FanPost

Payroll flexibility and why we can't afford a big Free Agent now...probably

The more that comes out from DD about the Fister and Fielder trades, and the more he talks about payroll and flexibility, I begin to see a master plan here. And when you look at the roster and payroll obligations going forward, you start to see that bigger picture.

DD has said in many interviews that the Tigers gained much needed flexibility that allows them to make some signings and extensions. In a video of an interview after today's press conference (sorry I can't' remember who tweeted it) DD was talking about big contracts and how you can't just think about the single year's cost, but the impact it has over multiple years. Looking at the Tigers payroll obligations and the mess of arbitration raises over the next 2 years (to the start of the 2016 season) it becomes very clear why they can't sign a big name FA while keeping Cabrera and Scherzer and some others.

First some established limits on payroll.

I did some work on revenue and payroll sustainability and I think I have come up with a good estimate of what the Tigers maximum sustainable payroll limit is. Forbes showed a slight loss in 2012 but overall it was close to even: $238M in revenue, $0.4M operating income loss (meaning it cost $238.4M to operate the team). Well the new numbers are starting to come out from 2013 but we can apply what was learned from the 2012 breakdown to calculate revenue and overhead going forward. Considering payroll was about $138M in 2012, that means it costs roughly $100.4M in overhead (coaches, taxes, salaries, minors, nachos for fielder, etc.) to operate the Tigers.

Recently Bloomberg put out the new numbers for last year. Bloomberg estimates the Tigers brought in $245M this year in revenue. Add on top of this the new MLB league-wide TV deal kicks in next year (~$26M gain for all teams).

To be on the conservative side, I'll say now that the Tigers have closer to $101M in overhead costs to operate the team.

Figuring they probably are hoping to bring in at least the same amount of revenue next year as they did last year, plus $26M increase from the new MLB TV deals, gives the Tigers a projected 2014 revenue of $271M. With $101M in overhead, that means their 2014 break even payroll should be around $170M. The internal cap is probably a bit under that ($165M-167M) to leave some room for trades at the deadline and late signings. Plus, that assumes all of the new TV revenue goes into payroll, which it may not. So I'll stick with $165M as the conservative limit on payroll.

Patrick O'Kennedy already did the math on it and after the Nathan signing, the 2014 estimated payroll stands at about $151M, factoring in expected arbitrations and filling out the rest of the roster with guys making league minimum.

Now, let's say they extend Cabrera and Scherzer in the next month, as Dombrowski has all but indicated he would do.

Cabrera is under contract for 2015 so my guess is they will just tack on years to the end of his contract at a higher payroll, similar to what they did with Verlander. I'll say the contract is a 6yr/172M deal, and I'll say he makes $29M 2016-2020, and $27M in 2021. So no impact on 2014 or 2015 payroll but the increase is coming. Scherzer's will have to have his contract kick in right away. How does a 6yr/$133.7M contract sound? Good? Mr. Boras agrees. $16.7M in 2014, $21M in 2015, $24M 2016-2019.
Payroll is now at $153.7M


You are probably screaming, "There's $10-12M remaining! Sign someone!" Hold on, that number will have to do more and more each year as we march forward.

Year 2015:

Vmart and Hunter leave. We don't have a DH and our corner OF consists of Andy Dirks and probably someone brought up from our system, I'll say Daniel Fields for now. Oh and we kick in an extension on Austin Jackson cause we're going to need a CF going forward. Ironically, his "okay" performance last couple years will work in our favor as I think we can lock him up for 5yr/$58.5M, but with Boras as his agent, that number is probably too low. Keep that in mind. $8.5M in 2015, $12.5M in 2016-2019. At minimum we will have guys making league minimum in the open spots on the roster, so if we run the numbers, this is how I see the roster setting up:

2015 Lineup

Player

Position

Salary

Miguel Cabrera

1B

$22,000,000

Ian Kinsler

2B

$16,000,000

Jose Iglesias

SS

$2,500,000

Nick Castellanos

3B

$600,000

Alex Avila

C

$6,750,000

Austin Jackson

CF

$8,500,000

Andy Dirks

LF

$2,650,000

Daniel Fields

RF

$505,000

???

DH

$505,000

Brian Holoday

BN-C

$505,000

Steve Lombardozzi

BN-IF

$900,000

???

