MORNING SPIN

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MORNING SPIN (10.11) - Roster/Payroll Reality

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MORNING SPIN (10.11) - Roster/Payroll Reality
By Reds Content Plus • Issue #163 • View online
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And now, back to today’s MORNING SPIN …
Thank goodness roster speculation never goes out of season.
Because – and I’ve looked everywhere I can think – it appears the Reds are no longer playing. So, as partial antidote to those nagging what-ifs, let’s take an early look at where the Reds roster and payroll stands as the front office wobbles into the offseason. 
  • The Roster/Payroll Framework 
  • A Baseline Roster
  • What the Baseline Costs
  • What Will Ownership Spend?
  • $35 Million for a Shopping List
We start today by generating a “baseline” in-house payroll and using that to lay out what Reds GM Nick Krall has available to spend on high-priority needs.

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The Basic Roster Framework
Free Agent Departures The Reds have lost RP Michael Lorenzen, RP Mychal Givens and 3B Asdrubal Cabrera to free agency. Those players are eligible to negotiate with all 30 teams for future employment. 
Team-Option Decisions The Reds face option decisions on C Tucker Barnhart and SP Wade Miley. The Reds would have to pay $7.5 million to Barnhart or a $500,000 buyout. Miley would be under contract for $10 million and has a $1 million buyout. 
Player-Option Decisions OF Nick Castellanos can opt out of his four-year deal with the Reds. If he stays, the Reds would pay Castellanos $16 million for 2022. RP Justin Wilson can opt out of his $2.3 million salary.
The Looming New CBA The Collective Bargaining Agreement between baseball team owners (MLB) and the players’ union (MLBPA) is expiring at the end of 2021. The 2022 season will be governed by a new set of structures and rules, none of which have yet been determined.
The high-stakes negotiations between MLB and the MLBPA have commenced. If you’re undecided between optimism and pessimism about the two sides making a deal on time, keep this in mind: They reached agreements without strike or lockout in 2002, 2006, 2011 and 2016. You have to go back to the 7-month strike that wiped out the 1994 World Series to find the most recent work stoppage.
The new collective bargaining agreement will establish a framework for how player salaries and/or rosters are structured. The NL may play with a DH starting in 2022. For now, let’s proceed with the rules stipulated under the current agreement: 26 players on the active roster and three salary categories. 
Salary Categories Players on a major league roster fall into one of three salary categories: (1) those with guaranteed contracts, (2) those who have the right to arbitrate their salary, and (3) those who work for league minimum.
Teams control a player until he earns six years of major league service time, at which point he becomes a free agent. During the first three of those six years of team control, the player earns whatever salary the team assigns, constrained only by the floor agreed to in the CBA. After a player accrues three years of major league service time, he has the right to have his salary determined by an arbitration process. 
Future Reds DH?
Future Reds DH?
A Baseline Roster
To start our analysis of the Reds current roster and payroll situation, let’s work through a low-cost baseline. We’ll assume the club declines the Barnhart and Miley options, that Castellanos opts out and that Wilson opts in. Beyond that, we’ll assume the club takes a few other “realm of possibility” steps to minimize payroll. This is not intended to suggest a final product, only a discussion starting point.
Here is that 26-man baseline roster:
  • SP (5): Sonny Gray, Luis Castillo, Tyler Mahle, Vlad Gutierrez, Hunter Greene
  • RP (8): Lucas Sims, Art Warren, Luis Cessa, Tony Santillan, Dauri Moreta, Justin Wilson (L), Cionel Perez (L), Reiver Sanmartín (L)
  • C (2): Tyler Stephenson, Mark Kolozsvary
  • IF (6): Joey Votto, Jonathan India, Kyle Farmer, Eugenio Suarez, Mike Moustakas, Jose Barrero
  • OF (5): Jesse Winker, Nick Senzel, Tyler Naquin, Shogo Akiyama, Aristides Aquino
This baseline roster assumes the Reds decline arbitration offers to Delino DeShields (ARB3), Amir Garrett (ARB2) and Jeff Hoffman (ARB1). It also includes Aristides Aquino, who would play for league minimum again in 2022 but is out of options. Whether it be Aquino, Max Schrock or TJ Friedl in that final roster spot, the budget impact would be the same. 
Joey Votto's salary will be $25 million in 2022
Joey Votto's salary will be $25 million in 2022
What the Baseline Costs
How much would the baseline roster cost? Let’s break it into the three categories of players. 
Players Under Contract Joey Votto ($25m), Mike Moustakas ($16m), Eugenio Suarez ($11.3m), Sonny Gray ($10.7m), Shogo Akiyama ($8m), Justin Wilson ($2.3m).
Those six players have guaranteed contracts that add to $73.3 million. The only way the Reds can avoid paying these salaries is through a trade(s). In an ideal world, the Reds would offload Shogo Akiyama and either Mike Moustakas or Eugenio Suarez. But the Reds would have to pay a huge percentage of those salaries or exchange them for another team’s dead weight. 
Pre-Arbitration Players Vlad Gutierrez, Hunter Greene, Art Warren, Tony Santillan, Dauri Moreta, Cionel Perez, Reiver Sanmartin, Tyler Stephenson, Mark Kolozsvary, Jonathan India, Jose Barrero, Aristides Aquino.
