Article: An Updated Look At Twins Payroll

[Nick Nelson]

Over the weekend, salary agreements were announced for four of the Twins' six arbitration eligible players. For two others, figures were publicly exchanged.

 

Below, we will take a look at those numbers, while also examining where the 2016 payroll stands with the updated info incorporated.Here are the official 2016 salary numbers for the four players that reached agreement (in parentheses, their 2015 salaries):

 

Tommy Milone: $4.5M ($2.775M)

Casey Fien: $2.275M ($1.375M)

Eduardo Escobar: $2.15M ($533K)

Eduardo Nunez: $1.475M ($1.025M)

 

(Big ups to Mike Berardino of the Pioneer Press for being first to report most of these figures on his must-follow Twitter account.)

 

Trevor Plouffe and Kevin Jepsen did not finalize deals with the team, which isn't surprising since they will be the two highest paid players of the bunch. As the arbitration process goes, both players submitted numbers, as did the team. In almost all cases where the difference is relatively modest, the two sides settle right around the halfway point.

 

How that would look here, with a little rounding for simplicity's sake:

 

Plouffe Proposal: $7.95M

Twins Proposal: $7M

Midpoint: $7.5M

 

Jepsen Proposal: $5.4M

Twins Proposal: $5.05M

Midpoint: $5.2M

 

With these specifics in hand, we now have a clearer picture of the team's projected payroll for the 2016 season. Here's how it shakes out (note: pre-arb numbers all rounded down to $500K, though most will likely be closer to $550K):

 

Joe Mauer: $23M

Ervin Santana: $13.5M

Ricky Nolasco: $12M

Phil Hughes: $9.2M

Trevor Plouffe: $7.5M

Glen Perkins: $6.3M

Kurt Suzuki: $6M

Kevin Jepsen: $5.2M

Tommy Milone: $4.5M

Brian Dozier: $3M

Byung Ho Park: $2.75M

Casey Fien: $2.275M

Eduardo Escobar: $2.15M

Eduardo Nunez: $1.475M

Fernando Abad: $1.25M

Ryan Sweeney: $750K

Eddie Rosario: $500K

Oswaldo Arcia: $500K

Miguel Sano: $500K

Danny Santana: $500K

John Ryan Murphy: $500K

Kyle Gibson: $500K

Trevor May: $500K

Ryan Pressly: $500K

Michael Tonkin: $500K

 

TOTAL: $105.35M

 

A couple notes: Fernando Abad and Ryan Sweeney are on minor-league deals but will get $1.25 million (per Darren Wolfson) and $750,000 (also per DW) if they make the Opening Day roster, which for now we'll assume they will. Several of the names toward the bottom of the list are obviously not locks to make the team, but barring further moves, they would be swapped out for other minimum-salary players.

 

That total of $105.35 million is a small drop-off from last year's Opening Day payroll of $108.26 million. However, if you factor in the entirety of Park's $12.85 million posting fee, which seems reasonable enough, the new figure rises to $118.2 million.

 

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[Kwak]

OK.  If [we] use the $118MM number, it's easy to see why a premium-priced relief pitcher wasn't signed to a contract.  I conclude that the Twins viewed any debate between adding a hitter (Park) or a premium-priced relief pitcher (Bastardo) was an either/or but not both, decision.

[Danchat]

Hey, Nick, is that number of $108.26M from last year's cap number including the $7-8M that they saved from Santana's suspension? Or does that not get factored into the salary cap?

[Otwins]

Royals at 130 million after signing Kennedy.

Tigers still discussing Cespedes trying to calculate luxury tax ramifications.

White Sox discussing numerous "big money free agents"

 

Hope this works out

 

[Seth Stohs]

 

Royals at 130 million after signing Kennedy.

Tigers still discussing Cespedes trying to calculate luxury tax ramifications.

White Sox discussing numerous "big money free agents"

 

Hope this works out

 

Yup, the Tigers were at about $175 million last year. 

[nicksaviking]

I want the Twins payroll to increase.

 

Though I want it hoping/expecting guys like Sano, Buxton, Duffey, Berrios, May and/or others will need attractive pre-arb extensions to keep them in Minnesota through their peak years.

[by jiminy]

I don't think it's reasonable to charge Park's entire posting fee to this year. I think it should be prorated over four years.

 

The entire commitment was 24.85 million over four years. To me, for budgeting purposes, that looks like 6.21 per year. 

 

Counting the entire posting fee this year makes his cost look like 15.85 million this year and 3 each of the following four years.

 

I would instead consider his cost each year to be 6.21, and this this year's payroll (so far) to be about 110.

[Loosey]

 

I don't think it's reasonable to charge Park's entire posting fee to this year. I think it should be prorated over four years.