BN-OF

$505,000

???

BN

$505,000

Justin Verlander

SP

$28,000,000

Max Scherzer

SP

$21,000,000

Anibal Sanchez

SP

$16,800,000

Rick Porcello

SP

$9,750,000

Drew Smyly

SP

$3,100,000

Joe Nathan

RP

$10,000,000

Bruce Rondon

RP

$505,000

Corey Knebel

RP

$505,000

Al Albuquerque

RP

$1,150,000

Ian Krol

RP

$505,000

Luke Putkonen

RP

$525,000

Robbie Ray

RP

$505,000

Guaranteed Contracts

$122,300,000

Arbitration

$24,300,000

Others

$8,170,000

Other Payroll

$0

TOTAL PAYROLL

$154,770,000

2015 payroll with no DH and a weak corner OF: $154.7M, and this might just be a tad low if Jackson commands more in salary. The payroll went just a bit up while the team got weaker. That leaves around $10M to get a DH and possibly a better corner OF for 1 year. Flexibility is coming in big time here.

Year 2016:

All those extension raises and escalators kick in, plus we owe Texas $6M now for Fielder. I'll say we ditched Avila to FA and brought up McCann to catch. Miggy moves to DH, Kinsler to 1st, and Devon Travis takes over at 2nd. The bench has some holes as does the BP but I'm not terribly concerned with those. I also have the Tigers not picking up Nathan's 2016 $10M option and instead taking the $1M buyout. This will really depend on how Nathan ages and how Rondon develops. All can be filled internally for league min players. Unfortunately, even with all that youth influence and infusion:

2016 Lineup

Player

Position

Salary

Ian Kinsler

1B

$14,000,000

Devon Travis

2B

$510,000

Jose Iglesias

SS

$3,750,000

Nick Castellanos

3B

$525,000

James McCann

C

$510,000

Austin Jackson

CF

$12,500,000

Andy Dirks

LF

$3,600,000

Daniel Fields

RF

$510,000

Miguel Cabrera

DH

$29,000,000

Brian Holoday

BN-C

$520,000

Steve Lombardozzi

BN-IF

$1,700,000

???

BN-OF

$510,000

???

BN

$510,000

Justin Verlander

SP

$28,000,000

Max Scherzer

SP

$24,000,000

Anibal Sanchez

SP

$16,800,000

Drew Smyly

SP

$5,100,000

Robbie Ray

SP

$525,000

Bruce Rondon

RP

$520,000

Corey Knebel

RP

$525,000

Ian Krol

RP

$520,000

Al Albuquerque

RP

$2,100,000

Luke Putkonen

RP

$1,150,000

???

RP

$510,000

???

RP

$510,000

Guaranteed Contracts

$124,300,000

Arbitration

$17,400,000

Others

$6,705,000

Other Payroll

$7,000,000

TOTAL PAYROLL

$155,405,000

2016 payroll: $155.4M

Payroll went slightly up and our lineup might be very weak. We could probably get payroll a bit lower by trading off or DFA some of the bullpen or bench guys like Dirks, Putkonen and Al Al who are starting to make more in arbitration, but it won't relieve payroll a ton, and you will have to fill them in with someone else. Even more, if we pick up Nathan's option, we virtually use up all our flexibility. Now, I imagine DD will try to help this by moving guys in and out and trading for better players but payroll will still be kind of tight. THAT'S why he needs that flexibility going forward. He has given himself just enough room to make some moves to cover what will need to be covered while keeping together a good core of players.

We have some extra cash this year and next but we can't spend it on big long term contracts. We need guys in on very short terms or some creative roster shuffling. Now we could solve the DH problem in 2015 if upper management thinks Hernan Perez or Travis are ready, and thus do the shifting on the infield a year early. OF course, if neither look like viable options in 2016, we might be in the market for a DH for longer term. There's so many variables that I really don;t want to extend this evaluation farther than 2016 because you don't know what will happen in that time. Whatever happens, you can be assured that DD will need some salary space to pull it off.

Of course, all that goes out the window if Mr. I opens that checkbook again, but if that doesn't happen, DD is going to need all the flexibility he can get.

This is a FanPost and does not necessarily reflect the views of the <em>Bless You Boys</em> writing staff.

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