Payroll constraints in baseball have always been an issue, but the luxury tax has influenced teams to act more “budget-conscious”.
First, let’s state the obvious: The luxury tax in baseball — $206 million in 2019 — is essentially serving as a soft salary cap to drive, or keep, player salaries down. Teams like the Dodgers, Yankees, Cubs, and Red Sox, who usually have the most money to spend, are suddenly operating a lot like the A’s and Marlins in free agency. Well, almost all teams are acting this way nowadays. For as much praise the Astros deserve for their approach to analytics, they are also part of the crowd that doesn’t spend a lot in free agency. While revenues have reached a new high, team owners paying their players less money. Something isn’t right with this picture.
I do understand to certain degree why teams operate in this manner. The way how teams spend are within the rules set forth by the Collective Bargaining Agreement. The players union does deserve a fair amount of criticism for not drawing the proverbial line in the sand against the owners. Minor league pay, for example, needs to be revamped. Something similar to minimum wage would be a start. For better or worse, the ongoing pay disparity is leading baseball right into another strike in the near future.
That said, the Astros have noticeably invested more in player payroll since bottoming out in 2013. I personally think they can spend more, but as long as the luxury tax is in play, teams like the Astros are going to operate with it in mind.
Year-by-year 40-man Year End figures, 2013-18
- 2013: $29,270,160 (30)
- 2014: $54,689,189 (29)
- 2015: $82,395,216 (27)
- 2016: $124,363,133 (18)
- 2017: $140,475,350 (19)
- 2018: $187,386,304 (7)
Here is the breakdown of the current payroll commitments based on the 40-man roster-competitive balance tax-AAV from Cot’s Baseball Contracts; please note that Cot’s uses an estimate for arbitration-eligible players, club control, 40-man players-minors, and player benefits.
- Justin Verlander: $25,714,286
- Michael Brantley: $16,000,000
- Josh Reddick: $13,000,000
- George Springer: $12,000,000
- Yuli Gurriel: $9,500,000
- Jose Altuve: $23,357,143
- Joe Smith: $7,500,000
- Roberto Osuna: $6,500,000
- Collin McHugh: $5,800,000
- Hector Rondon: $4,250,000
- Will Harris: $4,225,000
- Lance McCullers Jr.: $4,100,000
- Brad Peacock: $3,110,000
- Ryan Pressly: $2,900,000
- Jake Marisnick: $2,212,500
- Payment from Detroit Tigers: -$8,000,000
- Arbitration-eligible players: $18,612,500 – includes Gerrit Cole, Carlos Correa, and Chris Devenski
- Club-control: $3,450,000
- 40-man players-minors: $2,250,000
- Est. player benefits: $14,500,000
Projected 40-man CBT payroll: $176,731,429
Amount under threshold: $29,628,571
While I doubt that the Astros ever enter the top-three teams of payroll, it isn’t unreasonable to expect the club to have a top-ten payroll going forward. I am not optimistic that Houston will sign all of their young core players (Cole, Springer, Correa, and Bregman) to long-term contracts, but I do believe they ought to retain at least two of them when the time comes. Based on the above figures, the Astros still have room to add another impact player or two without entering luxury tax territory in 2019.
Beyond the upcoming 2019 season, the Astros have quite a bit of flexibility in store. The only long-term contract currently on the books is Altuve, although I do expect another player or two to join him next offseason. It’ll be interesting to see how the pay structure in baseball changes when the current CBA expires in December 2021. The Astros, like everyone else, will have to adjust if any noteworthy changes in the CBA take place.