The New National TV Contracts And 2014 Payrolls

Goodbye, 2013 season. Hello, Hot Stove. Stop sobbing. Really, stop. We’re going to get through this. There will be qualifying offers, declined options, over-the-top free agent signings and rumors galore. Before you know it, we’ll be complaining about beat writers’ spring training play-by-play tweets.

Today we’re going to talk about the effect of the new national TV contracts on 2014 payrolls:

  • The teams that have already built their 2014 payrolls on the revenue expected from those contracts.
  • The teams that haven’t already accounted for that revenue, and have money to play with this winter.
  • The teams that have revenues so high and payrolls so large that another $15 million means close to nothing.

In August 2012, Major League Baseball and ESPN announced a new eight-year national TV deal to cover the 2014 through 2021 seasons. ESPN will pay MLB $700 million per year for the right to broadcast games exclusively on Sunday nights, other games (non-exclusively) on Monday and Wednesday nights, extended highlights for Baseball Tonight, the Home Run Derby and other All-Star activities (but not the game) and one Wild Card Game. The deal also includes national and international radio and digital rights.

Several months later, MLB announced a new national TV contract with Fox and TBS, which also covered the 2014 through 2021 seasons. Under that deal, MLB will receive $800 million per year in combined revenue from the two networks, in exchange for broadcasts rights for the Saturday game of the week on Fox, the Sunday game on TBS and all of the postseason games — save for the one that will be broadcast on ESPN. Fox also retains the rights to the All-Star Game.

That’s $1.5 billion in national TV revenue per season that will go into MLB’s Central Fund, or $750 million more than under the contracts that just expired. MLB can spend money from the Central Fund in a variety of ways, but it’s been assumed in the reporting that the league will distribute the TV money to the teams. If so, each team will receive $25 million more in national TV revenue in 2014 through 2021 than they did in 2013.

Teams aren’t obligated, of course, to use all or even part of that additional $25 million on player salaries. That money can also be helpful to expanding a team’s national and international scouting operation, or its data analysis department, or marketing, or all three. But some teams appear to have made payroll commitments for 2014 — and beyond — knowing an additional $25 million was coming their way.

The chart below lists each team and their 2012 and 2013 Opening Day payrolls, as reported by Cot’s Contracts. The final column is labeled “2014 Payroll Obligations.” I calculated this number using several different sources: (1) Cot’s 2014 payroll numbers for players under contracts; (2) trades made since the start of the 2013 season; (3) contract extensions since the start of the 2013 season (aka Hunter Pence and Tim Lincecum); (4) options exercised or declined since the start of the 2013 season; and (5) Matt Swartz’s projected salaries for arbitration-eligible players, as reported on MLB Trade Rumors.

The 2014 number, therefore, is an estimate. For some teams, the estimate is rougher than others. We don’t know if teams will tender a contract to every arbitration-eligible player currently on their roster. We don’t know what the final salaries for those arbitration-eligible players will be.

We also don’t know how many minimum-salary players each team will have. I assumed the Astros would have 22 minimum-salary players, because otherwise their 2014 payroll would have been $5 million, for Jason Castro, Jose Altuve, and Trevor Crowe. But for most teams, I didn’t account for three, four or five players at close to $500,000.

The chart starts with Houston, which has the lowest 2014 payroll obligations, and ends with the Los Angeles Dodgers, which has the highest. But those numbers don’t tell the story. The key is to see which teams are already at or above their 2013 payroll, even with significant holes that need to be filled.

