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Recent History Of March Signings

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March is just around the corner. If you hadn’t noticed, a fair number of notable players remain unsigned. The very top of MLBTR’s pre-winter top-fifty free agent list remains well-represented on the open market, with a smattering of other notable players also still unsigned. This represents a continuation of the surge of late signings observed last winter, which was the first offseason conducted under the current collective bargaining agreement.

It’s not hard to see that the market is functioning differently under the new CBA. Here’s a listing of the most notable players who’ve yet to sign this year, alongside the recent history of MLB contracts inked during the month of March:

2019

2018

2017

2016

2015

MLBTR Originals

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Rounding up the latest original content from the MLBTR staff…

  • Given what we now know about the free agent market, Mark Polishuk took this opportunity to see how the Charlie Blackmon extension looks in hindsight in this Transaction Retrospective.
  • Jeff Todd gave us all a break from the Manny Machado and Bryce Harper hoopla because there are, in fact, other free agents still available. Take a look at his list of 1o Forgotten Free Agents, featuring nostalgic stars like Denard Span and “Big Game” James Shields. GMs around the league must be reading, because four of these unsung heroes have since signed new contracts.
  • Jeff also took a moment to see gauge public opinion about Manny Machado’s new deal with the Padres. Only 2.7% of you thought the $300MM deal was a bargain.
  • 2019 is a contract season for Chris Sale, so we attempted a valuation of a potential extension, should Boston explore it with their lefty hurler.
  • And of course, ICYMI, be sure to read the transcripts from this week’s chats with Steve, Tim, Jeff and Mark who are typically on hand to chat with MLBTR readers every Monday, Tuesday, Thursday and Sunday.

Transaction Retrospection: The Charlie Blackmon Extension

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Throughout the Rockies’ franchise history, the team hasn’t been shy about extending key members of the roster.  Colorado’s biggest extension yet could be in the offing, as the Rockies continue to talk with All-Star third baseman Nolan Arenado about a long-term deal that would keep Arenado away from free agency next winter.

If such a contract is worked out, it would easily be the most expensive deal in Rockies’ history, not to mention one of the pricier deals in Major League history.  It would also be the second major extension completed by Jeff Bridich in his time as Colorado’s general manager, coming on the heels of the club’s five-year extension with Charlie Blackmon last spring.  That deal is worth revisiting now, given what we’ve seen about the free agent outfield market (or, really, just the free agent market in general) after a second consecutive slow offseason of signing activity.

Blackmon was 31 at the time of the extension (he turned 32 last July 1), and, like Arenado is now, also a year away from reaching free agency.  Blackmon had posted solid numbers as a part-time player and then as a regular with Colorado in 2013-15, though he stood a big step forward to hit .327/.390/.578 with 66 homers over 1366 plate appearances in 2016-17.  That performance saw Blackmon earn a Silver Slugger Award in both seasons, as well as a fifth-place finish in NL MVP voting in 2017.

With the Rockies coming off a postseason appearance in 2017, the team moved to lock up a top performer, agreeing to an extension that guarantees Blackmon at least $94MM from 2019-23.  Blackmon earns $21MM in each of the next three seasons, and then has a player option for another $21MM season in 2022.  He then has another player option year for 2023 worth $10MM in guaranteed money, though another $8MM is available via escalators based plate-appearance thresholds that seem rather readily achievable, or on MVP finishes.  (The deal also technically adjusted Blackmon’s previously agreed-upon $14MM arbitration salary for 2018, turning $2MM of that figure into a signing bonus.)  All told, the extension could max out at $102MM in new money for Blackmon once all is said and done.

Even sticking to the guaranteed $94MM figure, however, Blackmon’s contract already looks like an outlier in the wake of how baseball’s free agent marketplace has evolved over the last two winters.  Manny Machado and Patrick Corbin are the only 2018-19 free agents who earned more than $94MM in guaranteed money this winter.  Bryce Harper will be the third name on this list once he eventually signs, and it’s doubtful that Dallas Keuchel will meet even MLBTR’s four-year/$82MM projected contract, let alone a $94MM deal.

Blackmon’s production also took a bit of a step back in 2018, as he hit .291/.358/.502 with 29 homers over 696 plate appearances.  Still strong numbers, to be sure, though more in the vein of a solidly above-average hitter (116 wRC+, 115 OPS+) than his more elite production (137 wRC+, 136 OPS+) in 2016-17.  On the defensive side, Blackmon had been a below-average but playable center fielder throughout his career, though his glovework fell off (-28 Defensive Runs Saved, -12.6 UZR.150) to such an extent in 2018 that the Rockies will now deploy him as a right fielder this season.

Had Blackmon been a free agent this winter, his most natural comp was another center fielder, A.J. Pollock.  The newly-signed member of the Dodgers outfield lacks Blackmon’s durability and longer track record of production, but Pollock is also 17 months younger, a more stable defender, and more of a sure thing to produce in a new ballpark (Blackmon has a career .970 OPS at Coors Field, and only a .745 OPS on the road).  Pollock landed a five-year deal from the Dodgers worth $60MM in guaranteed money, so even if some teams felt that Blackmon was the better free agent bet, the gap between the two players surely wouldn’t have been $34MM.

With all this in mind, it’s fair to say that Blackmon and his representatives at ACES did a good job in landing that extension last spring.  As a soon-to-be 33-year-old headed for corner outfield duty, as hard to imagine Blackmon would’ve found five years and $94MM in free agency if he had tested the market this winter.

A win for Blackmon, however, doesn’t at all mean that the deal was a “loss” for the Rockies.  As noted, Blackmon was still a very productive hitter in 2019 — drastic home/road splits aren’t as big an issue when you’re the team that plays at Coors Field, naturally.  Blackmon also wouldn’t be the first player to improve at the plate after shifting to a less-demanding defensive position, so getting out of center field could help Blackmon’s bat as well as simply drastically elevating his defensive value.

