Here we go again. The need for consistency and accuracy in reporting has forced me to break out the spreadsheet and deal with the Cardinals’ payroll one more time.
Sorry. I’m sure you’re just about as sick of the topic as I am.
I certainly did not plan to go this route today. I had a few other more interesting article ideas for you, but it looks like they’re going to have to wait until after Christmas. Instead, I have to spend today fixing what I wrote on Saturday, which has become completely outdated.
In that piece – “What Next?” – I outlined the Cardinals payroll situation post-Contreras and started looking at roster depth to try to figure out what the club would do for the rest of the offseason.
When I began that piece, I assumed that I would either have Contreras’ yearly salary information by the time it published or that the framework of his deal would be straightforward enough that a simple average annual value projection would let the analysis hold up.
Narrator: “It didn’t.”
So, here we are to fix what I had written previously. For the second time this offseason. We had to do this back when my original payroll work came out in October and the club said, through Derrick Goold, “Nope all of that is wrong now! Sorry, start over.”
I’m sure there is a whole office full of accountants over on Clark Avenue who pull out their popcorn Michael Jackson-style and giggle at me every time I try to write one of these.
Thanks, guys! Appreciate it!
Seriously, though, payroll has become one of the biggest stories of the offseason and it continues to be so as the Cardinals continue to do weird things with money.
The “Cardinals continue to do weird things with money” started when the club gave Adam Wainwright $17.5M this year. That salary is not weird. It’s expected. What’s weird is that they arranged it so that $10M of that $17.5M would be deferred and then let it be known publicly that the entire value of the contract, even the deferred portion, would count against this year’s payroll budget.
Deferrals aren’t new to the Cardinals. They’ve been using them with veteran players for a long time. We’ve been trained to believe that the reason clubs defer money is to a) give them immediate salary relief without forcing a player to take less money and 2) give players ongoing income and financial security post-retirement.
Goold has made it clear that the full $17.5M needs to be in the actual payroll line. Count it all even though it won’t be paid until later. That’s weird.
Maybe not to the accountants who just throw all this stuff into lines and balance sheets. But it’s a weird way to approach budgeting and planning for player acquisition.
Now, let’s look at the Contreras deal, where we will again find something weird. Here’s the relevant information from Spotrac:
C Willson Contreras' #Cardinals Contract— Spotrac (@spotrac) December 11, 2022
▪️ 5 years, $87.5M
▪️ 2028 Club Option ($5M buyout)
▪️ Full No Trade 2023-26
▪️ 10-Team No Trade 2027-28
▪️ Award Bonuses
28: $17.5M (club)https://t.co/mFP5W9bvNj
The Cardinals are only going to pay Contreras $10M next season. That’s a much lower than expected total. They’ll follow that up with $18M annually for ’24-26. Then he gets a slight bump in his final guaranteed season.
In the biz, we call that a backloaded contract. Backloading deals is nothing new for teams. Why does a team propose them? For the same reason that they defer funds. It’s better to save money now and spend it later!
Odder still is that if you add up Contreras’ AAVs you don’t get to the $87.5M published rate for the salary. You end up $5M short. That’s because the Cardinals included a 6th-year team option in Contreras’ deal worth another $17.5M. That option has a $5M guaranteed buy-out.
That’s a large buy-out. One of the largest that I’ve seen the Cardinals include in a deal.
Why do that? Two reasons: 1) from the player’s perspective, it encourages the team to pick up the option since they’re already on the hook for a relatively high percentage of the money and b) from the team’s perspective, it is another way to move guaranteed money out of the beginning of a deal and into the end of the deal.
That $5M is essentially a one-year deferral. Except the Cardinals don’t have to count it against their payroll this season. (Though the way this offseason is going, it wouldn’t surprise me if we find out tomorrow that it DOES SOMEHOW count right now.)
Ok… one more weird.
With all this focus on the way the Cardinals are counting payroll, it’s very easy to forget the other ways that the Cardinals are actively not spending. Arenado has two deferrals baked into his extremely complicated contract. $6M of his current salary won’t be paid until after he retires.
Why do teams defer money again? To save payroll space now.
Add Arenado’s $6M with $10M of Wainwright’s money that the club is not paying to either player this season but is counting against payroll anyway, we come up with $16M that the Cardinals are (not) paying from their current payroll budget.
Here. You’ll see what I’m talking about. This is the updated 2023 26-Man Projected Opening Day Payroll spreadsheet (accurate as of 9:33 am, Dec. 13):
With the advice of a bunch of people who I respect and who based their suggestions on information coming from the front office, I estimated the Cardinals’ budget at $185M.
Right now, counting everything that I’ve counted above including the kitchen sink (which is deferred until 2054), the Cardinals are only at $174.5M with a full roster and no notable needs to fill.
