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Tigers have reduced their payroll by $100 million after Justin Verlander trade

Expiring contracts and trades have cut the Tigers’ payroll dramatically.

Detroit Tigers v Chicago White Sox Photo by Jonathan Daniel/Getty Images

The Detroit Tigers began the 2017 season with the highest payroll in the American League. It was even higher than the New York Yankees, or any other major league team not named the Los Angeles Dodgers. Players’ salaries toted $200 million, according to Cot’s Contracts.

Following the trades of Justin Upton and Justin Verlander, the Tigers will have reduced their 2018 Opening Day payroll by over $93 million. They cut the average annual value of their players’ salaries by over $100 million when contracts expire after the current season. That is a reduction of over 50 percent, before factoring in any salaries for replacement players.

Detroit’s payroll was already going to be over $50 million lighter in 2018 due to expiring contracts. Many of those contracts belong to players who have provided little or no value during the 2017 season. The two contracts for Upton and Verlander will save another $42 million, even with the Tigers paying a chunk of Verlander’s salary while he pitches for the Houston Astros during the next two seasons.

The Tigers’ payroll was over $216 million for luxury tax purposes, or more than $21 million above the tax threshold. Players replacing those on the disabled list and September call-ups would have pushed 2017 salaries easily above the $200 million mark for the first time in franchise history, before recent trades brought salary relief.

While it is far too late for the Tigers to avoid paying a luxury tax in 2017, there won’t be any talk of luxury taxes for the foreseeable future. As a tax payer, any compensation for losing premier free agents would have been severely reduced, while the penalties for signing a free agent who has declined a “qualifying offer” will still be prohibitive. So, don’t expect the Tigers to rush out this winter and spend the salary savings on big ticket players.

Following are the salaries that will be coming off the books, both in 2017 salaries and average annual value (AAV) which is used for tax purposes.

Detroit Tigers Payroll Savings

Player 2017 Salary Savings AAV
Player 2017 Salary Savings AAV
Justin Verlander $28 M $20 M $25.714 M
Justin Upton $22.125 M $22.125 M $22.125 M
Anibal Sanchez $16.8 M $16.8 M $16.0 M
J.D. Martinez $11.75 M $11.75 M $9.25 M
Ian Kinsler $11.0 M $1.0 M* $15.0 M
Mike Pelfrey $8.0 M $8.0 M $8.0 M
Francisco Rodriguez $6.5 M $6.5 M $6.5 M
Mark Lowe $5.5 M $5.5 M $5.5 M
Justin Wilson $2.7 M $2.7 M $2.7 M
Alex Avila $2.0 M $2.0 M $2.0 M
Total $114.375 M $96.375 M $112.784 M

The total savings assumes that the club will decline the $16 million option for Anibal Sanchez and pay the $5 million buyout, but pick up the reasonable $10 million option for Ian Kinsler, rather than paying $5 million to let him walk for nothing. The totals also include $6 million that the club is still paying to Prince Fielder, and reported $8 million per season of Verlander’s salary that will be paid to Houston.

Some of the payroll savings will be allocated to scheduled salary increases for Miguel Cabrera, who will earn $30 million in 2018 (up from $28 million in 2017) and for Jordan Zimmermann, whose salary jumps from $18 to $24 million (ugh!). That’s $8 million in salary raises.

Eight Tigers will be eligible for arbitration this winter. Jose Iglesias and Andrew Romine will be eligible for the third and final time. Alex Wilson, Nicholas Castellanos, Alex Presley and Bruce Rondon are second-time eligibles, while James McCann and Shane Greene will be eligible for the first time. Between $8 to $10 million should cover all of the increases. Perhaps some of those players will be non-tendered or traded, creating more payroll savings.

Following the 2018 season, another $30 million plus is scheduled to come off the books, with the expiring contracts of Victor Martinez, Kinsler, Andrew Romine, and Jose Iglesias.

Some of the departing players will be replaced internally by younger players earning near the major league minimum salary of $545,000 in 2018. The Tigers may do some winter shopping, and will certainly have cash available to spend to improve the roster.