Could Colorado have re-signed Blackmon to a lesser deal as a free agent had they not extended him a year early?  Potentially, though such a “what-if” scenario is easy to create with 20/20 hindsight (plus, you never know if another team might’ve been particularly keen on signing Blackmon).  As it worked out, the Rockies were able to retain a player they liked both on the field and in the clubhouse, even if it may have been a bit of an overpay.

Let’s also not overlook the big-picture ripple effect of the Blackmon extension as it relates to Arenado.  The third baseman now has solid proof that a Bridich-led front office is willing to pay to keep a homegrown star in the fold, and retain members of what has been a winning core group that has reached consecutive postseasons.  Money-wise, Blackmon’s long-term contract presents no real obstacle to the Rockies being able to afford Arenado, given that negotiations are already taking place and the organization is cognizant of the $200MM+ it will surely take to keep Arenado in the fold.  From a return-on-investment standpoint, Blackmon’s contract also looks like much less of a problem for the Rockies’ payroll than the lack of production they’ve received from recent free agent signings like Ian Desmond, Jake McGee, or Bryan Shaw.

It will also be interesting to see how Blackmon’s extension stands in the wider scope of future extensions for star players a season away from free agency.  We’ve already seen some notable extensions this spring, though those deals went to players (Aaron Nola, Luis Severino, Jorge Polanco, etc.) who were still arbitration-controlled for several seasons, rather than pending members of the 2019-20 free agent class.  For some of those scheduled free agents who are already in their 30’s, the thought of an extended stint in free agency and/or a lesser contract than expected have surely crossed these players’ minds in the wake of the last two offseasons.

Blackmon’s contract may represent a best-case scenario for such players if they do pursue extensions, as Blackmon and his camp were able to score at what may be the peak of the outfielder’s value and earning potential.  Of course, it takes two to tango, and it remains to be seen if teams besides the Rockies are willing to pay a premium in an extension for a player who isn’t either a true elite veteran (like a Nolan Arenado) or a younger, arbitration-controlled star who could prove to be a bargain if locked up early.  As a team wanting to both win now and to send an early signal to Arenado that they wanted to win the future, however, the Rockies felt Blackmon’s extension was clearly worth the plunge.

Valuing A Chris Sale Extension

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As he closes in on his 30th birthday and the start of his tenth season of action in the big leagues, Chris Sale (through his reps at Jet Sports Management) is engaged in at least some level of discussion with the Red Sox regarding an extension. The upcoming season is the final year of control under the deal Sale originally signed with the White Sox, adding some impetus to discussions.

It’s a fascinating situation to consider, owing to a variety of considerations. From a narrative perspective, the club’s whiff on Jon Lester years ago provides obvious fodder for comparisons. And an otherwise quiet winter from the defending World Series champs also makes for an intriguing backdrop.

The really interesting part, though, is the valuation itself. Starting pitchers have found a fair bit of success at prying monster deals from clubs entering a walk year. Clayton Kershaw’s original extension (seven years, $215MM plus opt-out) is the largest, but Stephen Strasburg’s recent $175MM deal also makes for a notable recent data point. Both of those pitchers were more youthful than Sale, but Justin Verlander’s second extension (which added five years and $140MM to his existing deal) was signed at a comparable age point (and two seasons in advance of his free agency).

That’s not to say that any of those particular deals really looks to be a perfect comp for Sale. Rather, they go to show that Sale can and should be looking for a contract that values his would-be free agent seasons at their anticipated market value.

On the other hand, there’s also no small amount of risk to be priced in here. That was the case with those other contracts, to be sure, but in this case the team will no doubt be particularly wary. After all, Sale missed five starts last year with still-mysterious shoulder issues. Though he’s said not to have exhibited structural problems, he showed some potentially worrisome velocity changes (with a correspondingly wandering release point) last year.

Both the team and Sale himself surely know quite a bit more than we do about his health. Certainly, his overall track record is one of excellent durability. While Sale’s funky delivery and big velocity readings have long led to predictions of physical ailments, he averaged 30 starts and 205 frames annually from 2012 through 2017.

Whatever the health risk may be relative to other pitchers, there’s little denying that Sale’s recent performance track record is quite free of red flags. All told, Sale has a 2.89 ERA in nearly 1500 career MLB innings and currently sits as the all-time leader in K/9 and K/BB ratio.

Importantly, too, he was in top form last year. Sale was deployed judiciously in the 2018 postseason but did record 24 strikeouts in 15 1/3 frames. Before that, he handled 158 regular-season innings, over which he allowed just 37 earned runs on 102 hits and 34 walks while racking up a whopping 237 strikeouts. When you smooth out the ups and downs in the radar readings, Sale threw harder overall last year than he ever has as a starter (95.7 mph average four-seamer). He also generated more swinging strikes than ever before (15.8%).

Those facts seem to distinguish Sale from Kershaw, who recently provided another notable contractual point to consider. The Dodger star’s new deal was hammered out in a near-open-market scenario, in the window before he had to decide whether to opt out of the final two years and $65MM of the aforementioned contract. The sides came up with a rather unique arrangement: three years, $93MM, with $12MM in total incentives that are achievable in full if Kershaw is at full health throughout the deal. Kershaw turns 31 in March, just before his new deal begins, so that contract covers almost the exact same age period as Sale’s next contract will. Not unlike Sale, Kershaw missed a few outings last year but still generated impressive results. Unlike Sale, Kershaw has exhibited more significant and long-lasting concerns in terms of his stuff and peripherals. The Dodger stalwart averaged 162 innings annually in the three seasons preceding his deal, with a series of back issues limiting his availability, tamping down his velocity, and reducing him from the game’s best pitcher to “merely” one of its best.

