draft to select Scott Boras clients three years in a row.

Moore timed the market impeccably last offseason when he signed starter Zack Greinke to a four-year extension, and his ace rewarded him with a Cy Young performance in year one of the deal. Without the long-term contract, Greinke would be entering 2010 eyeing free agency at the end of the season. Instead, he's a relative bargain at $7.25 million in 2010 and $13.5 million a year for 2011 and 2012.

The back end of the pitching staff is anchored, as well. Closer Joakim Soria is locked up to an affordable deal through 2011, with the Royals holding options through 2014. With the albatross of the $36-million Jose Guillen contract lifted after the 2010 season, the only other big-ticket item on the Royals' books is Gil Meche, who is due $12 million in both 2010 and 2011. In all, the Royals will spend about $70 million for 2010 (about 20th in baseball) and already have committed about $40 million for 2011, with the lion's share going to Greinke, Meche, and Soria.

So yes, the Royals are spending. Unlike the low-payroll Marlins of recent years, Kansas City should have no trouble filling out the MLB expense report itemizing how exactly it is using its cut of revenue-sharing money.

The challenge for Kansas City-and the difference between the Royals and a team like the Twins-is the ability to develop players who deserve long-term contracts. Until the minor-league system begins producing major leaguers, fans at newly renovated Kauffman Stadium can count on more in the long line of gambles on players like Guillen, Jason Kendall, and, yes, Yuniesky Betancourt, fair-to-middling acquisitions who couldn't land better money or opportunity elsewhere.

Jeff Euston is an author of Baseball Prospectus. 
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