Payroll expectation for 2022

[spiritof66]

5 hours ago, Sports Guy said:

I don’t know why we wouldn’t look at the whole picture?

Ownership will take all money owed into account.  That 18.5M is part of the payroll for 2022 and we should treat it as such.

That would be fine if everyone used $18.5 million for those obligations to Davis, Cobb and any other payments that are due in 2022 to players no longer on the roster. The problem is that I've seen different numbers attached to those obligations, so we're starting at different points, making it hard to compare estimates. But if I look at that 2022 nut as totaling $18.5 million, my guess is an opening-day payroll of $59 to $62 million. Call it $60 million.

By the way, if I were setting a budget or target or whatever it is the Orioles do when they make their plans for player payroll (I'm assuming there is a planning exercise -- maybe there isn't), I wouldn't count that $18.5 million as part of my MLB payroll. Those are sunk costs the Orioles will have to pay in 2022 -- like stadium rentals, debt service, Warehouse rentals, operating costs of practice and training facilities, employee pensions, etc. -- over which the team has no discretion and no way to avoid or reduce, and which won't help the team compete in 2022. If I were the Orioles considering a budget or target for 2022 player payroll, I'd be seeking answers to these questions as I confer with Elias and others: (1) what is the on-field performance we're shooting for in 2022 as part of our rebuilding plan, (2) what players should be retained at what cost, and what kinds of players (or, later on, what specific players) should be acquired to get to that level of performance, and at what likely salaries, and (3) can the Orioles afford to pay that much, or do affordability issues require that the plan be scaled back? I would also explore the possible cost of back-up plans if things don't work out.

I think the $18.5 million should be irrelevant to the first two questions. The fact that Dad or Brady or Buck or Duquette or whoever incurred some very large 2022 payment obligations to departed players shouldn't change the CEO's plans for the Orioles' 2022 player payroll to go forward with the rebuild. The $18.5 million is relevant to the third question, about affordability: if Elias says I think I can come up with a hell of a team if I can have a payroll of about $150 million, that's probably not going to work. But the payroll levels that I and others are throwing around are, based on the limited information that's available, perfectly affordable for the Orioles to incur while paying interest on the team's debt, meeting its other expenses, and turning a profit. That's true with or without the $18.5 million obligation owed to the Crusher and Cobb and whoever (or whatever the right amount is). 

[owknows]

7 minutes ago, OriolesMagic83 said:

I can't see the MLBPA decreasing the luxury tax, at least w/o a strike.  Who knows, maybe they would settle for a system that increases player revenue.  I was thinking a system that increases salary minimums for veteran players (money would obviously have to come from somewhere).  NBA has a system like this. 

You seem to be missing the point. Or maybe I'm not making it very well.

Decreasing the luxury tax from $210M to $180M only (or heavily disproportionately) impacts only superstar players by limiting the maximum they can be paid.

There aren't many of those. The move is mostly symbolic

While at the same creating a $100M minimum payroll for all teams vastly increases the money available to be paid to everyone else. The rank and file.

This would positively impact many more (arguably the vast majority of ) players.

So as proposed... MANY more players would benefit, than would be hurt. And each player has an equal voice. And I think they're good enough at simple math to understand this.

[Aristotelian]

19 minutes ago, OriolesMagic83 said:

$15 mill for prearb guys sounds high, since the O's like to give guys $10k raises or something similar.  Even if the $4-14 M figure is low, it reinforces my idea that Santander/Mancini should be traded/non tendered.  I can only think that Stowers is in the AFL because Elias thinks he will be a ML outfielder next year.  I could see the O's replacing Santander/Mancini w/ a cheap stopgap for $2 mill or less.  Looks like the best hopes for next year's team is a Cashner type signing that actually works and a veteran reliever, obviously not top tier.  At least one somewhat dependable 2b/SS/3B player needs to be signed and the O's could patch a lineup around them. 

You are probably right. I was thinking 30 prearb guys on the 40 man times $500k for the MLB minimum but a lot of those guys will be making less while they aren't on the active roster.

[OriolesMagic83]

5 minutes ago, owknows said:

You seem to be missing the point. Or maybe I'm not making it very well.

Decreasing the luxury tax from $210M to $180M only (or heavily disproportionately) impacts only superstar players by limiting the maximum they can be paid.

There aren't many of those. The move is mostly symbolic

While at the same creating a $100M minimum payroll for all teams vastly increases the money available to be paid to everyone else. The rank and file.

This would positively impact many more (arguably the vast majority of ) players.

So as proposed... MANY more players would benefit, than would be hurt. And each player has an equal voice. And I think they're good enough at simple math to understand this.