In the Kershaw scenario, it seems fair to say that the Dodgers mostly took a health discount by limiting the length of the commitment and including a hefty, easily achievable, but health-dependent incentives structure. It’s the kind of contract we might have expected, in the not-so-distant past, for an outstanding pitcher of an older age. That Kershaw took it at a relatively youthful stage is testament both to the level of concern with his long-term outlook and perhaps also the newfound market commitment of many teams to avoid obligating payroll space too far into the future (particularly for players in their mid-30s).

It seems easy to say that Sale won’t need to settle for the Kershaw deal to get something done. The latter has had the more impressive overall career, but his recent red flags are impossible to ignore. Still, it’s an interesting general scenario to contemplate when imagining what a deal could look like.

How’s it look for players who hit free agency under more favorable circumstances? The approach long has been to chase the biggest and lengthiest deal on the open market. David Price ($217MM) and Max Scherzer ($210MM) were each a bit younger when they secured their seven-year mega-deals — both turned 31 during the first seasons of their new contracts — than Sale will be when he hits the open market. Zack Greinke, the only other pitcher to top $200MM, turned 32 just before reaching free agency, so he was a fair bit older. He got six years and $206.5MM, easily setting a Major League record (which he still holds) with an average annual value north of $34MM.

There’s little question that Sale could position himself for massive earnings in the 2019-20 offseason with a performance that mirrors his 2018 in quality and his prior career in durability. Sale could be joined by some big names on the open market, but he almost surely possesses the greatest earning upside of any possible free-agent starter. Price’s total guarantee and Greinke’s AAV marks both seem theoretically achievable, though it’s arguable whether that kind of coin will still be available in today’s market. Even if we could accurately gauge Sale’s true earning ceiling, which would depend upon quite a few market factors, reaching it represents only one of several conceivable scenarios. With something less than full health, or declines in velocity and/or effectiveness, Sale’s earning power would obviously begin to slide.

So, where might we anticipate the price tag landing in extension talks? Sale will earn $15MM in 2019 regardless of any new deal, so we’ll consider only the future seasons. Presumably, the Red Sox will look for some kind of discount (in salary, years, or both) to account for the health uncertainty — both that of any pitcher separated from free agency by a full season and whatever added questions come with Sale. Might the Boston organization seek to cabin the length of the contract? Or would it be amenable to a lengthier deal that spreads the guarantee over a longer span, thus reducing the annual luxury tax hit? And what about Sale’s own preferences?

Supposing the Sox are willing to go to Greinke levels on the AAV but not on the term, it’s possible to imagine a five-year extension in the range of $175MM. That figure would also match the recent Strasburg deal, albeit over a shorter duration (his was for seven years) — arguably a fair result for a more accomplished and consistent, but also less youthful starter. But is that really the most sensible approach? Perhaps the team would rather stretch things out, even if it means committing to additional seasons. Adding six years at $190MM would not greatly expand the Red Sox’ overall commitment. For one thing, it’s reasonable to anticipate that Sale will still be a useful-enough pitcher at the end of that deal to warrant his salary. There’s a risk he won’t be, certainly, but there’s also real upside (see, e.g., Verlander) as well as the promise of continued inflation driving down the effective price.

Interestingly, the club’s luxury tax situation also increases the value of spreading the AAV. Let’s do a bit of math to see how this looks. Sale’s original extension, signed before the 2013 season, will have paid him a total of $59MM over seven seasons, but option years are treated as one-off seasons for purposes of the competitive balance tax calculation. That means that Sale’s hit to the Sox’ books this year will be his current salary of $15MM. Modifying his forward-looking contract rights, though, would change that number by adding the new years and dollars and then re-running the AAV. As MLBTR’s Steve Adams examined recently with regard to a hypothetical re-signing of Craig Kimbrel, any new money added to the Boston luxury ledger is going to be taxed at a hefty rate. A new deal for Sale would not only trigger a drop in draft placement but would also mean a big tax bill increase. You can find the details there; for our purposes, since a new deal would certainly be of sufficient magnitude to push the club into the top tax bracket, the Red Sox would pay 75 cents for every additional dollar of AAV they take on. And that’s just for the 2019 season. If the organization continues to exceed the luxury line, it’ll keep getting hit with bills — every one of which will be impacted by Sale’s AAV.

It’s not hard to see how adding a season or even two at a relatively lesser salary might begin to make sense, particularly when one includes the concept of the time-value of money. Here are a few scenarios to kick around (all dollars in millions):

Extension Years Extension Money Extension AAV Cumulative AAV 2019 Tax Increase
5 $150 $30.00 $27.50 $7.83
5 $175 $35.00 $31.67 $10.96
6 $160 $26.67 $25.00 $5.96
6 $180 $30.00 $27.86 $8.10
6 $192 $32.00 $29.57 $9.39
6 $207 $34.42 $31.64 $10.94
7 $175 $25.00 $23.75 $5.02
7 $200 $28.57 $26.88 $7.37
7 $217 $31.00 $29.00 $8.96

These are, of course, largely random price points (some of which connect to contract comps noted above, others of which are simply round numbers). But they serve to show how much cash the Red Sox could in theory be forced to take on right now if they really want to avoid paying Sale past his mid-30s. That hit, as noted already, would potentially be repeated in future seasons in which the club nears or passes the luxury line. Those considerations may well factor into the organization’s approach, whatever level of health-related discount is deemed necessary to make a contract appealing.

If a lengthier, more spread-out deal might make greater sense for the ballclub, what about Sale? As my colleague Steve Adams reminded me, the southpaw hinted recently that he could go looking to set new high-water marks of some kind. As Sale put it: “You want to do right by the guys who are coming next year, two years, 10 years down the road because you kind of set the bar and the next guy who comes along either gets to that bar or sets it a little more.”

If he intends to raise the bar in an extension scenario, one full season removed from the open market, there’s no realistic way he’s going to top the line set by Price. Breaking the overall guarantee record (seven years, $217MM) would almost certainly mean pitching in 2019 before negotiating his next contract. On the other hand, Sale could take aim at Greinke’s AAV mark. In that case, though, it’s awfully tough to see the Red Sox making a commitment past five additional seasons (if they’re willing to make such a deal in the first place).

