The Payroll That Must Be Discussed

At certain points this offseason, it looked like the Padres were treating their 2015 payroll like the Yankees or Dodgers might, by largely ignoring it. First, they were interested in premier free agents like Pablo Sandoval and Yasmany Tomas and, even though those deals predictably (at least at the time) fell through, the Padres made legitimate runs at players that would generally be considered far too pricey for San Diego.

Then, near the end of the winter meetings, AJ Preller struck. The Padres picked up Matt Kemp and a large chunk of the $100-plus million owed to him over the next five years. And Preller wasn’t close to done, as he reshaped the entire Padres roster over the next couple of weeks. Notably, with concern to the ’15 payroll, the Padres also acquired a likely one-year rental by the name of Justin Upton, an outfielder who is owed just shy of $15 million this coming season before he departs via free agency. That’s two outfielders that would have been out of the Padres price range in offseasons past.

Since then, we’ve been reminded that the Padres are not the Yankees or Dodgers. In fact, unless the lurking Cole Hamels rumor comes to fruition, it doesn’t look like the Padres 2015 payroll will even reach the $100 million mark. First came the news on the money coming over from the Dodgers in the Kemp deal — we knew it was $32 million, but new information revealed that the Dodgers were paying a whopping $18 million of Kemp’s salary in 2015 alone, making Kemp, for one year anyway, a $3.25 million bargain. While the Padres are still only receiving $32 million from the Dodgers for Kemp — they’ll get $3.5 million in each year from 2016 through 2019 — the fact that they get a bulk of that money this year likely made it easier to add, say, Upton’s salary to the ’15 club.

Then came the (perfectly reasonable) Seth Smith trade, which shed the $6 million the 32-year-old outfielder was owed in 2015 for Brandon Maurer and his pre-arb pittance. Factor that in with all of the other players traded/lost this offseason — like the $1-2 million Rene Rivera would have received or the money saved when the Padres failed to tender Everth Cabrera a contract — and suddenly the payroll looks eerily similar to last year’s figure.

In fact, the current 2015 payroll estimate from Roster Resource, which includes the $18 million coming over from LA and estimates for all arbitration-eligible players, comes in at $88.7 million. That’s actually a $1.5 million decline compared to last year’s Opening Day payroll. Of course, that figure is far from final, but it’s remarkable in at least a couple of ways.

First off, AJ Preller (and the new front office). Not only has he remade the roster to his liking, held on to the top of the farm system and the top of the rotation, and added significant star power to a Padres team that was lacking it, he’s done it on a tight budget. You may disagree with some of the moves — and, ya know, I do — but it’s quite an accomplishment for a first-year general manager to creatively reshape the roster while actually trimming salary. Bravo.

On the downside, however, the payroll now hovers below $90 million. The numbers from Roster Resource are by no means set in stone — there’s plenty of offseason left with a few big free agents still out there, plus the arb-eligible salary figures are estimates — but I decided to take a look at every team’s current 2015 payroll estimate to see where the Padres stand.

And where do they come in? Sandwiched between Pittsburgh and Cleveland, 25th overall in the majors and well below the league average mark of nearly $122 million. With all the offseason shuffling, the Padres are still operating like a true small-market team. Compared to Opening Day payrolls from 2014, MLB salaries are up about 5.6 percent at this point in the offseason — and, again, that number is just an estimate, one that will go up when the likes of Max Scherzer and James Shields sign. Nine teams have a payroll expected to be lower than 2014’s figure, while 21 have gone up. The Padres have essentially flatlined, going from $90.1 million last year to (an estimated) $88.7 million in 2015.

Consider this table, which shows a list of the teams with the highest increase in payroll so far this offseason:

payrollincrease1

Seven of those teams had 2014 Opening Day payrolls either right near the Padres $90.7 mark or significantly lower. Now, there are different circumstances surrounding each increase, like the Cubs anticipated rise to contention and the Royals deep 2014 playoff run. But what about the Twins or the White Sox? What’s keeping the Padres from joining this list?

Overall, this isn’t a terribly big deal, but it seems like we’re occasionally getting a little bit ahead of ourselves with praise. Yes, it looks like the Padres new-ish ownership group made a good move by firing Josh Byrnes and hiring AJ Preller — and then letting Preller run wild — but let’s not pretend the Padres are suddenly running a high-priced operation. Their payroll is still located in the lowest quadrant of the league, with other small-market foes like the Marlins and Astros fast one their heels with big one-year leaps. No, this isn’t the 2009-2012 period, a time that was flush with ownership swaps, front office turmoil, and embarrassingly low payrolls. The Padres spending habits have at least jumped back to respectability, but it’d be encouraging to see the payroll number trending more toward the middle of the league, rather than the bottom five, especially given the confidence ownership has seemingly shown toward Preller and the new front office group.

