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Justin Upton deal gives Tigers stable roster, finances for next 2 years

The Tigers will pay a luxury tax on Upton's contract in 2016, but the payroll should be stable for two seasons and they have greater flexibility three years from now.

Denis Poroy/Getty Images

After a turbulent off season in which the Detroit Tigers replaced the loss of two starting pitchers, two outfielders, a catcher, a pitching coach and half a bullpen, the club approaches spring training with a roster that has few holes and  greater depth. The lineup and the payroll and should be relatively stable over the next two seasons, with some payroll flexibility thereafter.

Following the 2016 season, only Mike Aviles and Jarrod Saltalamacchia are due to become free agents. The Tigers have team options on Francisco Rodriguez and Cameron Maybin, with at least seven players eligible for arbitration. Maybin has a $9 million team option for 2017 with a $1 million buyout. Rodriguez carries a $6 million team option with a $2 million buyout (a difference of $4 million). If the luxury tax is an issue going into 2017, opting out of those contracts could help offset arbitration increases.

The Tigers are set to pay a 17.5 percent luxury tax on virtually all of Justin Upton's $22.125 million salary in 2016. That tax bill comes to $3.875 million, since the team was sitting right atop the $189 million payroll threshold that triggers payment of the luxury tax, prior to signing Upton to a six-year contract. That figure is likely even higher when other factors are considered.

After the 2017 season, Upton can opt out and become a free agent, and J.D. Martinez could join him as a free agent. Recently signed pitchers Mike Pelfrey and Mark Lowe will be free agents, and the Tigers have options for Anibal Sanchez and Ian Kinsler for 2018. Maybin and Rodriguez would also then become free agents if their options for 2017 are exercised. In the worst case, two starting pitchers, two relief pitchers and two outfielders leaving via free agency might sound familiar. The club essentially has a two-year roster with payroll flexibility for year three.

The impact of Upton's salary on any future payroll tax remains unknown, because the tax is set to expire at the end of the 2016 season when the current collective bargaining agreement (CBA) ends. It is widely expected that the threshold will increase, but the new tax rates, if any, are undetermined. Under the current CBA, a 30 percent tax would be levied on salary that exceeds the threshold for the second consecutive season.

Upton received the second highest free agent contract ever given by Detroit after Prince Fielder's $214 million deal, and the first with an "opt out" clause. He becomes the third highest paid player on the team, behind only Justin Verlander and Miguel Cabrera. The club has seven players earning eight figure salaries, but four or five of those will expire within three seasons. Developing their own cost controlled talent would work wonders for the payroll, and the Tigers have rebooted while keeping their top prospects.

The Tigers now have the fourth highest payroll in the major leagues for 2016, trailing only the Los Angeles Dodgers, New York Yankees, and Boston Red Sox.  The Tigers' Opening Day payroll stands at more than $190.5 million for 17 players, even if J.D. Martinez earns only the $6 million that the club has offered him before arbitration. Rounding out the 25-man roster with players earning near the major league minimum brings the Opening Day 25-man payroll to $194.5 million.

2016 Tigers payroll

2016 Salary
Cabrera $28M $29.2M
Verlander $28M $25.7M
Martinez $18M $17M
Sanchez $16.8M $16M
Kinsler $14M $15.5M
Rodriguez $7.5M $7.5M
Maybin $5.6M $5.6M
Pelfrey $8M $8M
Aviles $2M $2M
Lowe $5.5M $5.5M
JD Martinez $6MM (min)
J Wilson $1.525M $1.525M
Iglesias $2.1MM $2.1MM
8 players @513K
Fielder $6MM $6MM

There are several differences between the payroll used for purposes of calculating the luxury tax, and the Opening Day payroll numbers that you see on Cot's Contracts or Baseball Reference. Luxury tax payroll includes the average annual value of multiyear contracts, rather than present season's salary. It includes the entire 40-man roster are added for tax purposes, and it includes about $12 million for player benefits that are not included in opening day payroll numbers.

2016 Luxury Tax Payroll

Status 2016 opening day payroll 2016 luxury tax payroll
25 man payroll
$194.658M $197.3
40 man roster --- 1.2M
Player benefits --- 12M
Total $194.7M $210.5M

In addition, any buyouts of club options are included in the AAV for tax purposes. Players called up to replace others on the disabled list will add salary. Players acquired during the season or called up in September, when rosters expand, push the payroll higher. Performance bonuses earned for the season are also added for tax purposes.

The players, as well as several other clubs, would like to see the tax threshold increased, if not eliminated. The current CBA contains a sunset provision that kills the luxury tax at the end of the current agreement, but the last two agreements contained similar clauses, and new tax brackets were continued each time. The Tigers can't control the tax brackets, nor Upton's option decision, but they have flexibility to adjust to them going forward.