The trades made by the Detroit Tigers at this year's Winter Meetings in San Diego will have a small, but possibly significant impact on their net payroll for the 2015 season. They may also push the Tigers closer to potentially paying a luxury tax.
The Tigers traded starting pitcher Rick Porcello and his projected $12.2 million salary. They acquired Yoenis Cespedes, who has a $10.5 million salary, and starting pitcher Alfredo Simon, who is eligible for arbitration and projected to earn $5.1 million for the 2015 season. The net impact of those trades -- after cutting one roster position that would have been filled by a player earning the league minimum salary -- is a net increase of $2.9 million for the 2015 season.
Both Porcello and Simon are eligible for arbitration this year before being eligible for free agency after the 2015 season. The financial impact of swapping Porcello for Simon is a net decrease of a projected $7.1 million. This may explain why Detroit acquired Simon rather than another starting pitcher, such as the Reds' Mat Latos, who was traded to the Miami Marlins on the same day.
Cespedes is on a four year contract that pays him $36 million, granting him free agency after the 2015 season. For purposes of calculating payroll for the luxury tax, the average annual value of $9 million will be charged to Detroit's payroll in 2015. This brings the grand total to just over $170 million, based on the same arbitration estimates listed above.
I explained how the luxury tax works earlier this week, and broke down exactly how close the Tigers are to tripping over the threshold. To summarize, Detroit would pay a 17.5 pecent tax on any amount of player salaries above $178.4 million.
With a 2015 payroll for the 25 man roster estimated at $175.65 million, the Tigers would have just $2.75 million to spend on any further roster upgrades -- minus the salaries of 15 players optioned to the minors -- before being hit with a luxury tax. If Joel Hanrahan were to make the team and earn his full quota of incentives, that would just about do it. Paying a 17.5 percent tax on a few million dollars in 2015 may not be such a big deal, but if the Tigers were to exceed the threshold again in 2016, the tax jumps to 30 percent on the overage.
Following are the updated payroll charts:
Players with guaranteed contracts
|Miguel Cabrera||22.0 M||22.0 M||28.0 M||29.2 M|
|Justin Verlander||20.0 M||28.0 M||28.0 M||25.7 M|
|Victor Martinez||12.0 M||14.0 M||18.0 M||17.0 M|
|Anibal Sanchez||15.8 M||16.8 M||16.8 M||16.0 M (c)|
|Ian Kinsler||16.0 M||16.0 M||14.0 M||16.0 M|
|Joe Nathan||9.0 M||10.0 M||FA 1.0 (b)||10.0 M|
|Rajai Davis||5.0 M||5.0 M||F A||5.0 M|
|Joakim Soria||1.85 M (a)||7.0 M||F A||7.0 M|
|Alex Avila||4.15 M||5.4 M||F A||5.4 M|
|Total||105.8 M||134.7 M||104.8 M||140.3 M|
(a) Soria's $ 5.5 M 2014 salary is pro rated for time with Detroit
(b) Nathan's 2016 option is $ 10 M. $ 1.0 M buyout is included in 2015 AAV
(c) Sanchez 4.0 M bonus is spread over 5 year contract
Arbitration eligible players
|Player||Service Time||Year Eligible||2014 Salary||*2015 Projection||Increase/Decrease|
|David Price||5.170||4th||14.0 M||18.9 M||+4.6M|
|Alfredo Simon||5.164||3rd||1.5 M||5.1 M||+3.6M|
|Al Alburquerque||3.147||2nd||0.875 M||1.7 M||+0.825 M|
|J.D. Martinez||3.036||1st||0.510 M||2.9 M||+2.39 M|
|Total||-||-||16.89 M||28.6 M||+11.715 M|
*Arbitration estimates based on MLB Trade Rumors projections.
|Status||2015 Salary||2015 AAV||2016 Salary|
|Players under contract (10)||$ 134.7 million||$ 140.3 million||$ 104.5 million|
|Arb eligible (4)||$ 28.6 million||$ 28.6 million||TBD (c)|
|Jose Iglesias (a)||$ 1.65 million||1.65 million||TBD|
|Pre-Arb Eligible (10)||$ 5.1 million (b)||$ 5.1 million||TBD|
|Total||$ 170.05 million||$ 175.65 million||$ 111.8 million|
(a) Jose Iglesias is projected to earn the same salary as 2014. The club can voluntarily increase, or reduce by up to 20 percent.
(b) Other pre arbitration eligible players are projected at $510,000 salary.
(c) Arbitration eligible players in 2016 may include J.D. Martinez, Alburquerque, Iglesias, Andrew Romine, and Luke Putkonen.
2016 total includes guaranteed contracts, plus $6 million payment for Prince Fielder.