Perhaps Sale’s bar-raising sentiments shouldn’t be taken too literally. He no doubt appreciates that an extension situation necessarily involves other considerations (and lacks competitive bidding). A hurler of his age reaching the $200MM mark in new money, say, would represent a notable achievement even if it came with a relatively less-impressive AAV and didn’t really set any recognizable records. In terms of maximizing his own career earnings (without taking the risk of first pitching another season), there’s not a whole lot of downside to going for the biggest total guarantee possible at this stage, even if it effectively means taking a cheaper valuation for the last season or two of the new contract. Even if Sale were to hit the open market on the upswing in his later years — as may well occur next winter for Verlander — the additional earning ceiling at that point would be fairly limited, at least in terms of contract length.

If there’s a deal to be made here, then, the sweet spot could actually be on a longer term than might be anticipated at first glance. As the foregoing discussion shows, though, there’s also quite a lot for both sides to think about — and quite a lot we don’t know. The major wild card, perhaps, is the sides’ respective levels of concern with Sale’s shoulder. It’ll be fascinating to see how things proceed if Sale and the Red Sox end up making a concerted effort over the coming weeks to work out a deal.

Photo courtesy of USA Today Sports Images.

Projecting Payrolls: Houston Astros

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Though Spring Training is underway, let’s move on to our 15th team payroll projection. Below find the links to the earlier posts in this series.

Philadelphia Phillies
Los Angeles Dodgers
Los Angeles Angels
Atlanta Braves
New York Yankees
Chicago White Sox
Boston Red Sox
Minnesota Twins
Milwaukee Brewers
San Francisco Giants
St. Louis Cardinals
Chicago Cubs
New York Mets
San Diego Padres

If you have questions about financial information made available to the public and the assumptions used in this series, please refer to the Phillies piece linked above.

Today, we look into a club whose rebuild earned a World Series win, yet who finds itself with a rotation in flux: the Houston Astros.

Team Leadership

The Astros franchise got off to a bit of a rough start, beginning play in 1962 as the Colt .45s, but the team was obtained by GE Credit and Ford Motor Credit just over a decade later in 1975 as a result of crippling debt related to the building of the Astrodome. Thankfully for the future of baseball in Houston, former Yankees minority owner John McMullen purchased the club in 1979 and oversaw a period of relative stability before selling to Drayton McLane in 1993. McLane’s period of ownership was filled was success, from the Killer Bs to the 2005 National League pennant winners, Astros fans became accustomed to winning. Fans could have been understandably concerned when McLane sold the club at the end of 2011 to Houston businessman Jim Crane. While Crane’s ownership tenure got off to a rocky start, losing 218 games over his first two seasons, the results have been stellar over the past four seasons, particularly the team’s 2017 championship.

This year’s team has been assembled by general manager Jeff Luhnow, who took the reins in Houston in December 2011, shortly after Crane’s purchase was finalized, after nearly a decade running the Cardinals’ scouting department. Luhnow utilized his drafting prowess over his first few drafts to add stars like Carlos Correa, Lance McCullers Jr., and Alex Bregman, with others such as Forrest Whitley and Kyle Tucker close to contributing. Infamously, Luhnow also whiffed on a pair of number one overall picks in right-hander Mark Appel and left-hander Brady Aiken, though Luhnow salvaged his losses by flipping Appel to Philadelphia as a minor piece in the Ken Giles trade and recouping a compensation pick for Aiken going unsigned that became Bregman.

On the whole, it’s difficult to argue with the results that Crane and Luhnow have compiled: they tanked their way to a miserable 176-310 (36.2 percent winning percentage) over their first three years followed by a stellar 374-274 (57.7 percent winning percentage) mark over the last four years.

Historical Payrolls

Before hitting the numbers, please recall that we use data from Cot’s Baseball Contracts, we’ll use average annual value (“AAV”) on historical deals but actual cash for 2019 and beyond, and deferrals will be reflected where appropriate. And, of course, the value of examining historical payrolls is twofold: they show us either what type of payroll a team’s market can support or how significantly a given ownership group is willing to spend. In the most useful cases, they show us both. We’ll focus on a 15-year span for the Astros, covering 2005-18 for historical data as a means to understanding year 15: 2019. This period covers the transition from McLane to Crane ownership and includes a tank for the ages with winning teams on either side, so this provides an excellent window into what to expect from the club as they rev up to contend again. We’ll also use Opening Day payrolls as those better approximate expected spending by ownership.

The Astros were in the top half of leaguewide spenders each year from 2005 through 2010 before their 2011 dip. Then Crane tore the whole operation down to the studs, reaching a comical low in 2013. The 2013 Astros began the year with just five players earning north of $1 million — Bud Norris, Carlos Pena, Jose Veras, Erik Bedard, and Wesley Wright — yet Norris, Pena, and Veras were jettisoned in July while Wright was shipped out in mid-August.

The Astros understandably came under fire for their extremely low payroll at the time, but the low spending was justified by the fact that Crane incurred $275 million in debt to purchase the team and by Crane’s own promise that “once our minor league system is filled in, we’ll move up into the top five or 10 in payroll.” It took a few years for the payroll to reach such lofty heights, but by 2018, Houston found themselves with the seventh-highest end-of-season payroll.

Like most teams, the Astros haven’t been that close to the luxury tax threshold, but that changed in 2018 and figures to be a relevant consideration in 2019 as well. While the Astros never blew past their international amateur bonus pools to the extent that some other teams did, they did incur the top penalties and restrictions in 2016, showing a willingness to spend internationally. Nevertheless, their Major League payrolls present a good picture of baseball operations spending.

Future Liabilities

Get ready for Jose Altuve and a whole bunch of soon-to-be free agents.