Team 2012 Payroll 2013 Payroll 2014 Payroll Obligations
Astros $60,800,000 $26,000,000 $14,400,000
Marlins $100,000,000 $50,000,000 $21,700,000
Mariners $84,000,000 $84,000,000 $37,800,000
Rays $63,000,000 $61,000,000 $43,600,000
Twins $100,000,000 $82,000,000 $50,800,000
Cubs $109,000,000 $106,000,000 $58,000,000
Pirates $51,000,000 $66,000,000 $58,700,000
Mets $94,000,000 $93,000,000 $62,100,000
Padres $55,000,000 $68,000,000 $64,100,000
Athletics $53,000,000 $62,000,000 $65,900,000
White Sox $97,700,000 $119,000,000 $68,300,000
Indians $65,000,000 $80,000,000 $69,400,000
Rockies $81,000,000 $73,000,000 $72,000,000
Cardinals $111,000,000 $116,000,000 $76,000,000
Royals $64,000,000 $81,800,000 $79,500,000
Braves $93,000,000 $90,000,000 $80,400,000
Brewers $98,000,000 $88,000,000 $81,500,000
Orioles $84,000,000 $92,000,000 $88,100,000
D’Backs $75,000,000 $86,000,000 $94,000,000
Rangers $120,000,000 $125,000,000 $98,300,000
Reds $87,000,000 $106,000,000 $107,500,000
Red Sox $175,300,000 $154,000,000 $115,000,000
Nationals $92,000,000 $118,000,000 $117,000,000
Blue Jays $83,000,000 $119,000,000 $121,200,000
Phillies $172,000,000 $159,000,000 $121,800,000
Giants $131,000,000 $136,000,000 $127,500,000
Yankees $209,000,000 $228,000,000 $128,200,000
Tigers $133,000,000 $148,000,000 $134,000,000
Angels $151,000,000 $137,000,000 $151,500,000
Dodgers $105,000,000 $216,000,000 $195,300,000

The Astros, Marlins, Mariners, Twins and Cubs head into this offseason with tremendous financial flexibility — at least as compared to their player payrolls in 2012 and 2013. The new television money will provide a cushion for these teams as they continue their rebuilding plans. The Rays, too, look to have wiggle room, even if they don’t trade David Price. (The TV money could keep Price on the Tropicana Field mound until he becomes a free agent.)

On the other end, we find the Dodgers, which don’t seem to care much about budgets. There’s also the New York Yankees, which claim to be pushing to get under the $189 million luxury tax threshhold. The extra national TV money will be nice, but the cash likely is irrelevant to their plans.

Among bigger-spending teams, the Cardinals, White Sox, Rangers, Red Sox, Mets and Phillies have shed tens of millions off their 2013 payrolls, with trades or players leaving in free agency. How much these teams use the new TV money on free-agent signings or trades for expensive players remains to be seen.

The Indians sit in an interesting position. Cleveland made several splashes in the free-agent market last winter, signing Nick Swisher and Michael Bourn to four-year contracts. Both of those deals are backloaded to some extent, with the first-year payments the lowest of the four. Those contracts suggest the Indians were doing some early planning for the additional $25 million. Now that the Tribe has non-tendered Chris Perez and is said to be ready to walk away from Ubaldo Jimenez, they’ll have payroll flexibility even with the bigger paychecks owed to Bourn and Swisher.

The remaining teams — whether small-market or big-market — appear to have already made at least some plans for the additional $25 million they’ll receive this season. I say this based on the teams’ 2014 obligations, as compared to their 2012 and 2013 Opening Day payrolls.

For example, the Giants’ new contracts with Hunter Pence and Tim Lincecum bring them close to last year’s payroll — and they still need two starters, a left fielder and upgrades to the bench and to the bullpen. The Angels head into the offseason with $14 million more in salary commitments than they had to start 2013, thanks mostly to Josh Hamilton‘s backloaded contract. And the Halos need pitching in the worst way, prompting rumors that they’ll trade Mark Trumbo or Peter Bourjos or both to get some quality arms. The Reds, too, are ahead of where they were to begin 2013, thanks to Joey Votto‘s and Brandon Phillips‘ contracts. Again, it’s not surprising there are rumors the Reds might try to trade Phillips. Cincinnati has several holes to fill, the biggest of which is the rotation spot previously held by Bronson Arroyo, who now is a free agent.

Sally forth, baseball fans. You are now armed with the knowledge of where your favorite team’s payroll stands heading into 2014 and which other teams are most likely to compete with yours for coveted trades and free agents.



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Wendy writes about sports and the business of sports. She's been published most recently by Vice Sports, Deadspin and NewYorker.com. You can find her work at wendythurm.pressfolios.com and follow her on Twitter @hangingsliders.


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Nook L.
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Nook L.
2 years 6 months ago

Who is Sally forth?