The veteran/All-Star/MVP type players have an outsize voice in the MLBPA.  Notice the big emphasis on pushing what the top contract ever received by a position player or pitcher, whether yearly or the full contract.  Less emphasis is placed on the fact that overall salaries are falling.  But at least the top players are making $35 mill/yr instead of $30 mill/yr.  It's so hard to make it on $30 mill/yr.  I think what would be good for baseball is a much larger pool of revenue shared and a much narrower band of payrolls.  I don't see why the minimum payroll couldn't be $100 mill+ and the max around $180 mill.  There could be a lot of mediocre free agents getting big 1 year deals to meet the payroll minimum.  Having near the same payroll has worked well for the NFL.  It seems like it would do away with the tanking everyone hates. 

[Sports Guy]

34 minutes ago, spiritof66 said:

That would be fine if everyone used $18.5 million for those obligations to Davis, Cobb and any other payments that are due in 2022 to players no longer on the roster. The problem is that I've seen different numbers attached to those obligations, so we're starting at different points, making it hard to compare estimates. But if I look at that 2022 nut as totaling $18.5 million, my guess is an opening-day payroll of $59 to $62 million. Call it $60 million.

By the way, if I were setting a budget or target or whatever it is the Orioles do when they make their plans for player payroll (I'm assuming there is a planning exercise -- maybe there isn't), I wouldn't count that $18.5 million as part of my MLB payroll. Those are sunk costs the Orioles will have to pay in 2022 -- like stadium rentals, debt service, Warehouse rentals, operating costs of practice and training facilities, employee pensions, etc. -- over which the team has no discretion and no way to avoid or reduce, and which won't help the team compete in 2022. If I were the Orioles considering a budget or target for 2022 player payroll, I'd be seeking answers to these questions as I confer with Elias and others: (1) what is the on-field performance we're shooting for in 2022 as part of our rebuilding plan, (2) what players should be retained at what cost, and what kinds of players (or, later on, what specific players) should be acquired to get to that level of performance, and at what likely salaries, and (3) can the Orioles afford to pay that much, or do affordability issues require that the plan be scaled back? I would also explore the possible cost of back-up plans if things don't work out.

I think the $18.5 million should be irrelevant to the first two questions. The fact that Dad or Brady or Buck or Duquette or whoever incurred some very large 2022 payment obligations to departed players shouldn't change the CEO's plans for the Orioles' 2022 player payroll to go forward with the rebuild. The $18.5 million is relevant to the third question, about affordability: if Elias says I think I can come up with a hell of a team if I can have a payroll of about $150 million, that's probably not going to work. But the payroll levels that I and others are throwing around are, based on the limited information that's available, perfectly affordable for the Orioles to incur while paying interest on the team's debt, meeting its other expenses, and turning a profit. That's true with or without the $18.5 million obligation owed to the Crusher and Cobb and whoever (or whatever the right amount is). 

Highly unlikely the brothers view this the same way.

[Can_of_corn]

1 hour ago, OriolesMagic83 said:

The veteran/All-Star/MVP type players have an outsize voice in the MLBPA.  Notice the big emphasis on pushing what the top contract ever received by a position player or pitcher, whether yearly or the full contract.  Less emphasis is placed on the fact that overall salaries are falling.  But at least the top players are making $35 mill/yr instead of $30 mill/yr.  It's so hard to make it on $30 mill/yr.  I think what would be good for baseball is a much larger pool of revenue shared and a much narrower band of payrolls.  I don't see why the minimum payroll couldn't be $100 mill+ and the max around $180 mill.  There could be a lot of mediocre free agents getting big 1 year deals to meet the payroll minimum.  Having near the same payroll has worked well for the NFL.  It seems like it would do away with the tanking everyone hates. 

Any idea who the O's rep is?

[Frobby]

4 hours ago, wildcard said:

Deferred salary for 2022

5.7m Davis

2m Cobb

1.5m Trumbo

1m  O'Day

1m Cashner

11.2m Total

Just want to point out that this excludes the money that has to go into escrow to fund Davis’ deferred payments related to the 2020 season.   Since 2020 was a truncated season, the deferred compensation for that year is about $2.2 mm rather than $6 mm.   Plus, the amount paid into escrow isn’t the full $2.2 mm, but an amount calculated to grow (at 5% per annum) into $2.2 mm by the time it’s payable to Davis.   So figure maybe $1.5 mm in 2022 dollars paid into the escrow.   Technically it’s not a payroll expense in 2022, but it’s cash the O’s can’t spend on something else.   

[Aristotelian]

33 minutes ago, Frobby said:

Just want to point out that this excludes the money that has to go into escrow to fund Davis’ deferred payments related to the 2020 season.   Since 2020 was a truncated season, the deferred compensation for that year is about $2.2 mm rather than $6 mm.   Plus, the amount paid into escrow isn’t the full $2.2 mm, but an amount calculated to grow (at 5% per annum) into $2.2 mm by the time it’s payable to Davis.   So figure maybe $1.5 mm in 2022 dollars paid into the escrow.   Technically it’s not a payroll expense in 2022, but it’s cash the O’s can’t spend on something else.   

And he has $42M of deferred comp built into the original contract that's supposed to start in '23. 

