Mets Financial Guru Running Salary and Luxury Tax Calculations
I'm sure that the Mets want to compete in 2024. Don't we all?
But signings-wise, I think we'd all agree the Mets are off to a bad start.
And unlike other teams, we lose a guy like David Peterson for half of 2024(?) due to hip surgery and Ronny Mo for likely all of 2024 due to ACL surgery, so as Stearns adds, these 2 bizarre setbacks subtract.
Given where they are at now, what if they said, "Aah, screw it!" and blew up the roster to get under the 2024 cap of $237 million, which would reset the enormous salary cap tax back to zero?
First off, I am not an expert on the cap's intricacies, so to fully understand it, please consult with your financial advisers at Merrill Lynch or Lehman Brothers.
Anyway, using Fangraphs salary and projected salary data from upcoming arbitration for several players, just the current roster of players, per Fangraph's calculations, has the Mets sitting at an estimated $297 million (not including just-acquired $10 million Harrison Bader) for cap purposes, or a whopping $60 million over the cap (Bader boosts that to $70 million).
And talk seems to be that they may make a few modest acquisitions (relievers, a starter, a veteran hitter) that would drive this up above $297 million by another, what, $30 million?
Why so high? Money owed to dearly departed players.
Per Fangraph's estimates, the salary cap hit for the departed Verlander, Scherzer, McCann, and Ruf in 2024 is around $65 million. Just the retained salary of those 4 in 2024 get you to 25% of the 2024 salary cap! And Lindor's salary alone? 13% of the salary cap. Now you're up to $97 million in cap utilization, with just one player who will play for you in 2024.
At $97 million, only $140 million to go before you hit the team cap ($130 million with Bader). Add in a few dozen more signed and unsigned players to that $97 million.
You get the idea: team salary the size of the national debt. Cohenomics.
So, if you wanted the Mets to immediately drop below the cap in 2024, you'd likely have to blow up the team and make trades for prospects by trading away any combination of Alonso, Lindor, Nimmo, Marte, Diaz and McNeil that would drop you a net $60-90 million in salary to get you under the $237 million cap reset bump.
Benefits?
1) Avoid what I believe in 2024 would be a 110% luxury tax over $237 million, so perhaps (with a few added players and no roster blow-up) the team's luxury tax salary would be $90 million above the cap. Add $100 million in tax, and that's $190 million saved, give or take a few shekels.
2) A reset would get you out of the 10-slot first round draft drop penalty and avoid the international money allotment penalty, too.
3) The reset would drastically lower the luxury tax percentages used to calculate the tax in 2025 and beyond, at least for a few years.
Problems?
1) A reset of that salary magnitude now would possibly leave the Mets with a 50-60 win team.
2) Fan turn out (and revenues) would plummet, and some % of "which way the wind blows" fans would instead become fans of Judge, Soto, et al.
3) There is no guarantee how well the subsequent rebuild would go, nor how long that might take. The rebuild could become a failure, dooming the Mets to a long period of malaise (and no playoffs). Top free agents want to WIN, not be part of an uncertain, slow motion rebuild, so they might skip over the Mets.
4) Per Fangraphs, the Mets still have an estimated $17+ million Verlander cost hangover in 2025, which is about 7% of the 2025 cap. Not huge, but certainly not minimal.
So what do you do with this Mets team, considering that this MLB luxury tax regime is a weaponized penalty system aimed at the heart of high-spending teams?
Next year, per Fangraphs, the Mets' committed salaries already total roughly $157 million, or a little over $70 million below the cap, but many roster spots in that $157 million figure reflect no salary yet - too early to tell. So it would seem that $70 - $75 million between the $157 million and the 2025 salary cap could evaporate very quickly with a few signings and adding in the costs for 2025 of the many "whoevers" who are on the roster at the end of 2024 for which the current estimated 2025 salary is now blank in Fangraph's calculations.
My guess? The Mets prior to the 2024 season will add those few remaining relatively modest pieces over the next few months; then, if the team is floundering badly at the trade deadline AND Mets minors prospects are going strong, Stearns will detonate the roster in July in further trades for prospects, in an effort to shed tons of salary, both to reduce the 2024 luxury tax bill, but to also get younger AND CHEAPER in terms of roster aggregate salary longer term.
Your thoughts?
JUST HAPPENED TO SEE...
While on Facebook a video came up of a MLB pitcher who 2 days after his father died of liver disease is out on the mound, emotions roaring. He gets through the inning well, and rather than being pulled, is left in to hit with 2 men on, and promptly goes deep. Wow.
Emotions were sky high, and the crowd roared approval.
