Inside sports business
There’s no use fretting over recent $30 million annual baseball salaries given David Price and Zack Greinke, or hefty signings of midlevel starting pitchers like J.A. Happ.
That’s Major League Baseball’s new normal, one that takes adapting to but isn’t going away. At least not according to figures showing MLB teams continue to spend new television revenue in record amounts.
Every December, The Associated Press publishes the final 40-man roster payrolls calculated by MLB, including salaries, bonuses and cash payouts. MLB uses a methodology accepted by all clubs and applied equally, allowing for easy payroll comparisons.
M’s annual payroll since 2007 and rank:
2015: $124.4 million (15)
2014: $109 million (16)
2013: $91.1 million (19)
2012: $84.5 million (21)
2011: $98.1 million (14)
2010: $93.4 million (14)
2009: $102.3 million (12)
2008: $120.4 million (8)
2007: $114.4 million (6)
A separate compilation for each team — specifically for luxury-tax purposes — uses salary averages and variables like health and pension benefits. But let’s stick to the 40-man payroll results, since that’s what most affects the on-field product.
The AP also publishes average player salaries calculated by the MLB Players’ Association.
And the latest figures from both MLB and the players’ association, released this month, show the cost of doing business keeps rising.
The players’ association calculated average salary at $3.95 million last season, a 3.5 percent jump over the previous year.
Since the end of 2011, when the Los Angeles Angels got their TV deal and signed Albert Pujols, salaries have risen 28 percent.
The typical player earning $10 million in 2011 would have made $12.8 million in 2015. And now — assuming the current 3.5 percent inflationary figure holds — you’d pay that player $13.2 million next season.
A player who signed a three-year deal for $30 million in 2011 would project to make about $40 million over three years in 2016 based off salary inflation alone. Suddenly, that three-year, $36 million deal Happ just signed with Toronto at age 33 doesn’t seem so ridiculous.
Felix Hernandez getting $25 million annually from a contract signed three years ago seems a bargain alongside Greinke’s new $34 million per annum. On the flip side, acquiring even marginal players to round out rosters now comes with sticker shock. But teams can afford all this and more because of burgeoning team revenues and franchise values gained the past five years.
A record 22 of 30 teams surpassed $100 million in payroll last season — up from 17 a year ago.
Baseball player salaries
Average salaries since 2007:
2015: $3.95 million
2014: $3.82 million
2013: $3.37 million
2012: $3.21 million
2011: $3.1 million
2010: $3.01 million
2009: $3.0 million
2008: $2.9 million
2007: $2.8 million
MLB Players’ Association
These days, a $150 million payroll is the new $100 million as a benchmark for elite spenders. Nine teams surpassed or approached $150 million last season.
If a team spent $100 million in 2011, it needed a $128 million payroll last season just to keep up.
Don’t believe me?
The Mariners spent $98 million in 2011 to rank 14th overall. Last season, they spent $124 million but were 15th in payroll.
And just like in 2011, they had a losing record.
Payroll has become misunderstood, largely because adding two new wild-card playoff spots has allowed more clubs to contend longer. The entire American League claimed to still be in contention last Sept. 1, meaning a top-10 payroll isn’t needed to flirt with the playoffs.
But spending still improves playoff odds in a sport with no salary cap.
Four of the top 10 spenders made the playoffs last season, while five did it in 2014. Seven of the top 15 spenders qualified the past two seasons, but only three from the bottom 15.
Spending may not guarantee anything, but being in the top half and top tier helps. And while the New York Mets, Pittsburgh Pirates and Houston Astros bucked the playoff trend from the bottom half of spenders, they also scored huge on draft picks to assemble cheap young cores of talent.
Unless a front office has similar draft success, or frequently swings brilliant trades, the alternative is to spend more. The Dodgers spent a baseball-best $291 million last season to overcome years of bad trades and signings and claim a third straight National League West title.
So, what’s the middle ground? How much spending is enough between the Dodgers’ $291 million and the Astros’ $82 million?
The simple answer: Spending is enough when the roster is good enough.
For the Mariners, last season’s $124 million didn’t cut it. Despite preseason hype, the 21 players beyond the core four of Hernandez, Robinson Cano, Nelson Cruz and Kyle Seager lacked overall talent.
Thus, general manager Jack Zduriencik was fired and his replacement, Jerry Dipoto, has purged most of that supporting cast.
But the Mariners still project for a midrange payroll of $135 to $140 million in 2016. Given salary inflation, that’s only slightly better than the $98 million spent in 2011 relative to competitors.
That means Dipoto must quickly earn his own salary by showing he has imported enough lower-cost, high-upside players.
Every year, we have this same discussion, hear the same arguments about how adding payroll won’t necessarily help. Then the same results unfold for a team with baseball’s longest playoff drought.
For the Mariners to finally beat the odds with another midrange payroll, their new GM must hit some home runs alongside Cano and Cruz. Otherwise, in a game where teams keep spending big, the Mariners could face the same result that has sent them home by October since 2001.