[AnythingO's]

I'll take SG's 16 including Akin & Zimm for $15 M, keep Mancini and Santander for $10 M so 18 guys @ $25 M. I would add 2 SPs (E Rod, M Harvey) to eat innings with Means; 1 of Villar/Iggy/Galvis and an improved 3B (Harrison/Castro) for about $25 M so 22 guys @ $50 M. Deferred at $11 M and the last 4 at minimum so about $63 M for 26 guys.

 

[Frobby]

29 minutes ago, Aristotelian said:

And he has $42M of deferred comp built into the original contract that's supposed to start in '23. 

Yes, but the ‘23 payments were funded in 2018 if I understand this correctly.   The 0’s already had to pay into escrow as follows:

7/1/18 -funded the $6 mm deferred compensation related to 2016

7/1/19- Funded $6 mm related to 2017

7/1/20 - funded $6 mm related to 2018

7/1/21 - funded $6 mm related to 2019

So, $24 mm of the $38.2 mm in deferred payments is funded already.    The rest is funded as follows:

7/1/22 - fund $2.2 mm related to 2020 (wouid have been $6 mm if they had played the full season in 2020)

7/1/23 - fund $6 mm related to 2021

7/1/24 - fund $6 mm related to 2022

After that, all the funds due to Davis get paid from the escrow fund, unless that fund hasn’t grown by the assumed 5% per annum, in which case the O’s have to make up the difference when the payments are due.

[Aristotelian]

35 minutes ago, Frobby said:

Yes, but the ‘23 payments were funded in 2018 if I understand this correctly.   The 0’s already had to pay into escrow as follows:

7/1/18 -funded the $6 mm deferred compensation related to 2016

7/1/19- Funded $6 mm related to 2017

7/1/20 - funded $6 mm related to 2018

7/1/21 - funded $6 mm related to 2019

So, $24 mm of the $38.2 mm in deferred payments is funded already.    The rest is funded as follows:

7/1/22 - fund $2.2 mm related to 2020 (wouid have been $6 mm if they had played the full season in 2020)

7/1/23 - fund $6 mm related to 2021

7/1/24 - fund $6 mm related to 2022

After that, all the funds due to Davis get paid from the escrow fund, unless that fund hasn’t grown by the assumed 5% per annum, in which case the O’s have to make up the difference when the payments are due.

Thanks for clarifying, I could not find a clear answer in any of the media articles on his contract and the restructure. I wonder what the idea is behind the escrow payments. Seems like the payment isn't actually deferred as far as the O's are concerned, and Davis has to wait longer to get his money. Isn't that a lose-lose for both sides?

[Just Regular]

It looks like for 2021 Cots showed Tyler Wells at 570,500 lowest.   I think some of how more of the pay could get transferred to younger, more productive players is that getting bumped 10-15%, which might be an extra couple million assuming the roster will have about 15-18 minimum guys.

Between 2016 and 2017 last CBA, looks like the minimum increased about 6% from 507.5 to 535.

https://www.statista.com/statistics/256187/minimum-salary-of-players-in-major-league-baseball/

[Frobby]

3 hours ago, Aristotelian said:

Thanks for clarifying, I could not find a clear answer in any of the media articles on his contract and the restructure. I wonder what the idea is behind the escrow payments. Seems like the payment isn't actually deferred as far as the O's are concerned, and Davis has to wait longer to get his money. Isn't that a lose-lose for both sides?

The escrow payments are a CBA requirement for all deferrals longer than 2 years, and they serve three main purposes: (1) they give the player some level of assurance that the deferred money will actually be there when it’s due, (2) it keeps teams from overcommitting future cash, and (3) it’s not taxable to the player until it’s actually received.   Many deferred compensation plans are structured in a similar way, not just in MLB.

[Aristotelian]

5 hours ago, Frobby said:

The escrow payments are a CBA requirement for all deferrals longer than 2 years, and they serve three main purposes: (1) they give the player some level of assurance that the deferred money will actually be there when it’s due, (2) it keeps teams from overcommitting future cash, and (3) it’s not taxable to the player until it’s actually received.   Many deferred compensation plans are structured in a similar way, not just in MLB.

Got it. I always thought the deferral was a way for teams to save money in the short term and spread out payments but it sounds like it is actually more of a benefit to the player (especially #3). From that standpoint it actually sounds like a way to increase the net after tax dollars going to the player without costing any more to the team. From that standpoint it's surprising you don't hear about these more often. Good to know.

[Frobby]

5 minutes ago, Aristotelian said:

Got it. I always thought the deferral was a way for teams to save money in the short term and spread out payments but it sounds like it is actually more of a benefit to the player (especially #3). From that standpoint it actually sounds like a way to increase the net after tax dollars going to the player without costing any more to the team. From that standpoint it's surprising you don't hear about these more often. Good to know.

Well, it is still both.   Because of the 5% per annum discount factor, and the 2-year delay in escrowing the funds, it still helps the team with short term cash flow compared to paying up front.   There may be some tax advantages for the team, too, but I’m not sure.