 

The entire commitment was 24.85 million over four years. To me, for budgeting purposes, that looks like 6.21 per year. 

 

Counting the entire posting fee this year makes his cost look like 15.85 million this year and 3 each of the following four years.

 

I would instead consider his cost each year to be 6.21, and this this year's payroll (so far) to be about 110.

I was about to say the same thing.  I believe that $13M should be prorated.  So this years payroll is probably closer to $110.0. 

 

I would possibly even go as far as saying the posting fee shouldn't be included at all.  Park doesn't get paid that, it's already been paid (I believe) and is a now a sunk cost.  So as of today the Twins are obligated to pay $105.35M assuming the roster is stable from this point on.

 

[Nick Nelson]

 

I don't think it's reasonable to charge Park's entire posting fee to this year. I think it should be prorated over four years.

 

The entire commitment was 24.85 million over four years. To me, for budgeting purposes, that looks like 6.21 per year. 

But that's not actually how the payment is dispensed. The entirety of the posting fee is payed up front.  

[jorgenswest]

But that's not actually how the payment is dispensed. The entirety of the posting fee is payed up front.

 

I hope this is the thinking. That would mean that next year they will have 12.85 that has come off the books and the payroll number for 2017 start at 118 million rather than 110 million.

[DaveW]

I'm not sure they should hold Park's posting fee against the payroll this year (the full amount) if that is the case, then I sure hope he provides 16+ million worth of value...

 

$106 million is pathetic, even with the extra 4 million from Parks posting fee (pro rated)

 

This team should be in the 120-130 mil range, no doubt.

[071063]

 

I was about to say the same thing.  I believe that $13M should be prorated.  So this years payroll is probably closer to $110.0. 

 

I would possibly even go as far as saying the posting fee shouldn't be included at all.  Park doesn't get paid that, it's already been paid (I believe) and is a now a sunk cost.  So as of today the Twins are obligated to pay $105.35M assuming the roster is stable from this point on.

That's not how it works.  In the business world, and baseball is a business, since the posting fee was paid this year, it will be counted against this year.  It shouldn't be prorated or amortized.

[sthpstm]

 

But that's not actually how the payment is dispensed. The entirety of the posting fee is payed up front.  

But for accounting purposes, the Twins are spreading it out over the life of the contract.

[Vanimal46]

Do other teams take the posting fee and count it towards their payroll too? For example, this article shows the Texas Rangers had a $120 million payroll in 2012, but they also had a $50 million posting fee to get Yu Darvish... So they really had a $170 million payroll... 

I guess what I'm getting at is the posting fee counted towards the payroll, or a completely different expense all together. 

[sorney]

Just a general observation, but I find it interesting that people want the Twins to spend more money, yet when a player gets a big contract, they complain it's too much money.  

 

I'm not pro or con Twins spending money...I'm pro Twins getting good players.

[Sir_Eugene11]

 

But for accounting purposes, the Twins are spreading it out over the life of the contract.

If you put a down payment on a house, you don't spread that out in your budget for the life of your payment. The payment was made up front and should be reflected in the payroll as such.

[sthpstm]

 

If you put a down payment on a house, you don't spread that out in your budget for the life of your payment. The payment was made up front and should be reflected in the payroll as such.

How does correct my statement?  You do as you like, the Twins will do as they like, and what they do for their situation is the only one that really counts.

From Berardino: "In the Twins’ own accounting, the posting fee is spread out over four seasons, which pushes their projected 2016 payroll to roughly $108.7 million, including projections for six arbitration-eligible players. That’s slightly beyond their 2015 Opening Day payroll of $108.3 million."

http://blogs.twincities.com/twins/2015/12/10/twinsights-breaking-byung-ho-parks-contract-details/

 

[nicksaviking]

 

But that's not actually how the payment is dispensed. The entirety of the posting fee is payed up front.  

 

How about they put that down as an operating expense akin to advertising, stadium maintenance and hot dog vendor fees. The money went to Park's previous team, not Park. I don't know why a negotiation expense would be added to payroll. It's not going to effect Park's FICA deductions.

 

 "Payroll" is pretty arbitrary anyway, an expense is an expense, adding the posting fee to "payroll" is only to inflate the appearance. I doubt there are any rules for calculating and publishing payroll. Should they want, they could probably add the cost of uniforms, travel reimbursements and per diems for the players on road trips to "payroll". Those would elicit an obvious eye roll.

[Loosey]

 

That's not how it works.  In the business world, and baseball is a business, since the posting fee was paid this year, it will be counted against this year.  It shouldn't be prorated or amortized.

The cash expense would hit this year, from an accounting perspective though it could be spread over the life of the contract, depending on how the Twins want to have it look on their books.  Depending on how they do things they could possibly consider it a capital expense and depreciate the whole thing over the next 4 years.