We’ll start with Altuve, the 2017 American League Most Valuable Player and heart and soul of the franchise. His contract features one more discounted year before leaving $130 million on the books from 2020-24. As long as Altuve continues to produce like an MVP, I suspect that Houston won’t complain.

Moving to the top of the list, Houston has just one more year with Justin Verlander under contract. The team’s marquee trade acquisition in August 2017 after a period of struggles with the Tigers, Verlander was reinvigorated and returned to Cy Young caliber form. Owed a net of $20 million thanks to a contribution from Detroit, Verlander represents a good bargain in 2019 in advance of his first-ever walk year. He did originally have a vesting option for the 2020 season, but Verlander waived the option to facilitate the trade.

Next we find a trio of outfielders with two remaining years of control. 2018 provided a great, and timely, reminder of Michael Brantley’s offensive prowess when healthy, and he figures to set the table near the top of the lineup for the next two seasons. Joining him will be Josh Reddick, whose average power and above-average on-base ability had been a given for years before his BABIP against right-handed pitching surprisingly cratered in 2018. He’s no star, but he’s a good bet to rebound to be an average starter in 2019. Finally, George Springer slipped in the power department in 2019, but his ability to get on base and play a solid defensive outfield kept him valuable. If the power returns, he’ll be a star once again as he nears free agency.

Yuli Gurriel has underwhelmed somewhat since arriving from Cuba, and at 34, there’s not much reason to think he’ll improve dramatically going forward. He’s solid as a regular, though Tyler White’s offensive prowess could render Gurriel susceptible to losing some playing time.

The majority of the remaining guaranteed contracts are one-year commitments. Smith unfortunately ruptured his Achilles in December 2018, so he won’t be expected back until late summer, if at all. At this point, it’s fair to wonder if he’ll be able to contribute to the 2019 team. Chirinos, Miley, and Rondon should each play a role on the 2019 squadChirinos may get a crack to take the everyday job, but Houston would probably prefer it if Max Stassi’s 2018 breakout — he posted the second highest framing runs added per Baseball Prospectus despite playing a part-time gig — was a harbinger of things to come. Miley could find himself in the rotation’s fifth spot if Verlander and Gerrit Cole stay healthy while Collin McHugh and Josh James make successful returns to starting. And Rondon remains best-suited for a setup role rather than closing, a job he should stick with provided that Roberto Osuna remains entrenched.

The final contract offers some forward-looking control. New Astro Aledmys Diaz will head to arbitration should the team elect to keep him, although he’ll need to prove his health after spending time on the disabled list in each of his first three Major League seasons.

Houston has done well in avoiding dead money with only the final buyout payment for Singleton allocated to this year’s payroll.

Lest you find yourself wondering why the Astros are such a powerful ball club, let’s take a look at one of the most robust arbitration tables in the game:

There’s some serious star power here.

We’ll start with the starting pitchers. Much like Verlander before him, Cole appears to have been invigorated by his move to Houston. He pitched like an ace in Pittsburgh in 2015, then pitched well but not nearly as well in 2016-17. With the Astros in 2018, Cole was an ace once again. McHugh lost most of his 2017 to injury, then found his rotation job claimed by Cole last year. With Charlie Morton (surely) and Dallas Keuchel (presumably) out the door, McHugh figures to have first dibs on a starting job after excelling in relief last season. Unfortunately, McCullers won’t help his case in 2019 as he’ll spend the year recovering from November 2018 Tommy John surgery.

The majority of the Houston bullpen is listed in the table above. It all starts with Osuna, who starred after arriving via trade from Toronto at the end of his 75-game suspension for violating Major League Baseball’s policy on domestic violence. His baseball abilities are indisputable. His off-the-field activities present the club with significant risk, both with regards to public relations and roster construction. Even in his mid-30s, Harris represents superb value, especially given his ability to stifle batters of both handedness. He is likely in line for a big contract next offseason. Peacock and Pressly both figure to pitch a lot, with Houston hoping to get a lot of innings out of Peacock and high-leverage innings from Pressly. Finally, Devenski starred in long role in 2016, excelled in 2017 — though to a lesser degree than the prior year — then floundered in 2018. He still has some time to kill before free agency.

We close the arbitration table with the two position players. Correa, the 2015 American League Rookie of the Year, produced three nearly identical excellent seasons from 2015-17 before an injury-marred 2018. Just 24, Correa likely has years of stardom ahead of him. Marisnick, on the other hand, seems destined for a part-time gig that accents his defensive and baserunning skills. Outside of 2017, he hasn’t shown enough with his bat to warrant a more significant share of time, especially against same-sided pitching.

What Does Team Leadership Have to Say?

To Crane’s credit, when he stripped the club down to next to nothing, he promised that he’d spend when it made sense…and then he did. But what about pushing payroll even higher? Crane has shown a willingness here, too, commenting in December that, “I’d say if the right situation came long — certainly we’re not going over [the luxury-tax threshold] — but we could move closer to that. We were pretty high up in the food chain last year. A lot of teams realize the penalty is pretty severe if you go over. We’ll stay within the strike zone.” Luhnow hasn’t been as open about the team’s spending plans, but Crane provided plenty of guidance.

After living through a miserable rebuild, Crane seems keenly aware of the value of contending seasons and willing to spend to supplement his winning teams.

Are the Astros a Player for Bryce Harper?

I think that the Astros could be lurking in the shadows for Harper.

The team is smack in the middle of their window of contention, but having just lost Morton and (presumably) Keuchel from their rotation, they could use a boost. They currently have Brantley and Reddick manning the corner outfield spots, but Reddick is eminently tradeable. And that’s why Harper could fit so easily. If Houston offloaded Reddick and a portion of his $13 million annual salary for 2019 and 2020, the cost of Harper would be mitigated. With Harper likely obtaining a contract with opt-out clauses starting in the early 2020s, signing him allows the team to maximize their current window without seriously jeopardizing their ability to keep Altuve, Correa, and Bregman together for a decade or more.

