Payroll and luxury tax threshold calculations

[blue911]

Really would like to figure out what the Nats lux tax number is right now.   I'm thinking it is close to $180 MM. 

151 ish

Edit  - this is a breakout from the Scherzer and Janssen threads.  For Baseball-Reference's estimate of the Nats payroll, see http://www.baseball-reference.com/teams/WSN/2014-payroll-salaries.shtml .  As Blue notes below, that is a projection.

[JCA-CrystalCity]

151 ish

that low?  Who has a payroll number that is lower than their AAV?  The payroll is up to 157MM per B-R, and Scherzer has an AAV at least 10MM higher.  Add in the medical and other costs, it pushes them up even more.  Other than JZ, who else has a payroll number that is more than a millions or two above their AAV?

[blue911]

that low?  Who has a payroll number that is lower than their AAV?  The payroll is up to 157MM per B-R, and Scherzer has an AAV at least 10MM higher.  Add in the medical and other costs, it pushes them up even more.  Other than JZ, who else has a payroll number that is more than a millions or two above their AAV?

The $157 is projected not where they stand right now. They are at $149+/- currently. When you look at the over and under AAV on multi year players you get: Werth -3.5 (paid 21.5/AAV 18), Span -2.7,Desmond -2.25,Zimmermann -4.5,Escobar +1.5,Zimmerman +2.7,McLouth 0, and Scherzer +12.0. Simply put the have 4 player whose salary is a combined 12.9M above their AAV and 3 players whose salary is a combined 16.2M below their AAV. So the AAV is 152ish not 151ish. It'll go up by 2-2.5 with Blevens. But not much above that.

[whytev]

The $157 is projected not where they stand right now. They are at $149+/- currently. When you look at the over and under AAV on multi year players you get: Werth -3.5 (paid 21.5/AAV 18), Span -2.7,Desmond -2.25,Zimmermann -4.5,Escobar +1.5,Zimmerman +2.7,McLouth 0, and Scherzer +12.0. Simply put the have 4 player whose salary is a combined 12.9M above their AAV and 3 players whose salary is a combined 16.2M below their AAV. So the AAV is 152ish not 151ish. It'll go up by 2-2.5 with Blevens. But not much above that.

Okay, I have a question.

Let's say I sign free agent X to the Nationals for $100mm, 5 years, broken down as follows:

15
15
20
20
30

So the Nationals get taxed at $20MM/year for 5 years.

If he gets traded after three years, the Nationals get that $20MM off the books for the next two years, but the next team gets hit for $25MM because at the time they get him, that's the average value remaining?

[blue911]

Okay, I have a question.

Let's say I sign free agent X to the Nationals for $100mm, 5 years, broken down as follows:

15
15
20
20
30

So the Nationals get taxed at $20MM/year for 5 years.

If he gets traded after three years, the Nationals get that $20MM off the books for the next two years, but the next team gets hit for $25MM because at the time they get him, that's the average value remaining?

yep.

[whytev]

yep.

Makes back-loaded contracts somewhat more dangerous.

[tomterp]

Makes back-loaded contracts somewhat more dangerous.

There aren't but a handful of teams for whom that is relevant, right?

[whytev]

There aren't but a handful of teams for whom that is relevant, right?

True but when you're trying to unload Stanton in a few years, those are the same teams that can afford him.

[JCA-CrystalCity]

B-R estimates the Nats payroll would have been about $157.4MM before this signing, using a $2.2MM estimate for what Blevins will get.  This signing would put them a hair below $160MM.  Blue estimated that before this signing, their luxury tax salaries were about $3-4MM higher than their salaries because it is based on annual average value of the contract (AAV).  This signing, with an additional guarantee of $1.5MM for the option buyout, would raise that $5MM (less maybe a minimum wage contract.  The luxury tax also includes some charges for medical and other expenses.  While the Nats are not near the threshold, which I think is $189MM, the luxury tax salaries and expenses I think would now be somewhere in the $170+ range.  I think Blue's estimate would be $154 + 5 +10, while a high estimate would be $160 + 5 + 15.  Either estimate probably leaves room for one long term signing among Fister, Desmond, and JZ before the season starts. 

[blue911]

They'll lose Span,McLouth,Thornton & Blevins and while none are huge payroll/tax hits they will free up $19M in salary/$16M in tax space. It isn't inconceivable that Span and Blevins will be replaced by minimum wage players and McLouth & Thornton by lower cost veterans. Cots has them at $82 for 2016 and $59 for 2017, so even crossing over the tax threshold could be minor. 

[JCA-CrystalCity]

They'll lose Span,McLouth,Thornton & Blevins and while none are huge payroll/tax hits they will free up $19M in salary/$16M in tax space. It isn't inconceivable that Span and Blevins will be replaced by minimum wage players and McLouth & Thornton by lower cost veterans. Cots has them at $82 for 2016 and $59 for 2017, so even crossing over the tax threshold could be minor. 

no argument that the 2016 situation will have flexibility.  It's just they are squeezing themselves a bit for actions that will count against the 2015 calculation, which I believe is set on contracts signed by opening day (trades count too, I think, but I'm not looking up the rules right now).  I think a few big deals have been signed immediately after OD even if agreed to before then in order to game the system.  Maybe Adrian Gonzalez's contract with the Red Sox was that way.  That's why I say you will not see more than one big extension (if that) signed before OD.

[Slateman]

So, TL;DR it for me: How close are we to the luxury tax?

[JCA-CrystalCity]

A lot closer than we've ever been, but still with room to sign one or maybe 2 guys to extensions.  Somewhere between $10MM and $20MM for 2015, a lot more after that.  Still pretty far from LAC days and I'm guessing top 5 - 8 in baseball.

[wj73]

Wow - can't believe we're using "luxury tax" and "Nationals" in the same sentence.  How times have changed since our MLB ownership days. 

[Mattionals]

Wow - can't believe we're using "luxury tax" and "Nationals" in the same sentence.  How times have changed since our MLB ownership days. 

For many of the folks here who have been fans from the beginning, it really has been an exciting ride to see the team get to where it is at.  The team is, IMO, becoming a model for how to draft and develop players, especially pitchers.  Also, the ownership has shown willingness to spend not only in necessity, but in a fashion in which benefits the overall team now and later.  They have put lots of faith within "baseball people" like Rizzo and his cohorts, and the owners have decided to stay out of most negotiations and let Rizzo run his team and put the best product on the field.  Certainly beats watching Speigner pitch.

[wpa2629]

Don't be dissing My Boi Lavale 

 

[PC]

Washington Nationals payroll: a closer look

http://www.washingtonpost.com/blogs/nationals-journal/wp/2015/01/29/washington-nationals-payroll-a-closer-look

[JCA-CrystalCity]

The article PC links to has the Nats at $162MM or so in 25 man payroll.  Luxury tax includes medical and other costs that run more than $10MM, and it includes other costs on the 40 man roster.
http://www.philly.com/philly/blogs/phillies_zone/understanding-payroll-and-luxury-tax.html

Add in the $5MM difference between payroll and AAV, and the team probably only has about $10MM headroom below the $189MM threshold.  The article also says that, in terms of payroll, right now we are likely to end up around 5th in baseball.