Breaking down the Tigers' 2017 payroll, contracts, and luxury tax challenges

The Detroit Tigers spent over $200 million on player salaries during the 2016 season. For tax purposes, the Tigers' payroll for the 40-man roster was over $215 million. That figure includes the average annual value of multi-year contracts, performance bonuses, their share of player benefits, and $6 million for Prince Fielder. As a first time "offender," they will pay a 17.5 percent tax on the amount above the $189 million threshold, which comes to a "competitive balance tax" over $4.5 million, conservatively.

Under the present tax structure, the Tigers would pay a 30 percent tax on the amount above the tax threshold should they exceed the limit for a second consecutive season. The MLB Players Association will be pushing for a higher tax threshold in the new collective bargaining agreement (CBA), but how high is to be determined. Seven teams have payrolls at or above the tax threshold, so the Tigers are not the only team looking for a tax break.

The Tigers had been skillfully avoiding the tax in recent seasons, tip-toeing just above or below the tax threshold during the 2014 and 2015 seasons. Detroit's payroll had inched above the tax threshold prior to the trade deadline, but they avoided paying a tax when they cut $12.6 million from their payroll by trading David Price, Yoenis Cespedes, and Joakim Soria in 2015.

Free agent signings such as Jordan Zimmermann, Mark Lowe, and Mike Pelfrey once again had the Tigers on the cusp of the threshold, putting general manager Al Avila in a financial straitjacket to the point where he signed Mike Aviles to platoon with Anthony Gose in the outfield. At the press conference announcing Zimmermann's signing, Mr. Ilitch may have spilled the beans about pressure that owners might get when exceeding the "naughty limit."

"I’m supposed to be a good boy and not go over it," Ilitch said, "but if I think there are certain players that could help us a lot, I’ll go over it. Oops, I shouldn’t have said that."

In January, Ilitch gave the go-ahead to sign Justin Upton for $22.125 million per season. Avila again had no cash to spend all season and the team remained inactive at the trade deadline as they were chasing a division title. When Avila recently spoke of reducing payroll, he said, "Quite frankly, it's put us in a position where it's difficult to maneuver." When they did make a deal, sending Aviles to Atlanta for Erick Aybar, the Braves ate Aviles' remaining contract and kicked in cash to make the deal revenue neutral.

The Tigers' payroll would increase by about $6 million in 2017 if they just exercise team options on Cameron Maybin and Francisco Rodriguez, while letting free agents Aybar and Jarrod Saltalamacchia walk and filling their jobs internally.  All the payroll increase for tax purposes comes from projected arbitration increases for six players.

^aArbitration estimates are here.

AAV stands for the average annual salary of players on multi-year contracts, which is used for tax purposes. Presently, the Tigers would have a 40-man roster payroll around $222 million in 2017, which includes about $14 million in player benefits for tax purposes. These numbers will increase as players are called up in September or to replace others on the disabled list.

The Tigers have reset their payroll a couple of times in recent years. After the 2009 season, they traded Curtis Granderson and Edwin Jackson for Max Scherzer, Austin Jackson, Daniel Schlereth and Phil Coke. They also let Placido Polanco leave without offering arbitration. After a rough season in 2010, the Tigers rebounded to win four consecutive division titles. In November, 2013, when the team again found payroll increasing without making any roster upgrades, they traded Prince Fielder for Ian Kinsler and Doug Fister for prospects, clearing payroll space to fill other roster vacancies.

Mike Ilitch has been willing to exceed the tax threshold while the team is contending. The Tigers paid a tax of $1 million in 2008. He was ready to pay it in 2015 before the decision was made to sell. He will pay it in 2016. Without unloading salaries or some help from the new CBA, the Tigers will be paying a tax again in 2017.