The pitcher? Michael Lorenzen, drafted in the first round of 2013.
I searched back into old Macks Mets articles for him.
Sure enough, in 2013, Mack had a list of the top OUTFIELDERS in the upcoming draft, and Lorenzen? He was on the list.
Lorenzen (40-38, 4.11 in over 700 MLB innings) could really hit.
He hit .323 in college, and despite extremely few minors ABs for a few seasons while pitching in the minors, his subsequent MLB hitting line?
133 ABs, 7 HRs, 24 RBIs, .233/.282/.429.
One season, he hit 4 HRs in 31 at bats.
If he was just getting drafted today, I'd imagine his chances of being an Ohtani-style two-way player would be quite high.
26 comments:
Meant to move this article forward to 10:00 AM just now, but something didn't take, so it posted almost an hour sooner. It happens. Enjoy.
Swings,MeGill,Severson,Quintana,Houser. That rotation might be sneaky good.
I hate that DS is "Wilponing" it. Why not just pull the bandade off and trade Pete while he still should net 2 top prospects at least play all the kids and we just live with 24'.
Nice analysis, Tom!
This explains why David Stearns is acting like he is still in Milwaukee trying to find value in the dumpster because he can't afford to go to the store.
Steve Cohen took a big gamble over the last two years to "bridge" to the future and it didn't pay off. He is still spending money, but the priority seems to be on infrastructure that has a longer return on investment.
I get the logic, but 2022 set us up to expect a lot in the short term, so it feels pretty disappointing. A full salary dump is pretty drastic, and I think that the team will choose not to go to that extreme. However, 2024 is a big "tryout" year for many of the prospects, and if they turn out to not be so special, then extreme measures will have merit.
Paul I did not try to calculate 2026, and far too much can happen between now and then, but if you have a dozen prospects-turned-players and a handful of cheaper veterans in 2026, maybe 18 guys on the team cost you $30 million. Leaving $215 million for the handful of stars on payroll to still get you under the cap. Hopefully, one of those stars is Soto. But...he would be leaving the "Porch" to come to a pitcher's park, so if Cohen REALLY wants Soto, move the fences in about 7 feet all around to make it a better hitters' park.
Here is the best site for such answers:
https://www.spotrac.com/mlb/new-york-mets//payroll
So far, the Mets are looking at an estimated $294MM payroll and that’s before the pitching they need to add.
I’m with Gary, completely befuddled by what’s going on. I’d just as trade Pete is were are harpooning the year. But, If he wants to stick around for a few years at a reasonable contract, I’d rather have him than the prospects. Prospects aren’t sure things.
Honestly, I prefer this way to BVW’s way, which was to come in and immediately throw out the soap with the bath water and make a stupid trade for a doped up buddy. But, at this point Stearns cannot just tell the whole world what the organization is planning.
Gus, true, he needs to keep the other 29 teams off-balance as it concerns future Mets strategy. And fans. If they plan to disappoint fans in 2024, the longer they wait, the more tickets for 2024 get sold.
You can look at this issue a thousand different ways but the only way you get under is to not add any costly long term contracts and only sign players this year for one year
True Mack, but then you need to add next year too, and you don’t have continuity until your kids come up. Now, Marte has been good in winter ball for two games - big deal! But, if he is, the roster is full offensively and is fine by my opinion; there’s a chance for Baty and Vientos and every position has a solid or better MLB player.
Now onto the pitching. With starters throwing about 150 innings and getting $20MM, give me three good relievers at that rate for about $7MM each to give me 55 innings per guy. Problem is, relievers want $9+MM per year. So, I wait. No to Dylan Cease and his 4.58 ERA, no to Woodruff who you don’t know how he will come back and you’ll be paying tax on more dead money, not to Snell and Montgomery’s price tags, no to Imanga and his shoulder issues, and no to Stroman, Urias, or Bauer or other headaches out there; I would not want to give a first time manager such heartache. What’s left? I don’t make $8MM per year to figure it out, but if I did, Manaea would be at the top of my list too.
Gus, agreed on Marte. If he is close to 2022 this year, why spend more?
I would sign 3 relievers of quality...and skip adding starters. Sometimes, you live with risk.
You have Megill, who I believe, will rebound well, and Joey....Butto and Vasil in reserve until Peterson returns. Later in 2024, if needed, Hamel, Stuart, and Scott.
Relievers - having 5 good to great ones, supported by several decent ones like Drew Smith, with our current starters, ought to get the job done. And get us closer to exiting luxury tax hell.
Later in the season, Lavender, Gervase, Oca. Maybe Orze.