The luxury tax is a serious consideration, but it should be avoidable. I currently have the team’s luxury tax payroll at $181.2 million. If the Astros followed the blueprint above, jettisoning Reddick and signing Harper for, say, $30 million per year, they still might be able to stay south of the tax line.

The Astros have looming rotation questions with the free agencies of Verlander and Cole coming, but building around an offensive core of Altuve, Correa, Bregman, Brantley, Springer, White, and Harper…whew.

What Will the 2019 Payroll Be?

How high is Crane willing to go?

As of now, I have the Astros at $164.9 million with the aforementioned $181.2 tax number. After sporting a $160.4 million payroll in 2018 and mentioning that the books have room to expand, there’s surely room for more.

Projecting just how high that number goes is tricky. The 2018 payroll was achieved by the age-old formula of 2013 payroll times five plus $4 million. What does that tell us for 2019?

All kidding aside, Houston is primed to take another step. Harper represents approximately three additional wins over what Houston figures to get out of right field in 2019, and if Reddick could be unloaded, it makes tons of sense. However, Houston has made such a move yet, so it stands to reason that perhaps Crane isn’t interest in pushing payroll quite this high.

So let’s split the difference here between what it would take to add Harper and where payroll currently stands. This represents a 9.2 percent increase of 2018 spending, a sensible amount for a team in the midst of their best-ever window of contention.

Projected 2019 Payroll: $175 million

Projected 2019 Payroll Space: $10.1 million

10 Forgotten Free Agents

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The long-running but less-than-dynamic market situations of Manny Machado (now resolved!) and Bryce Harper (not so much) have captured much of the public attention this winter. But the evolution of free agency has most notably impacted mid-level veterans. We’ll wait to see how things settle out before attempting to make any conclusive market observations. Still, it’s interesting to see how many prominent players have thus far remained off the radar entirely.

Here’s a list of the ten most notable free agents who have yet to be connected to specific teams on MLBTR’s pages this winter:

  • Jose Iglesias, SS: It’s a bit stunning that Iglesias has yet to draw publicly reported interest. He’s still just 29 and is one of the game’s premium defensive players. He’s also coming off of a good-enough season at the plate (.269/.310/.389; 90 wRC+) for a player with his immense talents with the glove. Over the past four seasons, Iglesias has reliably produced about 2 WAR annually while serving as a semi-regular player (480 plate appearances per season).
  • Ervin Santana, SP: While we have heard some discussion of the veteran righty, we’ve yet to see him connected via firm reporting to a single club. Sure, his 2018 season was a total disaster, as he struggled mightily after a nagging injury robbed him of much of the season. In the two prior campaigns, though, Santana spun 392 2/3 innings of 3.32 ERA ball. While his peripherals never suggested those sparkling results fully reflected his contributions, they still painted him as a quality rotation piece.
  • Denard Span, OF: The glovework just isn’t there anymore, but Span can still hit and run the bases. He turned in a .261/.341/.419 slash last year, good for a 112 wRC+, while grading as an above-average baserunner. It’s hard to imagine he wouldn’t at least make for an upgrade as a fourth outfielder for quite a few teams.
  • Logan Morrison, 1B: After settling for a one-year deal following his breakout 2017, Morrison’s injury-riddled 2018 effort represents Exhibit A as to why free agents generally seek to maximize contract length when they hit the open market. Now, Morrison is looking for a bounceback opportunity … and he seems like an interesting buy-low candidate. After all, his .196 BABIP is sure to rise, and he still managed a .182 isolated power mark and 15 home runs in his 359 plate appearances last year.
  • Carlos Gomez, OF: The 33-year-old looked like a possible bargain last year, but turned in a dud of a season for the Rays. But he was a quality performer just one season prior, slashing .255/.340/.462 and contributing 17 long balls and 13 steals over 426 plate appearances with the Rangers.
  • James Shields, SP: No, he’s not a very exciting pitcher anymore. But the 37-year-old is as durable as they come and would make for a respected member of any staff. He gutted out 204 2/3 innings of 4.53 ERA pitching last year, but might be somewhat more effective if utilized in a more limited capacity.
  • Hanley Ramirez, 1B: We all know the story here. HanRam was unceremoniously dumped by the Red Sox early last season and was never picked up thereafter. The 35-year-old wasn’t great in the season prior, either, and hasn’t always had the smoothest relationships with his teams. Still, he was a highly productive hitter in 2016 and for years before that. Ramirez also just turned in a productive showing in the Dominican Winter League.
  • Jose Bautista, OF/3B: While the power probably won’t fully return, Bautista still managed to walk at a 16.8% clip and turn in a .348 on-base percentage last year. He also popped 13 long balls in 399 plate appearances. Bautista is a limited player at this stage of his career, to be sure, but still does some worthwhile things on the ballfield.
  • Matt Holliday, OF/1B: It’s even harder to know what to make of Holliday, who sat out most of 2018 but returned with a bit of a vengeance late in the year with the Rockies. In 65 total plate appearances, Holliday slashed .254/.415/.434 with a pair of dingers. It’s hard to know what he’d look like over a full season, but there surely aren’t many guys sitting around out there that could reach base at that kind of clip after joining a team in the middle of the season at 38 years of age.
  • Tyler Clippard, RP: There are plenty of candidates for this last spot, but the 34-year-old Clippard takes it based upon his overall body of work in the majors. He has now topped sixty innings in ten-straight seasons, a remarkable run for any reliever, and was still capable of posting a 3.67 ERA with 11.1 K/9 against 3.0 BB/9 last year. Clippard has lost some zip on his heater but still generated swings and misses at a 14.3% rate. He also continues to draw loads of infield flies (16.3% last year). While he’s now much more susceptible to dingers than he was in his prime, Clippard has remained a durable and useful reliever. SIERA, at least, is a believer, crediting him with a 3.42 ERA equivalent mark in 2018.

