Will the Anibal Sanchez signing push Tigers over the fiscal cliff?

The signing of Anibal Sanchez to a five year, $80 million contract is good news for Tiger fans who want nothing more than to see the Tigers win the World Series for the first time in almost 30 years. Once again, Tigers owner Mike Ilitch has stepped up and shown his dedication to bringing a championship to Detroit. However, one has to wonder whether the deal will hinder the club as it tries to remain competitive in the near future.

With the Sanchez contract, the club’s opening day payroll is projected to total over $155 million by opening day, by far the largest payroll in club history. Of greater concern is the fact that the Tigers have a roster comprised mainly of players that are either signed to multi-year contracts, or are in their arbitration years. The club has a number of substantial commitments, and a number of escalating salaries, with few players working for the league minimum salary.

Tigers president and general manager Dave Dombrowski has made the point that the Tigers have three players earning in excess of $20 million, and only the Yankees had that many through the 2012 season. The Angels and Dodgers will join that select group in 2013. More daunting is the fact that Justin Verlander has just two seasons left on his contract, and Miguel Cabrera has just three seasons remaining. The Tigers would like to extend their superstars.

Dombrowski has built the club around a strategy of drafting starting pitchers, knowing that they are the most precious, and generally the most expensive players to acquire by trade or by free agency. Verlander, Rick Porcello, and Drew Smyly were all drafted. Max Scherzer and Doug Fister were acquired by trades. Sanchez was acquired in an expensive trade and now retained with an expensive free agent contract.

The Tigers feature a rotation of Verlander, who could get perhaps $30 million per season if he were a free agent right now, Max Scherzer who has two seasons left before free agency, Doug Fister and Rick Porcello, who each have three seasons left. Scherzer should make around $ 7.5 million next season, upwards of $10 million for 2014, and even more if he were to be extended into his free agency years. Porcello and Fister stand to get about $22 million each before free agency, and then the free market rate after that unless an extension retains them.

Other players who are arbitration eligible for the first time include Austin Jackson, Alex Avila,and Brennan Boesch. Phil Coke is eligible for the second time. This group would have included Don Kelly and Ryan Raburn, who have been let go. In fact, the only starting players that are still pre arbitration are Andy Dirks and Drew Smyly.

Projected salaries for arbitration eligible players, according to Matt Schwartz of MLBTR

Max Scherzer - $7.5MM
Rick Porcello - $4.7MM
Doug Fister - $3.8MM
Austin Jackson -$3.1MM
Alex Avila - $2.5MM
Brennan Boesch - $2.1MM
Phil Coke - $1.7MM


The total projected salary of the 2013 arbitration class is $25.4 million, and that will increase each season until the players reach free agency. The Tigers could shed some salary by trading a starting pitcher, or by dealing Brennan Boesch who doesn’t seem to fit the current lineup scheme. Or, they could allow some of their players to play out the string and let them walk after six seasons, perhaps receiving a valuable compensation draft pick if they’re willing to make a departing "qualifying offer" in the $14 million range. Those decisions are down the road, in the not too distant future.

Mike Ilitch has made a very strong commitment to winning immediately. Not only has the club spent money on free agents with contracts that may be a burden before they’ve expired, but they’ve traded several top prospects and forfeited draft picks to acquire players, all in an effort to win now.

If the Tigers hope to have more than a two year window of opportunity, extending Verlander and Cabrera is essential. I have suggested that a four year, $100 million extension for Verlander would be appropriate, and that would make him the game’s highest paid pitcher, but it may take even more than that.

The Dodgers gave Zack Greinke the largest contract ever given to a pitcher in terms of average annual value, with an average salary of $ 24.5 million. That tops the $24 million average salaries made by Cliff Lee and CC Sabathia.

Cabrera has three years remaining on his contract, but he stands to make even more than Verlander as a free agent. The Tigers don’t want to let it get to that point. If the Tigers can’t extend these two players, their chances of keeping them become slimmer, and their chances of fielding a perennial winner fall off the cliff.

Even if Detroit can retain Verlander and Cabrera, their roster is going to become very expensive to keep in tact. A rough estimate of 2014 payroll with the current cast is still above $155 million, and they’ll have to replace their second baseman and shortstop, who will be free agents.

This is not to say that Mike Ilitch, who is now 83, won’t keep spending some of his $2.7 billion (Forbes estimate) to keep the Tigers in the hunt for a championship every season. Baseball revenues continue to grow, Tiger fans tune in at a league leading viewer rate, and Tiger fans have a history of supporting a winner, to the tune of over 3 million fans last season.

The Tigers have a couple of solid outfield prospects in Nick Castellanos and Avisail Garcia. They have one promising pitcher in Smyly and a potential closer in Bruce Rondon. But they don’t have the kind of prospects in the pipeline that are necessary to maintain a fiscally responsible balance of young players and veterans that can be sustained over the long haul.

The Tigers have two of the top 37 draft choices in next June’s amateur draft. One of those came in the trade for Sanchez, being swapped for the No. 73 choice, as they dealt their top pitching prospect to Miami. They’ll need to make those picks count to infuse some young talent into a veteran laden roster.

There is no question that signing Sanchez makes the Tigers one of the favorites to repeat as American League champions. The signing is a cause for celebration. Whether they’ll be able to sustain that level of success is a large question. At least so far, Tiger management has shown the financial commitment and the skill to keep a winning team on the field.