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Saturday SOC: Budget & Payroll Update

A payroll update and its ramification on what’s next for the Cardinals.

Division Series - Los Angeles Dodgers v. Arizona Diamondbacks - Game Three Photo by Chris Coduto/MLB Photos via Getty Images

Good Saturday morning, Viva El Birdos!

I hope you had a pleasant time with family and friends over the Thanksgiving holiday. And that you survived the insanity of Black Friday, if that’s your jam, with all your limbs and teeth intact.

I’m back today to give you a brief update on the Cardinals’ projected payroll and their current roster plus a little Thanksgiving-Friday-fueled commentary. No reason to waste time. Let’s jump in!

Current Payroll & Roster

With the moves that the Cardinals have made at the non-tender deadline and after, here is an updated 26-man roster, with a balanced number of offensive players and pitchers.

As always, don’t pay close attention to the pre-arbitration player names. They are mostly salary placeholders. This is not a roster prediction. It’s a budget prediction and most pre-arbitration players make about the same amount of money.

By non-tendering Dakota Hudson ($3.65M), Andrew Knizner ($1.85M), and Jake Woodford ($1M), the Cardinals saved $6.5M in estimated arbitration salaries.

The club then added Lance Lynn ($10M + performance bonuses) and Kyle Gibson ($12M). That’s $22M committed for two starters. That’s a relative discount compared to the cost of starting pitching in the league. But it comes with a relative lack of production certainty. Before you argue with me about that statement, and I know some of you do, give me a chance to explain below.

That gives the Cardinals $131.5M in guaranteed contracts. It lowers their arbitration estimates down to $21.7M. And they have a fluid $8.7M in pre-arbitration players.

That locks the club in at $161.97M here on November 24th, 2023. That’s where the team is. Where will they go?

Projected Budget

We heard from John Mozeliak for the first time this winter at the General Meetings. He was asked about payroll and indicated that the club was on track to return to their expected payroll totals from last season.

That sent some waves through fans. How could the Cardinals consider holding payroll steady after they were reportedly short in spending last season and had so much to do to return to contention in 2024?

Team reporters immediately clarified. Yes, the Cardinals were under budget last season. Then they sold off parts at the trade deadline instead of making expected additions for the postseason. That lowered their final 40-man payroll quite a bit from what they intended.

Cot’s has not updated their 2023 year-end payroll but they do have their CB Tax 40-man salary calculated at $192.5M. That includes numbers I don’t normally put in Opening Day payroll calculations. Like performance bonuses and other player benefits.

All indications are that the Cardinals intended to have a final 40-man budget of $200M or more. When Mozeliak says that the Cardinals are planning to return to their previously expected budget levels, this is what he means: a payroll that would cross the $200M barrier.

The problem is that he doesn’t specify when the Cardinals will reach or eclipse $200M. Is that an Opening Day figure, as many are apt to presume? Is it a 40-man, end-of-year figure?

There is typically a substantial gap between the club’s 26-man Opening Day payroll and their end-of-season 40-man payroll. There is another gap between their end-of-season 40-man payroll and their Luxury Tax 40-man payroll that includes payroll benefits. Last year, the gap between their 40-man Luxury Tax and their 26-man Opening Day was around $16M. It’s been much higher than that in the past.

Calculating payroll for an MLB team remains something of a guessing game. It’s an annual source of confusion. And an important one for teams like the Cardinals that have to pinch pennies even when they have gaping holes.

Here’s my take: the $200M number is likely a reference to the club’s 40-man end-of-season payroll figure. Because payroll changes and grows throughout an offseason and season, I always use an apples-to-apples approach to payroll comparison. Opening Day 26 to Opening Day 26 or Final 40 to Final 40. Mozeliak clearly referenced a 40-man payroll when he talked about returning to previously budgeted totals. We know this because he referenced moves made in the season – trading away payroll and not acquiring payroll at the deadline.

Apples-to-apples. If Mozeliak expected the club’s final payroll in ’23 to be $200M or so. And he expects to return to that number., then we should conclude that the club intends to again have a final (not Opening Day) payroll in ’24 of $200M or over.

So, if you go around saying the Cardinals will spend up to $200M before they play a game, I think you’re going to be disappointed. Maybe not. But that’s how it reads to me. It also fits the team’s historic practice.

I used the club’s previous history, its current situation, and its previously-expected budget levels to come up with my $192M expected budget. Does that still hold up?

I think it does. Despite picking from the bottom of the dark-meat pile for their Thanksgiving pitching plates, every indication is that the Cardinals plan to pursue an upper-level starter to finish out their rotation. The names reporters have cited in connection to the Cardinals are going to cost between $20M-$30M next season. (Except Dylan Cease). The team also plans to add some bullpen pieces.

The Cardinals insist there is a “lot of offseason left” and that they “are not done”. That makes me fairly comfortable with my original projection of $192M. I would prognosticate that Mozeliak has a flexible $205M budget to spend throughout the 2024 season.