How hard and fast is that $174.5M? Well, it does include that $16M in deferred salary that we know the Cardinals are not spending on any salary this season. If you don’t want to credit them for that – and you don’t have to, you don’t work on Clark Avenue – because that’s not how deferred money is supposed to work, then the Cardinals’ functional payroll this season drops down to $158.5M.
Regardless of your perspective here, there is one truth we could probably agree on. By actively deferring money, backloading deals, and negotiating large buy-outs half a decade from now, the Cardinals are acting like a team that’s trying to save payroll space.
Notice I’m saying “save” payroll space. Not “cut” spending. There’s a big difference.
The Cardinals still have a few ways to cut payroll if they so choose, but they haven’t shown any indication that they want to do that. DeJong is still here. So is Dakota Hudson. Chris Stratton, a non-tender candidate early in the offseason, returned on a small deal.
The Cardinals are not desperate to save cash because they are up against a hard payroll cap.
Instead, they look more like a team that’s actively positioning itself to take on quite a bit of salary when the time comes to do so.
Depending on how you view the deferred money, the Cardinals have between $10 (the deferrals count) and $26M (the deferrals don’t count) of… let’s just call it payroll elasticity build into their 2022 budget.
That’s a lot of flubber!
Why are they saving space and what will they do with it? Here are a few guesses:
1. Save it for the trade deadline. This is my best answer. After spending several seasons sitting out the summer auction, the last few years have seen them jump back in. Injuries to the starting rotation have necessitated such moves as the farm system has been unable to supply the quality depth the team has needed.
That hasn’t changed much as of today. The Cardinals have rotation depth, claiming 6 experienced starters in their 5-man rotation. That implies at best a false sense of security. Every year the club suffers several injuries to the starting rotation, and frequently at least one of those injuries removes a starter for a full season. A few injuries – long or short-term – could push the club into routinely starting players they’ve displayed discomfort with in the recent past.
The Cardinals seem like a team that plans to adjust their rotation in late July when they’ll know what they need and what they have. If they need to buy at the high end of the market – something they haven’t done in the past – they would have the money to do so.
2. Save for the future rotation. It’s no secret that the Cardinals don’t have much of their starting rotation intact after this season. Steven Matz sticks around on a discounted deal relative to the current market and Dakota Hudson – not currently a starter in my previously published depth chart – will still be under team control. The club might hope or believe that a few arms from the farm system can step into gaps, too.
Still, they will have to sign either current Cardinals to new contracts or add other starters from the free agent market or through trade. Either way, it will involve money. Lots of money. Adding four average or above starters on the open market, including re-signing current Cardinals who are set to be free agents, would cost between $15-25M each. More if they want to venture into the “ace” category.
The Cardinals might push all those decisions to the offseason. Or their current payroll flexibility could allow them to make moves this season – either before Spring Training or at the trade deadline – that will stretch into next year. That could include extensions to current players, like Miles Mikolas and Jordan Montgomery, or adding team-controlled players through trades.
3. Make an opportunistic “big move”. The Cardinals could still make a big move. Several beat writers predicted something like this early in the offseason and they weren’t talking about Willson Contreras. If there was some kind of Paul Goldschmidt or Nolan Arenado-like situation out there, the Cardinals would have the payroll flexibility (and the prospect capital) to jump on it.
Is there? I’m not aware of anything. At least not now. Come spring, though? Or the trade deadline? You never know. What we do know is that when superstar-caliber players are on the trade market, the Cardinals have tried to be players for them, with varying levels of commitment. They know full well how difficult it is to draft and develop such talent.
4. Nothing. Don’t rule out the possibility that the Cardinals have worked substantial budgetary flexibility into their payroll simply because they could. I did some Christmas shopping online today. One present on our shopping list came in quite a bit cheaper than we had budgeted. Expectations are met. We’ll have a happy girl on Christmas morning. Why spend more when we don’t have to? The Clark Avenue accountants wouldn’t.
But the wife and I are not accountants, are we? We’re a mom and dad who budgeted a certain amount for our kids for Christmas. That extra savings just means we can now have a VERY happy girl on Christmas morning by getting her a few extra presents!
The Cardinals can do the corporate thing and just pocket their savings. They can already show a spending increase. They can already claim a full roster. They can already point to their unrivaled position at the top of the NL Central.
Or they could continue to try to improve a roster that is still just 6th best out of 6 likely contending teams in the National League.
Until the Cardinals do that, I promise I won’t talk about payroll again. I’m as sick of the topic as you are. Next week we have a Christmas podcast interview with Alec Burleson! And I’ll start getting back to what used to be my bread-and-butter around here: player analysis!
Happy Wednesday, Viva El Birdos.