Contracts & Salaries, Part 3: Transitions

Months if not years in the making ... here is the latest installment in our ongoing series looking at the roster construction, contracts and costs. I would say it's the final installment, but Part 3 seems to have spawned a Part 4 somewhere along the way. Part 1 examined the contractual status of every player on the 40-man roster, and the data in that article was updated just last week. Part 2 examined the "big picture" of how payroll is impacted by a player's contract status as he moves through his career. Now it's time to figure out, how much money is there to spend in 2006, really?

I'm not going to try to break down every aspect of the Indians' financial picture -- maybe that'll be Part 8 -- but we can start by having a clear picture of where the payroll has been, and where it's going in the next few years. Here's a chart that several readers have requested ... these are all the significant raises that non-free agent Indians will be getting in 2006, including some estimates for our three arbitration cases:

Total Estimated Raises .. $13.15 million

... compared with ...

Total 2005 Salary of 2006 Free Agents .. $15.15 million (see Part 1 for the raw data)

That's right -- if let all seven guys walk, and regular salary increases kick in for our other players, all we've got left is a lousy $2 million. (And not to jump ahead too much, but we've already spent $13.2 million.) I know that seems hard to believe, but it's absolutely true. What's more, it's only going to get worse over the next several years:

Why is this the case? Because the Indians have had an "unnaturally" low payroll since 2002. The 2002 radical rebuilding created a roster where almost every key player was pre-arbitration in 2003 and 2004, and most key players still in 2005. That makes perfect sense if you're rebuilding from scratch, but it isn't sustainable once you're trying to contend every year. You can't add seven rookies every year to keep your payroll down, you can only add two or maybe three.

That means that even if you continue to let players go through free agency, your roster is still going to get heavier with arbitration-eligible players. If you look at the lower-right portion of this chart, you'll see two things. (1) I'm just making up salary numbers off the top of my head. (2) Our second big wave of cheap young players will all hit arbitration by 2009, just as our first big wave is starting to cost "real money" or reach free agency. Martinez may well still be a bargain at $5.7 million in 2009, but it's still $5 million more than he's getting in 2006. Across a whole roster, these things add up! Several of these older players will be replaced by new cheap, young players. But not nearly enough of them.

In other words, just to keep this $40 million 2005 team together through 2008, the payroll will go past $75 million -- even if they continue to let free agents go to other teams, as they did with Thome and Ramirez, et al. And this is why, ultimately, demands for higher Indians payrolls in 2005 and 2006 don't make any sense. If they add too much payroll now, they will only be guaranteeing that the roster they end up with will have to be broken up by 2008. And the thing is, it's a pretty damned good roster.

You may look at the chart and say, "Wait a minute, there is no way in hell that we're paying that stiff Broussard six million bucks in 2009, or any other season." And you're right -- but believe it or not, that is our best-case scenario: Ben will turn his career around and be worth continuing to employ through free agency. If he doesn't, we have a hole to fill where a key player should be -- you can replace that 2009 salary with the words "free agent."

Wherever you see the word "free agent" on this chart -- four or five each year, you'll notice -- it means we either need to spend $8 million that year or develop a prospect successfully. The first option is expensive, the second is difficult. So I've filled in $6 million for Ben that year -- and picked up all our team options -- because that's the best case scenario for the Indians. Prospect success at any one position is a total crapshoot, even given a high-quality system like ours.

The Good News

We were not, in fact, down to our last $800,000 after re-signing Scott Sauerbeck.

The Indians also paid Vizquel's $1 million buyout in 2005, which goes away -- and we are not paying any buyouts in 2006. In addition, as part of the Lawton-Rhodes deal, we sent Pittsburgh cash in 2005, and they'll send the same amount back in 2006. I haven't seen the exact amount reported, but $3 million would be a reasonable guess, creating another $6 million in savings for 2006, compared to 2005. Due to this "invisible" $7 million swing, along with improving MLB media contracts and higher ticket revenue projections, the 2006 payroll is likely to be budgeted around $62 million, up from $41.5 in 2005. The new TV contract will probably take the payroll budget up past $70 million over the next few seasons.

Why has this not been trumpeted more loudly by the Dolans? There are many possible reasons. They know, as illustrated above, that it will take that much money just to keep a high-quality team together without rebuilding. Hell, even the Athletics and Twins are busting $60 million next season. So there isn't as much extra money lying around as it appears, especially for the kind of splashy contracts that fans crave in December -- and because other teams are also flush with more money, those contracts are more competitive than ever.

I think, finally, that the Indians are not publicizing their 2006 budget because they want to make sure they don't spend it just for the sake of spending it -- ahem, Tigers cough cough Tigers -- not this year or any year. What if I told you that Shapiro would like to make sure that every year, they have enough money left over to do a Millwood-Garciaparra type of contract, or barring that, to pick up someone's salary mid-season? Wouldn't that make sense?

At the end of the 2005 season, the Indians had already committed $39 million in 2006 payroll, assuming nobody got non-tendered, without keeping or replacing any of our seven free agents. That created a $23 million budget for retaining, replacing and acquiring players. To spend any more than that, they'd probably have to shave salary through trades (Rhodes, Blake, Belliard, Riske) or non-tenders (Broussard). We know they're not going to non-tender Vazquez or Crisp. So, how does a team figure out how to spend that money?

NEXT: Coming very, very soon ... what they've done, and what they're still considering, and why.

X
Log In Sign Up

forgot?
Log In Sign Up

Please choose a new SB Nation username and password

As part of the new SB Nation launch, prior users will need to choose a permanent username, along with a new password.

Your username will be used to login to SB Nation going forward.

I already have a Vox Media account!

Verify Vox Media account

Please login to your Vox Media account. This account will be linked to your previously existing Eater account.

Please choose a new SB Nation username and password

As part of the new SB Nation launch, prior MT authors will need to choose a new username and password.

Your username will be used to login to SB Nation going forward.

Forgot password?

We'll email you a reset link.

If you signed up using a 3rd party account like Facebook or Twitter, please login with it instead.

Forgot password?

Try another email?

Almost done,

By becoming a registered user, you are also agreeing to our Terms and confirming that you have read our Privacy Policy.

Join Let's Go Tribe

You must be a member of Let's Go Tribe to participate.

We have our own Community Guidelines at Let's Go Tribe. You should read them.

Join Let's Go Tribe

You must be a member of Let's Go Tribe to participate.

We have our own Community Guidelines at Let's Go Tribe. You should read them.

Spinner.vc97ec6e

Authenticating

Great!

Choose an available username to complete sign up.

In order to provide our users with a better overall experience, we ask for more information from Facebook when using it to login so that we can learn more about our audience and provide you with the best possible experience. We do not store specific user data and the sharing of it is not required to login with Facebook.

tracking_pixel_9351_tracker