[Winston Smith]

$108 mill last year put the Twins 11th out of 15 AL teams in payroll, with the newest stadium.

 

They may drop to 12th this year if they stay around $108.

[Sir_Eugene11]

 

How does correct my statement?  You do as you like, the Twins will do as they like, and what they do for their situation is the only one that really counts.

From Berardino: "In the Twins’ own accounting, the posting fee is spread out over four seasons, which pushes their projected 2016 payroll to roughly $108.7 million, including projections for six arbitration-eligible players. That’s slightly beyond their 2015 Opening Day payroll of $108.3 million."

http://blogs.twincities.com/twins/2015/12/10/twinsights-breaking-byung-ho-parks-contract-details/

Ah you're right, I hadn't seen that statement on record. I knew they had already made the full payment but it just seems like an odd way documenting expenses. 

[DaveW]

$108 mill last year put the Twins 11th out of 15 AL teams in payroll, with the newest stadium.

 

They may drop to 12th this year if they stay around $108.

Good thing old man Carl conned the taxpayers to build that fancy new stadium to ensure the Twins would be competitive.

 

0 playoff game wins since Target Field opened. Bottom third payroll.

 

I'm just glad it wasn't my tax dollars going towards it.

[Don Walcott]

 

$108 mill last year put the Twins 11th out of 15 AL teams in payroll, with the newest stadium.

They may drop to 12th this year if they stay around $108.

Good point.  How much the Twins spend relative to other teams is really the comparison we should all be concerned about.  Right now, it seems like the Twins are supporting a payroll of a team with no ambition for the playoffs, despite last year's team and a window of opportunity for a team with a lot of underpaid young talent.

[Thrylos]

Payroll numbers are good to see, but they do not really mean that much.   As a matter of fact, I'd rather see them have Burdi and/or Chargois than Fien in their pen for considerable savings and for better results.  And I'd rather see them have Melotakis or Rogers than Bastardo for considerable savings and for better results.

 

On the other hand, I'd love it had they added someone like Chapman or Heyward or Price.

 

you can have an $100 million payroll with 25 players at $4 million each or with 3 superstar players at $20 million each, supplemented with 3-4 good veterans at 10 million each and cheap good young players.   The second way is way more effective in my book than targeting mediocrity just to say that you spent $.

[BK432]

 

Payroll numbers are good to see, but they do not really mean that much.   As a matter of fact, I'd rather see them have Burdi and/or Chargois than Fien in their pen for considerable savings and for better results.  And I'd rather see them have Melotakis or Rogers than Bastardo for considerable savings and for better results.

 

On the other hand, I'd love it had they added someone like Chapman or Heyward or Price.

 

you can have an $100 million payroll with 25 players at $4 million each or with 3 superstar players at $20 million each, supplemented with 3-4 good veterans at 10 million each and cheap good young players.   The second way is way more effective in my book than targeting mediocrity just to say that you spent $.

 

Yeah.....this is what I wanted to say, and now I didn't have to spend 10 minutes writing it! It's a bit disappointing to see spending stay stagnant, but at this point, I don't see a lot of upside in spending more money. They definitely could have afforded to go after the guys mentioned above and it would have improved the team...but those ships have sailed.

[nicksaviking]

I don't want to see them spend money just to spend money. I'm not trying to defend the team, I'm just more concerned with the fact that they still only have 25 roster spots and I want as many as possible to go to players in their early to mid 20s.

 

I'm not against free agents or vets, I'm just against more free agents and vets. We can't un-sign the ones we have, those horses are already out of the barn.

[Dman]

Personally I would count the 12M against this years cap whether it needs to be or not. It makes it easier to account for Parks low salary for the rest of the years.  Even if that puts them at 118M they could easily stretch to 130M.  I don't think money is the issue for them right now (at least for a reliever). I think deciding who plays and when is a larger concern.

 

They better break the bank when some of these young guys turn into All Stars though or I plan to grumble loudly.

Edited January 18, 2016 by Dman

[h2oface]

Posting fees are not salary. They don't even go to the player. I consider it spending some of the money that they didn't spend in 2012 and 2013 and 2014.... when there was still no limits on the budget. It certainly isn't part of this year's salary figures. The Posting fee is part of the budget for the year, but it is not payroll. It is an expense, like travel, per diems, uniforms, etc......... but not payroll.

[h2oface]

 

Good thing old man Carl conned the taxpayers to build that fancy new stadium to ensure the Twins would be competitive.

0 playoff game wins since Target Field opened. Bottom third payroll.

I'm just glad it wasn't my tax dollars going towards it.

 

I think the record is skipping again......... 

[drjim]

Payroll will be at least $200k less than listed.

 

Sweeney is not breaking camp ahead of Buxton.