Tim
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Tim
2 years 6 months ago

John Galt’s sister.

joser
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joser
2 years 6 months ago

It is this. And this.

maqman
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maqman
2 years 6 months ago

Want to venture a guess as to what the Mariners new regional network deal will contribute in 2014-15?

dang
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dang
2 years 6 months ago

How do the yankees only have $128,200,000 in payroll obligations?

That just seems off.

SK
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SK
2 years 6 months ago

AJ Burnett’s contract is coming off the books. Cano, Granderson, Youkilis, Hughes and Kuroda are free agents. Rivera and Pettite retired.

You can bet it’s going to be higher than $128 million but right now that’s about where their commitments sit.

Tim
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Tim
2 years 6 months ago

The Cubs, Blue Jays, and Angels are paying over $36m of the Yankee payroll obligations.

RC
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RC
2 years 6 months ago

They don’t, they only have like 89M.

Its 128 minus the $18.6M coming from Anaheim for Wells, minus the $14M coming from the Cubs for Soriano, and minus $3.6M that is actually prorated bonus for Wells, but was actually paid by Toronto.

Not sure where the rest of the 3M missing is, but Cots has 89.

uniqueusername
Member
uniqueusername
2 years 6 months ago

89 in Dollars committed w/o Arb.

128 sounds more like an estimation of what it looks like after Arb. Could be wrong. But that is how I read it.

RC
Guest
RC
2 years 6 months ago

Thats not consistent with how hes doing the other ones. Frankly, hes wrong on a lot of these.

Boston has 121M committed for next year, not 115. (118 in salary, and 3.x in payments to LAD)

uniqueusername
Member
uniqueusername
2 years 6 months ago

States in the article its an estimation. One of which using Estimated Arb costs from Matt Swartz.

Bottom line, payroll Obligations for the Yankees is not 89 Mil. It’s well over that. They have an obligation to pay arb costs.

As for the Boston thing? Probably not adding in Lester’s 13 Mi Option. That is pretty much assured to picked up. But not official.

RC
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RC
2 years 6 months ago

Cots has 121M (for the Red Sox) not including ARB numbers. How are you getting $115M using their numbers and then including the ARB players?

Tim Armstrong
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Tim Armstrong
2 years 6 months ago

Wendy, you talk about back loaded deals, and the luxury tax. I think it would be helpful to have another column on the chart that is the AAV breakdown, so that you can see what the luxury tax numbers, and the actual commitment numbers are.

Payroll
Guest
2 years 4 months ago

Great information about Payroll, i was searching such articles since long time , Today’s I found it finally and i am very happy reading your articles, i would like to big thanks for sharing such excellent information for us. I will come back again on your website for gathering such info for improvement our skills and knowledge .Thanks .
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Baltar
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Baltar
2 years 6 months ago

This is a fine article, and I appreciate your work, especially on the 2014 obligations.
Although strictly speaking not an obligation, many teams have options that they are certain to likely to exercise. For instance, the Rays will certainly exercise their option on Zobrist, likely on DeJesus. That’s another $10M+, assuming your 2014 number includes buyouts, more if it didn’t.
That extra $25M, while having an impact on all clubs, is a whopper for the low-budget teams. Using the Rays as an example again, they could increase their salary budget by about 40%, if they choose to spend all $25M there.

RC
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RC
2 years 6 months ago

Half the “low budget” teams aren’t actually low revenue. Most of them won’t spend it unless forced to.

TKDC
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TKDC
2 years 6 months ago

For the arbitration eligible players, did you exclude the amounts for players that were said by MLBTradeRumors to be likely non-tender candidates?

Eric R
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Eric R
2 years 6 months ago

“That’s $1.5 billion in national TV revenue per season that will go into MLB’s Central Fund, or $750 million more than under the contracts that just expired. ”

I assume that the $$ isn’t fixed but some number that inflates over time that averaged out to $1.5B and $750M respectively, right?

If so, lets figure that the inflation rate is 5% and that the old deals also ran for eight years. If that is the case, then the previous deal ranged from $20.9M to $29.5M per club through 2013 and the new deal would start at $41.9M escalating up to $58.9M

That would suggest that $25M extra is a bit inflated and the real gains from 2013 to 2014 is more like $12.4M.

If the escalations are even bigger, like 10% per year, then 2013 and 2014 would be pretty close.