If they hit that total by Opening Day, that would give them about $13M to use during the season, at the trade deadline, or to cover other payroll considerations. That’s a lower total than normal if we go by the club’s Luxury Tax history. It’s not that far off the “year-end 40-man” payroll that Cot’s calculates. Based on what the team needs and how many wins they need to make up, I would expect the club to invest most of its budget space in Opening Day salaries. The Cardinals shouldn’t keep a large chunk of cash on hand to improve at the deadline when they first have to make sure they’ll be in contention at the deadline. That’s been their normal practice, but it’s a pretty poor strategy this season.

So, I still could be high if they approach budgeting and spending in the way they normally do. But I’ll stick with it.

The Cardinals have about $30.3M in available budget space for a $192M Opening Day budget. They can save another $5.85M in estimated arbitration salary if they decide to move Tyler O’Neill, which I still think they will do.

That gives the Cardinals $35.9M to spend on one more starting pitcher and on 1-2 bullpen pieces. That’s pretty much exactly what they need to get that done right and finish out this team.

Did Gibson and Lynn Save the Cardinals Money?

There’s no doubt that Kyle Gibson and Lance Lynn were on the cheaper side of the available starting pitchers. That does not mean, however, that the Cardinals saved significant money by shopping pre-Black Friday specials.

One-year contracts do not allow teams to spread out a player’s value. It’s just all up-front money.

Pitchers like Shota Imanaga or Seth Lugo – and several others I would rate below those two but above Lynn and Gibson – would have made something close to $10-12M in the first year of their multi-year deals. Even a pitcher in the upper-mid tier of free agents, like Eduardo Rodriguez or Jordan Montgomery, could have made around $15M this season, with a salary that escalated from there.

Yes, teams have to pay for quality in starting pitching. But they don’t necessarily have to pay in year one. Backloading, multiple signing bonus payments, option years with guaranteed buyouts, and deferred money are all ways to spread the cost out.

The deals for Lynn and Gibson were not about saving money. The Cardinals did not claim that they were. Instead, these deals were about saving commitment.

The club continues to avoid long-term contracts to pitchers, not as a matter of convenience or necessity, but of strategy. Mozeliak explained this, saying, “Because, you know, injuries happen.”

Yes, it’s true. Pitchers get injured. Most of them will. Quite frequently, in fact.

But injuries only happen to the good pitchers who are signed to long-term contracts?

The problem with Mozeliak’s assertion is that older pitchers are statistically more likely to suffer those injuries. That rate of injury increases with age. Older pitchers are also statistically more likely to produce at a lower level than their younger counterparts. The rate of decline increases with age.

Short-term commitments to older pitchers do not lower the cost spent per production received.

Committing to such players does raise the likelihood of injury and lowers the likelihood of receiving quality production.

Right now, the Cardinals have $50.5M locked up in starting pitchers with one more expensive starter to go. Steven Matz will be the youngest of those starters and he is well into his predicted age-related decline phase entering his age-33 season. Miles Mikolas is 35. Kyle Gibson is 36. Lance Lynn will play in 2024 at age 37.

John Mozeliak has said he wanted “sure things” in his rotation and claims to have found them in Lynn and Gibson. The only certainty with Lynn and Gibson is that they will, at some point soon, suffer an injury or their performance will send them out of the league. It might not be next season. But history suggests it’s the only certainty in their future.

MLB has received a total of just 28 qualified (about 160 innings) seasons from pitchers age 36 or higher since 2015. That’s the kind of “sure thing” innings the Cardinals are lauding about Lynn and Gibson. Those 28 seasons came from just 14 different pitchers. 4 of those pitchers are certain or near Hall of Famers (including Adam Wainwright at the bottom of the list). 1 threw a knuckleball.

That leaves just 9 pitchers over 8 seasons who were not among the best starters in baseball history and managed to stay either healthy enough or effective enough to complete a season.

John Mozeliak and the Cardinals’ front office are banking on their staff defying these trends. Their jobs, and the club’s success, depend on it.

Seems quite risky to me. It seems like it might have been a really good idea to pay a bit more this season for more “sure thing” quality in their rotation.

But the Cardinals are clearly not listening to me. Instead, they are continuing the same strategy they’ve had since around 2019. Here’s a list of the MLB starters that the Cardinals have acquired/re-acquired since then:

Adam Wainwright
Miles Mikolas
Jordan Montgomery
Kwang Hyun Kim
Steven Matz
Jon Lester
Jose Quintana
J.A. Happ
Wade LeBlanc
Lance Lynn
Kyle Gibson

The trend is obvious. Low commitment. Short terms. Cheap costs. Despite a lot of talk late in the season about needing to change their approach to pitching, they haven’t changed at all when it comes to MLB pitching acquisitions.

They have one more starter to go. They still have an opportunity to take one risk. Will they do it? We’ll find out in the next few weeks.

Have a great weekend, Viva El Birdos!