13 February 2018

What if the Orioles Just Want to Cut Payroll?

All off season, including here on Camden Depot, it's been assumed that the Orioles have money available to spend on free agents as a result of clearing multiple large salaries off their books. Specifically, the O's no longer have to pay a combined $45 million to Ubaldo Jimenez, Wade Miley, JJ Hardy, and Chris Tillman. Given that the O's payroll has increased every season for almost the past decade, it made sense that at the very least they would maintain a payroll number similar to that of 2017. Of course, the problem with the 2017 payroll (which was the highest in club history) is that the team crashed and burned, finishing below .500 for the first time since 2011.

The Orioles have, in both their actions and their rhetoric, repeatedly shown that the current brain trust has little interest in rebuilding. It was therefore natural to assume that the Orioles would sign several free agent pitchers to bolster what was the worst starting rotation the team has ever had. Of course, there has only been the barest of hints that the Orioles are even interested in any free agent starters, much less being close to signing one. Even in a glacially slow off season, the O's have been less active than their normal selves. This raises obvious questions about what the goals of this off season actually are.

From a non-cynical perspective, perhaps the O's are just engaging in their time honored method of waiting for the market to shake itself out and then picking up whatever is left. In an off season with a relative dearth of impact talent, this might even make sense. The problem is that the team is desperately in need of pitching talent and there have been multiple reports that the Orioles have been turned off of the starting pitching market by contract demands, health concerns, or both. There is certainly still time for moves to be made, and it seems likely that the Orioles will bring in at least one or two MLB starters, but the idea that the team would sign multiple higher end pitchers is rapidly becoming unrealistic.

A less generous interpretation, however, would be that the Orioles may just not want to continue spending at the level they have over their recent run of success, especially since they have spent well above their market over the past half decade. Baltimore is the 21st largest metro market in America with about 2.7 million people. There are six other franchises that operate in markets with 600,000 more or fewer people than Baltimore: San Diego, Saint Louis, Colorado, Tampa, Pittsburgh, Cincinnati, and Kansas City. 600,000 is, admittedly, an arbitrary number, but I mostly picked it to show the types of teams that the Orioles are clustered around in terms of market size.

Note: All payroll data provided by Cot's Contracts.

It's clear that the Orioles are at the top of the class among this group, with only the Cardinals having a higher average payroll since 2012. The Orioles also have the highest single season payroll ($164 million in 2017) and outspent each of these teams in 2016 and 2017. If you go back only to 2014, the differences are even more stark, with the Orioles having the highest average payroll of the group.

Clearly, this kind of analysis ignores any number of factors. I didn't take into account regional television network revenue, ticket sales, team record, or a host of other potential reasons for the disparity in payroll among these teams. That said, if we accept the idea that the total number of people living in a particular market is a decent proxy for how much a given team should spend, this data is fairly striking. Within their market peer group, the Orioles have been easily one of the highest spenders over the past half decade.

So, maybe there's a simple explanation for the lack of activity from the O's this season: they've realized that their market cannot sustain this level of spending and are attempting to bring the payroll down to more reasonable levels. Even if they do very little in terms of adding to the rotation, it is likely that the 2018 payroll will at least be in the $130 million range, still well above their average spending since 2012. While the team isn't doing what most fans, and even players, seem to want, they will still be spending a significant amount of money on the team in 2018.

Of course, the biggest issue isn't necessarily that the Orioles are cutting payroll, but rather whether the brain trust has a clear idea of where the franchise is going in the next several years. Undergoing a payroll correction in the service of a rebuild may result in a couple of lean years at the major league level, but at least there would be a plan in place. Cutting payroll while also holding onto and/or not seriously engaging in contract extension discussions with the team's most talented players seems much less like a plan and more like a front office that is in disarray.


Pat said...

My guess is they are a top 7 market when you count the TV and MASN money which includes big money from the Nationals. However, this may indicate lean years ahead with the nationals money reducing, and the low attendance figures of the last few years.

Salisbury Dave said...

People overrate MASN. Yeah it makes money but basically every franchise, especially the bigger markets, have their own RSN. In no way does MASN put us in a T10 market.

Mike Bonsiero said...

MASN might give them a little edge because it does, for utilitarian purposes give them a chunk of the DC market in a monetary way, but not so much as to jump them from the 20's (where they would otherwise be) to 7th.

They may very well be cutting salary, something that has been speculated about for a couple of years, but if that's what they're doing it's really bad process to do that and then not have a realistic outlook on the season and trade Manny, Brach etc.

Jon Shepherd said...

Remember this, MLB teams who fiercely jockey with each other over money have concluded that the Orioles are a small market revenue club. We may feel we are big as we take three minutes to drive from one side of Baltimore to the other on I95, but folks with a whole lot of money at stake think otherwise. Baltimore metro market is about 25th overall. DC metro probably helps push that up to maybe 21st. However, much of the corporate money that clubs draw from actually goes to DC.

Joe Wantz said...

I didn't get into all the regional tv deals for this particular article, but I don't think there's any way the Orioles are a top 10 market, even with MASN.

Unknown said...

The more I think about this, the more I think this is what would be happening if Angelos was getting ready to put the team on the market. Don't sign any expensive multi-year deals, don't renew the GM or the manager, don't trade away valuable pieces and rebuild, just try to cut spending overall and cross your fingers the stars align for your last year.

Pip said...

If Angelos is really preparing to sell the club, minimizing debt is important but maximizing value is as well, and it is unwise to let Brad Zach and the gang depart untraded.
I wonder if Angelos is expecting to lose the MSN money lawsuit and is preparing to hand over a ferocious amount of money to the Nats?
I'm a very patient and reasonable person, but such circumstances would drive me insane. Heaven only knows what that possibility might be doing to Angelos himself.
Regarding the team, I wish the Powers would accept the realistic situation and act accordingly.
This team could be far better than it is and still not whiff the postseason, and blowing bank and farm for 85 wins and fourth place is a poor procedure.
Far better to sell assets and enjoy the game while looking ahead.

Jan Frel said...

Yes! So rarely in discussions about payroll do writers ever consider that the owners might want to: profit?

vilnius b. said...

Comparing Baltimore's market size to that of St. Louis is fairly ridiculous.
The Cardinals have a huge regional base that spans several midwest spans and even some southern states as well.
I remember a game about a year in Seattle when half the crowd was bedecked in red. Some of them traveled, but many others have relocated to other parts of the U.S.