Those 12 players will earn league minimum salaries, a specific dollar figure that will be established by the new CBA. League minimum was $570,500 in 2021. It’s possible that number will get boosted quite a bit, as the union tries to push more money in the direction of more players. Players who have earned league minimum for more than one year often get small raises. For this exercise, let’s assume it’s $600K. The Reds baseline roster of 12 players in this category will cost $7.2 million.
Arbitration-Eligible Players That leaves eight players on our baseline roster who are eligible for arbitration.  We wrote in May that the club should try to negotiate extension agreements with several of these players. As far as we know, that hasn’t happened.
Here are estimates from the folks at MLB Trade Rumors who have a long-standing model for predicting arbitration amounts:
  • Luis Castillo (ARB2) - $7.6m
  • Jesse Winker (ARB2) - $6.8m
  • Tyler Mahle (ARB2) - $5.6m
  • Tyler Naquin (ARB3) - $3.6m
  • Kyle Farmer (ARB2) - $2.2m
  • Luis Cessa (ARB2) - $1.6m
  • Lucas Sims (ARB1) - $1.2m
  • Nick Senzel (ARB1) - $1.1m
That adds up to just under $30 million. Salaries for players with a right to arbitration often won’t be known for sure until February 2022, after negotiations and hearings are finished.
Adding up the three categories, the estimated baseline payroll for an in-house roster is about $110 million.
What Will Ownership Spend?
The other half of the equation in projecting a team roster is the amount of money Reds ownership will budget for payroll. To provide a bit of context, here are the payroll spending amounts for the Reds for the past few seasons, based on FanGraphs Roster Resource:
  • 2021: $132 million
  • 2020: $149 million (assuming 162 games)
  • 2019: $132 million
  • 2018: $101 million
Given the break-even policy of the Castellini family, the payroll cut in 2021 wasn’t a surprise. But the Reds aren’t cheap. Average MLB payroll spending in 2021 was $134.7 million. In 2021, the Reds, who have the smallest economic footprint – according to market size estimates in the current CBA [p. 239] – of a major league organization, outspent 14 of the other 29 teams. (Whether the Reds are smart in how they spend their money is another thing.)
But massive uncertainties make it impossible to predict what the owners will do with 2022 payroll. They could return to the team’s pre-COVID trajectory and boost payroll back to the $150 million level, or slightly above. They could retrench if the pessimism lingers about attendance that drove them to make cutbacks in 2021. In that case, payroll might end up in the $130 million range again.
A big variable is how the team did financially in 2021. I’ve heard revenues far exceeded expectations and budgets. 
Those are the routine financial vagaries. Two other issues have enormous overhang when trying to predict the 2022 Reds payroll. First, an awkward ownership succession in the Castellini family could re-direct strategic decision making or cause hesitancy. Second, the new CBA will establish different revenue sharing parameters, salary caps and possibly salary floors. Each of those could have a considerable impact on Reds spending decisions.
So, spitballing the Reds 2022 payroll is loaded with more guesswork that most years. But to start looking at roster options, we need a number. Let’s say $145 million is what the Castellini family whispers into the ear of Nick Krall. 
Reds should learn Castellanos decision soon
Reds should learn Castellanos decision soon
$35 Million For a Shopping List
Our baseline salaries added to $110 million. Our payroll guess is $145 million. That leaves $35 million of discretionary payroll above the baseline.
In-House Shopping
Here are a few in-house names and price tags where that discretionary money can be spent. 
  • Nick Castellanos - $16m (if he opts-in)
  • Nick Castellanos - $19-20m (if he accepts a qualifying offer)
  • Wade Miley - $10m (best way to improve rotation?)
  • Tucker Barnhart - $7.5m (Barnhart and Miley a package?)
  • Jeff Hoffman - $1.1m (much better K% and BB% in bullpen)
  • Amir Garrett - $2.2m (BB% up, K% down, lefty)
Basic Needs
CF/OF With Nick Senzel’s future uncertain at best, the Reds need to add an OF who can play a legit center. Preferably he would be right-handed to platoon if necessary with Tyler Naquin. If Senzel doesn’t make it back, they need two. 
RP Adding bullpen depth is at the top of the Reds list. Only four of the eight names on our baseline roster are solid bullpen citizens. One of those is Tony Santillan, who the Reds may choose to move back into a starting role. Hoffman is a likely add. A strong left-handed reliever would be helpful. They could also use a top back-end guy, like a Raisel Iglesias. 
SP If they don’t pick up Wade Miley’s option, signing a solid starting pitcher becomes important. If they do re-up Miley, they could still use another arm for depth
About MORNING SPIN
MORNING SPIN is a newsletter written by Matt Wilkes and Steve Mancuso. We are co-owners of and writers at Reds Content Plus.
Stats Glossary
Need a quick refresher on what a certain stat means? You can find definitions here at our glossary at Reds Content Plus. If you run across a stat in MORNING SPIN that we don’t have there, please let us know by email at redscontentplus at gmail.
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