So, like you said, add 3 quality relievers via signings. I highly doubt one will be Hader.
If Marte is close to 2022 Marte, don't add offense, I just wrote. The cavalry by mid season or a little later ought to be Williams, Acuna, Gilbert.
Gotta think that in addition to the money coming off the books next year, there’s a reasonable chance that one or more of the longer term deals are traded either at this year’s deadline or in the offseason once this FO gets a read on them. McNeil, if he has a good season, and maybe even Marte if he’s healthy and productive through the deadline (though Cohen would still likely need to pick up some portion of his ‘25 salary to get a significant return. Nimmo seems less likely but also not impossible. Lindor I don’t believe can be traded for value without absorbing a lot of that money. As good as he is, giving him that contract was, in my opinion, a real mistake. And then there’s Pete, who I think, if he’s having a good season, would bet more of a haul at the deadline for a power-needy contender than most people think. Not that I’m advocating trading him, but it’s a lot of money to consider tying up for a 1B who isn’t a particularly good defensive player and who may or may not age well.
Stearns didn’t draft or develop any of these guys, and will be coldly logical in making those decisions, and will almost certainly be more patient than us fans.
Another big question is if we expect to sign Soto and the Yanks are coming off a playoff run it will take probably $450mil+ to sign him with Pete possibly gone so I'm imagining he can't wait to move to Queens.... yeah right. So all in all we've won 1 WS in 54 years and will be coming off a 75-80 win season so where do I sign? The fact our baseball club plays in "Flushing" is appropriate then. I can hear the swoosh now.
Sneaky good rotation,maybe. Smelly bad rotation,probably.
Adam, I have an article coming up soon on a former Mets first baseman whose career plummeted quickly after he turned 31. Maybe that won't happen to Pete.
Gary, that is the Mets' conundrum. The inability to rise more than rarely above mediocrity. We may just miss Soto and have to wait for the kids to arrive in waves.
My guess is there are more bona fide future major leaguers in the Mets system than at any time in their history.
Tom, I’ve done some research on several first basemen similar to Pete’s profile and a few great homerun hitters in order to compare. I don’t know when I will finish the research, but I plan to write something for that as well.
Just a head’s up, the guys I’ve research so far are Ryan Howard, Chris Davis, Prince Fielder, Cecil Fielder, Mo Vaughn, Frank Howard, Ralph Kiner, Albert Pujols, and I can’t remember who else right now… I’m at work.
No one on the Mets will admit they are setting up this team financially to make a run at Soto in 24
Watch for Alonso Marte and McNeil to be traded and replaced by
Clifford Gilbert and Williams
Spoiler alert: they all plummeted…
Interesting. And as Gus points out, there are a long list of big, power hitting 1B whose contracts their teams wished they could get out from under during their age 33-ish and older seasons. I’m good with hoping he’s got 30+ HR at the deadline and trading him for one and a half elite prospects, and revisiting after the season to see if he might be available for a 4-5 yr deal.
I'd love to see Pete hit 500 HRs as a Met. I doubt that happens. Some dumb team will give him a few too many years. No one, you see, is ever the next Chris Davis.
I see no way that Soto will sign with the Mets - for two reasons. The first is the aforementioned idea that the Mets do not provide the ideal landing spot and the second is that the Mets will not be interested in taking on another contract of that magnitude.
With respect to the second point above, if they do not sign Alonso, why would they go after another poor defensive hitter for even more money? Remember, this guy already turned down a contract approaching a half-billion dollars.
If they wanted Soto, they would have been in on him this year via a trade before committing mucho bucks for mucho years.
True - but if you put together a list of the best hitters in baseball, Soso is definitely top 5. That's quite an anchor to secure your team. Time, as they say, will tell, but I too am not optimistic. This is, after all, the Mets.
Let’s call the bad move out. Did I like getting Acuna, Gilbert, and Clifford, yes. At the cost of eating roughly $40 million of Max and Verlander’s contracts, No. Both the Astros and especially the Rangers used Cohen’s wealth and Eppler’s foolishness to make us pay for that salary, which is on our books, and hurts us bad with the Luxury Tax. We basically paid $40 million for those 3 prospects and for those two Pitchers to not pitch for us. Unless at least two of Acuna, Gilbert, and Clifford aren’t very good starters those were very bad trades.
Acuna, Gilbert, Williams.
Clifford is still in A+ Ball.
Why Soto and not Alonso? To begin with, Soto is coming into his prime and Alonso is exiting. Secondly, Soto is a superior hitter to Alonso. Lastly, Soto is not as good a defender at his position as Alonso is at his, but neither will embarrass the team.
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