Diamondbacks 2021 Payroll Update

As covered by Jim, The Diamondbacks open spring training camp Wednesday, February 17^th. With the signings of Joakim Soria and Asdrubal Cabrera it seemed like a good time to revisit and update the payroll status. As always, if there are any other major changes that occur during spring training or leading up to opening day, then I’ll update accordingly. Likewise, I always appreciate crowd sourcing. If anything I missed or is in need of correction please let me know in the comments and I’ll come back and edit.

For the TL;DR crowd I’ll post the table at the top of the article. If you’re not interested in the process or the “guts” of this, that’s understandable. It’s quite long. But for others there may be some interest in how I arrive at this, why it’s somewhat different from what you find on other websites, and how it’s evolved. A lot of this some of you will be familiar with, as I’ve covered before. But this is the most fleshed out “guts” post I’ve done on the process to date and will serve as a reference post to link to in the future when providing updates. This has been my process over the last several years, although I’ve made tweaks. I think it’s the best, most accurate D-backs centric info you can find of course.

Last year opening day payroll was shaping up to be about $120M and budgeted to about $123M.

As of right now opening day payroll shapes up to be just over $92M and the payroll budget looks to be about $95M. (Opening day payroll does not include estimates for Injury replacements that must be budgeted for. ) So this represents a significant reduction, due of course to Pandemic economics.

Barring any last minute big surprises, payroll will almost certainly be below $100M on opening day. It could edge upwards if a couple of guys on minor league contracts make the roster, or they make another relatively low cost signing or trade.

Sources:

There are 4 main public sources used to gather this information.

Baseball Reference Contracts Page

Roster Resource Page at Fangraphs

Cots Baseball Contracts page at Baseball Prospectus

Spot Trac Team Payroll Page

All four are terrific websites, each with their own formats and process. However there are always differences between them, and part of my process is to reconcile those differences. They all contain different levels of information as well that can be helpful in drilling down to specifics.

In addition to these public sources, I try to utilize my own experience having worked in the team’s Baseball Operations group from 2008-2010. Obviously that experience is increasingly out of date and totally irrelevant to specific player cases. However it does give me a little perspective that is helpful. Finally, I also depend on contacts and resources within the Baseball Media, who in turn have access to baseball industry insiders that I often lack.

Deferred Salary

This is always a big one. I have gone back and forth with how to deal with Madison Bumgarner’s deferred salary. Per Cots, based on media reports:

in 2021-23, $5M annually is deferred without interest, to be paid in $5M installments each Nov. 1, 2025-27

The question then becomes, do you include that deferred money in the 2021 payroll budget projection? I’ve done it both ways, most recently not including that $5M in the 2021 payroll projection. However I was still looking to clarify the best way to handle his case. Fortunately we have some help from Nick Piecoro who wrote about deferred salary budgeting rules back in 2016 when the team signed Zack Greinke:

Though $10 million of Greinke’s 2016 salary of $31 million is being deferred, the Diamondbacks still must budget for the full amount because Major League Baseball requires clubs to fund the vast majority of deferred salaries before realizing a relatively small credit, a source said.

Those rules went into effect after the Diamondbacks of the mid-2000s reportedly ran into cash-flow problems in part because of deferred payments.

So based on this, the $5M is back in. An interesting side note from that 2016 article is that Derek Hall said the Greinke deferral was an “isolated case” and not something they would be doing going forward, but obviously they changed their minds on that.

Signing Bonuses

A lot of the differences you will find on the public websites are due to how they’re handling signing bonus money. Back in 2007 Jeff Moorad told me that signing bonuses are pro-rated over the life of the contract. For example, a $1M signing bonus on a 3 year deal would be spread out in three installments of $333K. Indeed when I was able to view the internal payroll budget sheets starting in 2008, that was how they were shown. However I believe that had a lot to do with how Moorad and Josh Byrnes tended to negotiate these bonuses. There are other cases where it’s not spread out evenly and we have some documentation on that. When we do, I go by that public information. When we don’t, I simply pro rate it. Some examples:

• Ketel Marte: He signed a 5 year extension in March of 2018. Part of that extension included a $2M signing bonus. Some sites pro rate that signing bonus into 5 payments of $400K each. However per Cots, “$2M signing bonus, paid 5/15/18”.

Since we have specific info of a date that was paid, I don’t pro rate it. Accordingly I just show his base salary of $6M for 2021 and $8M for 2022. (BR and FG show 6.4M but Spot Trac shows 6.0M)

• Nick Ahmed: When Nick signed his 4 year extension it included a $1.5M signing bonus, that according to Cots is paid $1M on 4/1/20, $500,000 on 4/1/22. So His Bonus money is treated accordingly, and $500K is added to his original base amount of $7.5M for 2021. Note that BR and Spot Trac pro rate it evenly, whereas FG treats it as I am. (See also incentives below)
• Eduardo Escobar: When he signed his 3 year deal prior to 2019 season it included a $500K signing bonus. There is no clear indication I can find if that was paid in one installment or not, so it’s considered to be pro-rated, and $.167K is added to his base salary of $7.5M. All other sites treat this the same way.