Projecting Payrolls: San Diego Padres

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As we still continue to wait for the new homes of Bryce Harper and Manny Machado, let’s move on to the 14th team payroll projection. Below find the links to the earlier posts in this series.

Philadelphia Phillies
Los Angeles Dodgers
Los Angeles Angels
Atlanta Braves
New York Yankees
Chicago White Sox
Boston Red Sox
Minnesota Twins
Milwaukee Brewers
San Francisco Giants
St. Louis Cardinals
Chicago Cubs
New York Mets

If you have questions about financial information made available to the public and the assumptions used in this series, please refer to the Phillies piece linked above.

Today, we look into a club whose rebuild has yielded one of baseball’s top farm systems: the San Diego Padres.

Team Leadership

In the realm of sports franchise ownership, the Padres got off to a rough start. C. Arnholdt Smith founded the team in 1969, but when software executive John Moores bought the team in 1994, he became the fourth distinct owner in just a 25-year span, an unseemly rate of turnover for the club. Moores held the club as majority owner for a significant period of time, but it wasn’t without its own upheaval: in 2009, a group led by agent Jeff Moorad purchased a significant minority stake in the Padres with the intention of completing the remaining purchase of the team in the coming years. Instead, after years of trying by Moorad, the team was sold in 2012 to an ownership group led by Ron Fowler (who now serves as chairman) and Peter Seidler (presently titled the organization’s general partner).

Since August 2014, the baseball operations department has been headed by executive vice president and general manager A.J. Preller. Preller inherited a team that had won 75 games per year from 2011-14 and in the first four years under his leadership, the team went on to win just 70 per year. Nevertheless, Preller received an extension in October 2017 due in large part to his efforts building a successful farm system.

The team is yet to make a postseason run under Preller (or Fowler/Seidler, for that matter), but to be fair, they won just one playoff game in the 14 years prior to the 2012 sale.

Historical Payrolls

Before hitting the numbers, please recall that we use data from Cot’s Baseball Contracts, we’ll use average annual value (“AAV”) on historical deals but actual cash for 2019 and beyond, and deferrals will be reflected where appropriate. And, of course, the value of examining historical payrolls is twofold: they show us either what type of payroll a team’s market can support or how significantly a given ownership group is willing to spend. In the most useful cases, they show us both. We’ll focus on a 15-year span for the Padres, covering 2005-18 for historical data as a means to understanding year 15: 2019. This period covers the transition from Moores to Fowler and Seidler’s ownership and includes Preller’s first attempt to buy a winner, so this provides an excellent window into what to expect from the club as they rev up to contend again. We’ll also use Opening Day payrolls as those better approximate expected spending by ownership.

Although the Padres have never been a top spender among Major League clubs, payroll underwent a meteoric rise during the first few years under new ownership, nearly tripling from 2010 to 2015 before tumbling again when Preller’s first attempt at constructing a winner backfired.

The Padres have never come remotely close to incurring a luxury tax bill, oftentimes ending with a payroll $100 million under the tax line. However, the team became a major spender on international amateur talent prior to the new system clamping down on substantial expenditures in that space, giving out the following bonuses in the 2016 class alone: $11 million to Cuban lefty Adrian Morejon, $4 million to Dominican shortstop Luis Almanzar, $3 million to Cuban righty Michel Baez, and at least five other bonuses between $1 million and $2 million each. Despite the paltry annual Major League payrolls and the smaller media market when compared to the behemoths of baseball, the Padres under Preller approached the international amateur space like the Yankees, Red Sox, Dodgers, and Cubs until a new Collective Bargaining Agreement closed that door. A major chunk of franchise spending was embedded here.

Future Liabilities

The Padres sheet is really interesting. Let’s take a look and then examine the numbers.

Let’s look at this one backward, from the bottom to the top.

The Padres have a significant chunk of their 2019 spending tied up in players who won’t be wearing Padres uniforms this year. Hughes appears to be the biggest number at first glance, but thanks to the contribution from the Twins, San Diego owes him just $7.25 million. More importantly, the purpose of that deal wasn’t Hughes: it was San Diego’s ability to draft and sign Texas Tech oufielder Grant Little with the 74th pick in the 2018 draft, acquired from the Twins alongside Hughes.

The largest commitment belongs to Hector Olivera at $16 million over the next two years. Signed by the Dodgers, Olivera was traded to the Braves, suspended for domestic violence, and then the Padres acquired his contract when offloading Matt Kemp’s remaining deal to Atlanta.

Makita failed as a bullpen import last year, while Wood failed as a trade import in 2017, leaving 2018 dead money and the buyout of his 2019 option that was split with Kansas City. Neither amount is significant.

Finally, Gyorko, Shields, and Richard also won’t play for the Padres in 2019. For Gyorko and Shields, this year represents the final year of multi-year payouts of bad decisions. For Richard, San Diego caught a break when Toronto claimed him off of waivers and agreed to take on half of his $3 million guarantee for 2019.

Add it all up and the net dead money on the San Diego books is $25.9 million in 2019, $8.5 million in 2020, and nothing beyond. Keep this in mind.

Small, short-term commitments to Kinsler and Stammen don’t move the needle much, though both figure to get a chance to play meaningful roles for the team in 2019.

Richards, on the other hand, gets yet another chance to show that he can get and stay healthy over the course of a southern California season, this time with the Padres instead of the Angels. That chance, of course, will come in 2020 after Richards underwent Tommy John surgery in July 2018.

Finally, we hit the two big numbers: Myers and Hosmer. Myers showed tremendous promise early in his career with the Rays and he excelled with San Diego in 2016, totaling 28 homers and steals while getting on base well. Unfortunately, nagging wrist injuries an an inexplicable experiment at third base have hampered his overall value in recent years. Just 28, Myers still has time to re-emerge even if the early returns on his extension have been poor. Add it all up and he has $72.5 million remaining over the next four guaranteed years, including his 2023 buyout. Not good. But not crippling.