Chcago Mark
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Chcago Mark
2 years 6 months ago

Does any of this effect the luxury tax threshold or is that set until the next cba? I can’t help but see salaries sky rocket due to this. The Mariners and Cubs are oozing with money. So are the Yankees once they re-set their tax threshold. I can also see the Rangers, Red Sox, Cardinals Phillies and yes, the Dodgers spend a lot more. It’s a nice time to be a free agent.

Ian
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2 years 6 months ago

A heads up on that Phillies number: Cole Hamels, Mike Adams, and Ryan Howard are due for $12 million in raises from 2013 in 2014 that I don’t believe are reflected accurately in the projected 2014 total.

One for you, two for me
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One for you, two for me
2 years 6 months ago

An extra $25 million in revenue absolutely does not translate into $25 million more in payroll. Revenue is a 50/50 split in the other national sport ventures, and baseball is held to no such standard. Count on your team’s salary going up by no more than $10 million because of the national tv deal. Now is the time to get into the business of selling yachts to baseball team owners!

Matt
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Matt
2 years 6 months ago

Keep in mind that that other 50% won’t go entirely into the owner’s pocket. In most industries, the capital/labor split of revenue is 35/65. The 50 that the players get is obviously labor, but they aren’t the only labor teams employ. Front office staffs can/will get bigger, there will be more spent on coaching, more training/nutritionists at minors levels, more international scouting, more resources into central & south American academies, etc. This all sounds trivial, but if a team adds 15-20 in aggregate headcount for those purpose, they can spend $3m pretty quickly

Brandon
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Brandon
2 years 6 months ago

Thanks for doing this, Wendy, so that I don’t have to.

odbsol
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odbsol
2 years 6 months ago

Nice work as always Wendy

DodgersKings323
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DodgersKings323
2 years 6 months ago

Guggenheim about to make it rain!!

Mr Punch
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Mr Punch
2 years 6 months ago

Good job. Thanks!

swedishfish007
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swedishfish007
2 years 6 months ago

Wendy, did you account for the AAV of a players salary being the component that counts against payroll? Or did you use the player’s 2014 salary and count just that against the team’s 2014 payroll? There’s a couple numbers on here for some teams that look off due to not using that method – which is what MLB does, IIRC.

Patrick
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2 years 6 months ago

The number here for the Tigers is very low.

I’m not sure what’s missing, but I wrote something on blessyouboys.com about where the Tiger payroll stood, and I came up with 157 million after they declined the option on Jose Veras. That’s using Matt’s numbers for arbitration players (9 players), scheduled salaries for players under contract (6 of those), and rounding out the roster with Iglesias and a bunch of minimum salaried players.

If they only signed Benoit and Infante, they’d be up to around $ 173 million.

Patrick
Guest
2 years 6 months ago

AAV is used for purposes of the luxury tax or “competitive balance tax”, but it doesn’t represent the amount that the team will have to write in checks for the season.

The tax calculation also includes 1/30th of the amount that teams spend on benefits, which reportedly works out to 10- 11 million per team, per year. So with the tax threshold at 189 million, the real salary “cap” without paying a tax is about 178- 179.

Dan
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Dan
2 years 6 months ago

Wendy- Votto and Phillips actually have nothing to do with the Reds being ahead in 2014 of where they are in 2013. Votto’s salary drops $5 million from $17M to $12M and Phillip’s contract goes up $1 million from $10M to $11M. So they actually net out to save the reds in 2014 vs. 2013 at -$4M. Their raise comes almost entirely from their huge arbitration haul of players (most notably Bailey, Leake, Chapman who are in line for large raises) and contractual raises to Ludwick, Broxton, Latos, Cueto, and Bruce. So blaming their rise 2014 commitments on Votto and Phillips is totally inaccurate.

Michael Canter
Guest
2 years 6 months ago

She never indicated that those salaries went up – just included them as they are two of the larger salaries. We are taking about payroll commitment here. It’s okay to actually read the article and disseminate the information for what it is instead of making assumptions in an attempt to simply disprove something, FTR.