Incentive/Performance Bonus

Reporting on the details of incentives can be very spotty and sometimes the wording is not entirely clear. But we do the best we can with what we have. Note, I do not include incentive money for incentives not yet earned, even though in some cases they may seem very likely. I just add them up at the end of the end of year. I don’t know how the team budgets for them. But for example I can imagine a scenario where if several players are on track to meet incentives by mid July that might impact how much budget they would have to absorb salary in any trades at the deadline. Also remember there are bonuses available for things like Roster Service Time days, Playing time, (Games, Starts, PA, IP, etc), awards voting, like MVP and Gold Gloves. However bonuses for specific statistical achievement such as Homers, Strikeouts or Saves, are not allowed. LINK

Just 3 examples below. But I went player by player to check on all of them.

• Ketel Marte: As a result of his 4th place finish in the 2019 MVP voting he will received a $1M bump to the value of the option years on his contract (2023-24). But that does not affect anything for 2021 or 2022.
• Nick Ahmed: His contract includes these incentives:

salaries increase $500,000 in all subsequent seasons for each Gold Glove or All Star selection, up to $1.5M each.

salaries increase $250,000 in the following season for 150 or more days on active roster

Since his deal was signed 2/10/20, the 2019 GG does not impact his 2021 salary. However the service time for 2020’s shortened season is pro-rated and accordingly in addition to his base of $7.5M and the $500K bonus mentioned above, I also include $250K for service time incentive. Total $8.25M for 2021. It drops back to $7.5M estimate for 2022 as there is no more bonus to be paid and he has not yet earned the incentive money from 2021 season.

• David Peralta: Per Cots, 2021 & 2022 salaries increase $500,000 each for 150 days on active roster in the prior season. Since 2020 Service Time is prorated, he met that incentive, and accordingly I up his salary for 2021 from $7.5M to $8.0M. The other sites are showing $7.5

Option Years and Buyouts:

When an option is picked up, that pre agreed to salary is input. When an option is declined for the following season and a buyout must be paid, that buyout amount must be paid within the fiscal year prior to the option year being paid out. So for example:

Kole Calhoun will earn a base salary of $8M in 2021. There is a team option for $9M in 2022, with a $2M buyout. If the team declines that option, they must pay him the $2M before 12/31/2021, and therefore that money would go against the final 2021 payroll ledger. However there is no way for me to know at this time whether that option will be picked up or not or whether there will be a buyout paid. So the buyout is NOT included now, but would be if calculating year end expenditure.

Arbitration Eligible Players:

In previous iterations these were estimated amounts based on MLB Trade Rumors estimates. ARB cases are now finalized for 2021 and actual amounts are shown. 2022 are my own estimates. For 2022 I also include a rough estimates to allow for players that will be 1st time ARB eligible.

Pre Arbitration Roster Spots

Very simply, the team will open the season with 26 roster spots. However many spots will go to players not on guaranteed contracts, either through free agent signings or arbitration settlements, must be accounted for. For example, I originally had 14 slots going to this group, but with the additions of Soria and Cabrera, that is now 12. It doesn’t matter WHO those players are for the purposes of this budget summary. MLB minimum salary for 2021 is $570,500. However there are some players, like Christian Walker that will make more than that based on service time. ($590K in his case) I just use an average of $580K for all slots. See Link.

Injury Replacements and Roster Expansion

You will see 4 roster slots x $580 K, or $2.32M budgeted in the table above. When players are called up from the minors to take a spot on active roster from someone on the injured reserve, they receive a pro rated MLB league minimum salary based on however many days they are counted as having service time. (The player on injured reserve continues to receive MLB Salary)

Per Spot Trac, there were 1,152 IR days accumulated by D-backs players in 2019. Some of those went to players that were already making league minimum wages, such as Luke Weaver. It would be double counting to include his replacement in the budgeting since he was already making league minimum. Other days needing to be replaced were for players like David Peralta who was on a guaranteed contract. What I do is simply estimate that roughly 750 days of league minimum replacement and September service time needs to be accounted and budgeted for. Since there are 187 days service time in an MLB season, that works out to 4 roster slots . This is similar to how it showed on the budget sheets I saw when I worked for the team. It may have changed, but wouldn’t likely be more than one slot higher or lower. Close enough.

Minor League Contracts:

When players with previous MLB experience are signed to minor league contracts, they typically have a clause that guarantees them a set amount for making the MLB roster. For example Chris Devensk was signed by Arizona as a free agent 1/20/21 (minor-league contract) but with a salary of $1M in majors. If he made the opening day roster and stuck all season, he’d make $1M plus possible incentives based on games and games finished. However if he came up for a month mid season and then was released then he’d just make a pro rated portion of the $1M. Since there is no way to predict which players on such a deal will get added to opening day roster I typically don’t account for them in the budgeting process unless it’s exceedingly clear the player is going to make the team. I usually just wait for the opening day payroll update and figure it out then.

As a side note, a couple things I learned from the link above in the Pre Arb Roster Spots Section

The minor league minimum for a player signing his first major league contract increases from $46,000 to $46,600 next season, and the minor league minimum for a player signing a second or later major league contract goes up from $91,800 to $93,000.

MLB announced last February that it is raising 2021 minimums for minor league contracts, from $290 weekly to $400 at rookie and short-season levels, from $290 to $500 at Class A, $350 to $600 at Double-A $502 to $700 at Triple-A.