Going forward, 2016 will be another interesting offeason for Preller (speaking of getting ahead of ourselves), as the Padres only have $33.8 million locked up in contracts, $18.25 million of which will go to Kemp. The Padres will likely lose the salaries of Justin Upton, Ian Kennedy, and Will Venable, all free agents, along with potentially Carlos Quentin, Joaquin Benoit, and Cory Luebke, all with club/mutual options (among other players). The only players on contract for 2016 are Kemp, Cameron Maybin ($8.1 million), and Jedd Gyorko ($4 million), though that’s of course not including arbitration-eligible (and pre-arb) players like Andrew Cashner, Tyson Ross, and Derek Norris.

On the plus side, that leaves plenty of flexibility next offseason for Preller. On the other hand, he’ll also have to replace a bunch of talent, provided Upton and Kennedy depart, and he’ll have to do so with a significantly larger portion of his payroll tied up in Kemp. And he might not have quite as much to spend as you might think. My very rough current 2016 payroll estimate, which includes arbitration raises for guys like Cashner, comes in at $57 million for 15 players. Considering the ever-rising price of free agents, there isn’t a ton of wiggle room* there to replace Upton and Kennedy, etc., so long as payroll doesn’t take a major leap forward.

*In fairness, it’s Preller, so there’s always wiggle room. 

The Padres have done a good job efficiently spending (or not spending) money, at least since the new front office has come on board. The only questionable contract on the roster belongs to Kemp (if you ignore the final year on Maybin’s deal), and plenty would argue that he’s a relative bargain. The worst thing a team can do is throw money at pricey free agents without any semblance of a plan — ask the Mets, or Phillies, or (certain) Red Sox teams, or former iterations of the Dodgers, or the Yankees. The Padres, at least, don’t have to worry about shedding or working around a bunch of albatross contracts.

As you’ll hear from time to time, money doesn’t buy championships. It does, however, give an organization a better chance to build a competitive team year in, year out, to work around bad contracts, to keep a core together, to invest in the future. And if the Padres want to compete over the long haul in a division that houses the free-spending Dodgers (now with smarter front office) and the perennially contending Giants (with deep pockets of their own), eventually payroll has to increase to a more competitive level. For now, Preller’s been left to build a contender with a bottom-level payroll, and he’s done a heckuva job trying. Eventually he’ll need help from upstairs.

Additional reading: Check out Wonko’s recent post at Gaslamp Ball, which touches on (and partially inspired) some of the payroll issues discussed above, but delves more deeply into the offseason shake-up in general. 

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  • randplaty

    The hope is that since Preller is still trying to acquire Hamels, they still have the flexibility to add significant payroll. This may or may not actually be the case, but there’s at least hope. :p

    • Dustin

      At this point, I’m skeptical that they’ll add Hamels, in part because the asking price remains unrealistic and in part because of his $23.5 million salary. But that’s jut speculation on my part. I just hope there’s a plan in place to raise payroll somewhat significantly over the next few years.

  • Virginia Padres

    Moncada

    • Dustin

      Yes.

  • ballybunion

    It just looks to me like the Padres new strategy is to accept a bit of churn in the roster every couple years or so, with trades and -maybe- a free agent signing or two, instead of working from the bottom up with prospects and a window of contention two years of every decade. The new owners apparently think putting an exciting team together every season with a new mix every couple-three years will have a chance for lightning strike contention almost every year.

    I think the payroll will go up after a year or two with greater attendance, since hard-to-watch teams the last few years have drawn around 2.1 million, and 2.6 to 2.8 million has been achieved at Petco in its early years with better teams. The only certainty is that the new owners have put together a smart, aggressive baseball front office and are going to give them a lot of freedom to operate, and I hope increasing payroll flexibility with the increased attendance.

    • Dustin

      Those are good points, all around. The thing is, do you wait for the wins (and attendance) to come and then increase payroll, or do you increase payroll and hope the wins/attendance follow? That’s always a major question, I think.

      Of course, with this offseason’s influx of star power, the Padres will probably see a pretty good attendance increase in 2015 even if they only win 75 or 80 games again. But that won’t last without success.