OscarGamblesAfro
Member
OscarGamblesAfro
2 years 6 months ago

Wendy Thurm…snappin’ necks & cashin’ checks! EPMD.

joser
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joser
2 years 6 months ago

Appreciate the work, Ms Thurm, as always, and doubly appreciate your attentiveness to the comments (which can’t always be easy).

On an unrelated note, I was wondering if you were following the CSN Houston bankruptcy saga and if you were planning to write something about it.

Z.....
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Z.....
2 years 6 months ago

Though I dont see anyone out there thats worth signing for the Marlins at this time (assuming a free agent would actually sign with them), I hate that they talk about only having $8 million to spend this offseason, after arbitration. They are projecting payroll to be around $38 million for 2014, and they have sited lack of funds. We ALL know that is ENTIRELY false. Every team is receiving $52 million from the new national tv deal alone. Like I said, I dont see a reason for them to go out on this free agent market, but I would appreciate it if they stop trying to insult my intelligence like they’ve continued to do over the years. It would be WAY more accepting for them to just straight out tell the truth and say there is nobody worth pursuing, instead of blatantly lying about the funds that everyone knows they have. *sigh*

Kyle
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Kyle
2 years 6 months ago

I’m pretty sure $59m for the Cubs is about $10m-$15m short. Did you account for Soriano’s payment?

james
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james
2 years 6 months ago

Good article which highlights the big picture – many teams will have some of the largest payroll flexibility in modern sport. It wouldnt be surprising to see solid but not spectacular players receiving eye-popping deals. The teams that invest in their own infrastructure will do much better long term.

Patrick
Guest
2 years 6 months ago

Here’s the math for Tigers’ payroll:

6 players under contract= 107.8 million

9 arbitration eligible = 42.6 million (per Matt Swartz’s estimates)

Jose Iglesias = 2.2 million

9 players to round out the roster = 4.5 million

Total = 157.1 million

That’s 23.1 million more than Wendy’s number on the chart.

Nice handy chart, though.

Nivra
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Nivra
2 years 6 months ago

Wendy: Thanks for this. it’s awesome.

Since it’s the off-season, I’d like to suggest a good topic for a future article. I’d love to see an estimate of the percentage of total revenue that MLB teams spend on player salary, and then compare that to the other 3 major sports, many of which have that percentage hard-coded into their CBA.

Patrick
Guest
2 years 6 months ago

I just read something about that in a comment on Tango’s blog. Can’t remember which topic, though. Within the last 10 days or so.

Michael Canter
Guest
2 years 6 months ago

Great article, Wendy. Very informative.

Jennifer
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Jennifer
2 years 5 months ago

Wendy – You have 100% of the revenues going to the teams. Am I wrong or doesn’t 25% of all national contract revenue is retained by MLB for pensions and operations?

Jennifer
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Jennifer
2 years 5 months ago

Thanks.

My 25% came from something Jayson Stark wrote a few years ago where he said that 25% of national contracts are retained by MLB for pensions and operations.

It is true this is not in the CBA but that is not surprising because any such agreement would be among the teams or among the teams and MLB; there is no reason for the MLBPA to be involved.

Anyway it is quite cool that you quit lawyering to write about baseball. I’m 30 and a litigation attorney but can’t see me giving it up to follow your career path but then one never knows.

Thanks again.

edwin stewart
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edwin stewart
2 years 10 days ago

WT:Enjoyed your review. Your salaries add up to about $2.58 billion, a recent SI article listed them at $3.4 billion excluding 40 NAs, mostly probably minimum wage figures. a total that coincides with the Yahoo Sports roster summaries. YS has the Dodgers and Yankees respectively at $246 and $235 million, sharply higher than your inputs. Regardless, the summary on TV contracts explains what I found incomprehensible-the awarding of insane salaries to very marginal players not to mention the Cano, Kershaw, Trout, Uptnn Brothers, Pujois and and on contracts. An extra $50 million covers a lot of stupid salary decisions. Am a lifelong Pirate fan, remember Rickey telling Ralph Kiner we listened last with you, can finish last without you. Curious as your informed opinion when ticket prices stop fan interest. Keep up the good work. I come from a family of attorneys.

Jensan
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Jensan
1 year 4 months ago

I thought I read in the CBA that the MLB had to 68 million + annually to pensions less 50% of the monies collected for teams exceeding the luxury tax .

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