Interesting Payroll Article

[NWinAZ]

Understanding how the Mariners' payroll budget works isn't easy. Here's some things to take into consideration and a handy reference tool.

By Ryan Divish
Seattle Times staff reporter
Since I started covering baseball in 2006, the idea of player payroll has always been a slightly complicated subject to me. And over that time, understanding everything that goes into what a team spends on its payroll for any season is something that has only gotten slightly easier to comprehend over that time.

Teams don’t make it any easier by refusing to provide the details of payroll and contracts for obvious reasons. So when fans would say, the Mariners, or another team, is spending less on payroll this season compared to the year before, they could legitimately make that assumption by looking at the information provided to them. That misconception is compounded when opening day rolls around each season, and someone compiles the payroll of the opening day 25-man roster, which isn’t close to overall payroll.

Mariners CEO Howard Lincoln said the team had no plans lower budget this season. The Associated Press had the Mariners at just over $124 million for 2015, while Forbes lists the Mariners at just $145 million spent for last season. Various sources had put the Mariners’ projected payroll budget around $140-145 million this season.

Over time, here’s some things that I’ve learned about how a team’s payroll budget is set and how the general manager and his staff work to stay within it. Obviously, we’ll use the Mariners as an example.

• The payroll is for the 40-man roster, NOT the 25-man roster. And since there are changes to the 40-man roster – they all must be taken into consideration since players are working on guaranteed contracts. So players not on the Mariners are taken into account and the possibility of that player being added to the 25-man roster and their salary increasing also must be factored in. Since big league guaranteed, that money doesn’t just disappear when they are taken off the 40-man. For example, last season when Justin Ruggiano was designated for assignment and not claimed off waivers, he accepted an outright assignment to Class AAA Tacoma and because of his service time, the Mariners still had to pay his full MLB salary of $2.505 million – until they traded him to the Dodgers.
• In terms of a money owed to a player based on their MLB contract, teams factor in the performance incentives into that budget. Sure some incentives seem unlikely to ever be paid. But it’s prudent to budget in those incentives. For example, Hisashi Iwakuma receives $500,000 if reaches the plateau of 150, 160, 170, 180 and 190 innings, while Chris Iannetta will receive $150,000 for reaching 75, 80, 85, 115, 120 games started and $200,000 each for 90, 95, 100, 105, 110 games started. Those possible dollars are factored in.
• Besides 2016 allotted salary for players, there is signing bonus money that is factored in. This year, the Mariners still owe Danny Hultzen approximately $1.8 million this season from his $6.35 million signing bonus from his first contract after being drafted in 2012. So that money is part of the budget, along with Hisashi Iwakuma’s $1 million signing bonus for this year. These are the known signing bonus payments.
• Players under club control make the MLB minimum – but it isn’t the same amount. Some players make a little more than others. It’s not a huge amount of money. Last season, James Paxton made just over $519,000 while Mike Zunino made just over $523,000. Each team determines what they pay these players on their own scale/algorithm. It can be performance from the season before, service time and other factors.
• Also players on the 40-man roster can make more money as minor league players even if they aren’t on the 25-man roster based on the collective bargaining agreement. Zunino is a good example. Because he basically spent all last season in the big leagues, he will make 60 percent of his salary from a season ago if he isn’t added to the 25-man roster per the CBA. So even if Zunino were to spend the entire season with Class AAA Tacoma, the Mariners would owe him about $300,000, which is much more than a typical Class AAA salary. Each team also factors in September call-ups and increased player salary for that month. It’s usually anticipated to be more than $1.5 million.

These are just some of the aspects of the payroll budget that a general manager and his staff must factor in to their decision making. This year, I’ve tried to make a handy spreadsheet as a reference tool – with much help from Cot’s Baseball Contracts – to keep track of contract status and payroll. I’m not good at Excel.

 

[DHoey]

Just got done reading the article. Really neat spreadsheet.

 

[NWinAZ]

Just got done reading the article. Really neat spreadsheet.

I thought it had some good points that most of us hadn't considered or maybe overlooked. One thing I wasn't aware of was the Zunino part and how much he gets paid in the minors based on last years MLB service time.

I need to look at the spreadsheet. I really didn't get to it.