Hosmer, similarly, provided terrible early returns on his big deal. He comically has an average WAR in even-numbered years of -0.4 compared to 2.9 in odd-numbered years, including 3.6 over his non-rookie odd-numbered years. I’m not here to stump for the even-year/odd-year split, but Hosmer has shown a trend. The Padres will surely hope to see a massive rebound from their marquee investment in 2019. Like Myers, Hosmer is still in his 20s (29). Hosmer is due $80 million over the next four years before he decides whether to hit free agency in advance of his age-33 season or keep his three-year, $39 million golden parachute.

The Padres arbitration table is arguably the leanest one we’ve seen thus far in the series:

Despite being 5’10” and nearly 32 years old, Yates figures to occupy a key role in 2019 coming off of a stellar 2018 that saw peak production and a repeat of his 2017 velocity jump. Yates figures to play an important role for the team, either as the closer or as this year’s Brad Hand, fetching a sizable return in July.

Hedges is an excellent defensive catcher and provided offense around the league average for his position last year.

Erlin excelled in a swing role in 2018 returning from Tommy John surgery, coming in under one walk per nine innings while setting career highs in velocity on every pitch. He’s worth keeping an eye on in 2019.

The remaining names — Jankowski, Mitchell, and Garcia — simply don’t move the needle much (unless the needle is moved by pure speed, in which case Jankowski moves it a ton).

What Does Team Leadership Have to Say?

At a time when most franchises are talking about payroll efficiency and ducking the luxury tax, Preller’s end-of-season comments were a breath of fresh air. In looking to 2019, Preller stated that “I feel like we’re going to have some financial flexibility, because a lot of the players are younger players. And we’re at that point from a plan standpoint where we’re going to have to supplement from the outside — be it the free agent or trade route. We’ll look to do that in the next few months.”

Fowler and Seidler, on the other hand, made waves this offseason by opening the team’s books to the San Diego Union-Tribune and revealing that they are (i) primarily focused on reducing the team’s debt load, and (ii) still hung up on the inefficient use of cash from 2015. Fowler mentioned that 2015’s $40 million payroll bump yielded just $15 million in additional ticket/concession/merchandise revenue, continuing that “It really convicted me…We had a blip in terms of revenue…(and) we dug a big hole for ourselves.”

That does not sound like an ownership group interested in spending big dollars anytime soon.

Are the Padres a Player for Bryce Harper or Manny Machado?

Yes. Definitely. Or at least they definitely should be.

The Padres don’t immediately make oodles of sense as a player at the top of the market, but they check off every other box for being a team that pursues one of these elite talents.

First and foremost, ownership has shown the penchant to spend on a winner as Preller’s 2015 experiment showed.

Second, ownership has shown a penchant to spend on “the right player” as last year’s massive deal for Hosmer showed.

Third, the Padres have a window of contention that will blow open in the next year or two.

Fourth, thanks to shrewd trades and superb drafting and development, that contender will be fueled almost entirely by players making the league minimum. The Padres have assembled one of the truly great collections of farm talent in the modern history of the game. I could go into great detail here, but instead, I’ll let the introduction to the club’s top prospect list over at Baseball Prospectus do the talking: “their full-slot, top-ten first-round pick from this year’s draft is ranked 12th overall.” If you have any interest in prospect accumulation, take a look at the Padres system and how it was built.

Fifth, they have southern California geography on their side with both a pleasing climate and proximity to Harper’s home in Las Vegas.

Sixth, they have a desperate need for an impact bat (or two) and the two spots that make the most sense for housing this bat are (i) outfield, and (ii) shortstop or third base (wherever stud infielder Fernando Tatis Jr. isn’t playing).

Seventh, outside of Hosmer and Myers, the Padres don’t have any major salaries on the books and their current Major League players heading into arbitration in the next few years won’t receive substantial awards. There simply isn’t much in the way of earmarked money going forward, be it currently guaranteed or coming through arbitration.

Eighth, the immediate payoff could be significant as the Rockies stood pat this winter aside from Daniel Murphy, the Diamondbacks kicked off a rebuild, and the Giants have thus far made modest additions.

Considering the above factors and the glacial pace of the Harper/Machado market to date, it should come as no surprise that the Padres began openly poking around the market for the superstars last week.

What Will the 2019 Payroll Be?

At this stage in the offseason, payroll is quite low at $87.6 million. This would represent a 6.8 percent drop in payroll from 2018’s Opening Day payroll. As a reminder, 2018’s Opening Day payroll was 5.3 percent below 2016’s opening day payroll. And 2016’s Opening Day payroll was 8.4 percent below 2015’s. Add it all up and this year’s Opening Day payroll would be 19.2 percent below 2015’s high water mark. In the estimate of Forbes, the franchise’s value has increased over 29.9 percent during that time.

So is this it? Is this the new normal for the Padres, same as the old normal?

Something doesn’t add up to me. The Padres sported a payroll north of $100 million in 2015 and spent nearly $100 million in 2016 while spending about $25 million on international amateurs, all while saddled with a much more notable debt burden.

There’s a scenario in play where the organization truly doesn’t want to spend, thus keeping payroll at its current level below $90 million and saving cash for…well, I’m not sure exactly. But that doesn’t line up with recent practice. The club lacks major commitments going forward and needs a big boost with a front office and ownership group that has shown a willingness to make a splash. I bet Fowler and Seidler authorize another big swing.

Keep in mind that the numbers projected below would still be below 2015 and 2016 aggregate spending levels…and that the team sees more than $20 million in dead money drop off of its books next year.

Projected 2019 Payroll: $115 million

Projected 2019 Payroll Space: $27.4 million

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