As the snow flies in Toronto with the GM Meetings underway, thankfully the hot stove season is heating up, with decisions on qualifying offers, Rule 5 protection and non-tender deadlines, and the Baseball Winter Meetings and Rule 5 Draft a month from now in Las Vegas. There’s also free agency – so which teams are most likely to spend this offseason based on who actually can afford top FAs?
In a November 7th radio interview with the Fan 590’s Lead Off here, Blue Jays President and CEO Mark Shapiro said that “we’re going to have to be aggressive on every level of the free agent starting pitcher landscape.”
However, Shapiro also noted that “if you look at the history of free agent pitching contracts, it is a really, really, really high-risk area to play in.”
Shapiro did say the Jays would be one of many teams interested in Gerrit Cole:
"“Dollars are not going to be our challenge, which hasn’t always been the case. It’s going to be where we fit with Gerrit’s alignment of interests…same thing with every FA we pursue. What I am confident is, that throughout the free agency process we’ll be able to get better this winter, and we’ll have the resources to do it.”"
That sounds like GM Ross Atkins and the front office will be at least checking in on top free agent pitchers this offseason with their increased salary budget, but that they remain uncomfortable taking too much risk on free agent pitchers. Shi Davidi said something to this end as well, that:
"“while the Blue Jays don’t feel the roster is at a point where they should be aiming at the likes of Cole and Strasburg just yet, they do seem willing to drive the market on certain arms, already engaging some in preliminary talks.”"
There were similar messages on the first day of the GM meetings in Scottsdale, Arizona, with Jays beat writers Gregor Chisholm of the Toronto Star and Scott Mitchell of TSN both implying that the Blue Jays would not be trying to sign either of the top starters available in Gerrit Cole and Stephen Strasburg, “Not because of president Mark Shapiro, not because of [GM] Ross Atkins, but because of the ownership group, Rogers Communications.”
So which teams will be bidding on Scott Boras’ favourite pitchers Gerrit Cole, Stephen Strasburg and Hyu-Jin Ryu this offseason, and James Paxton next year?
Competitive Balance Tax
Many baseball people have discussed how the Competitive Balance (“Luxury”) Tax threshold has become an effective salary cap. Here’s the rule:
"“A club exceeding the Competitive Balance Tax threshold for the first time must pay a 20% tax on all overages. A club exceeding the threshold for a second consecutive season will see that figure rise to 30%, and three or more straight seasons of exceeding the threshold comes with a 50% luxury tax. If a club dips below the luxury tax threshold for a season, the penalty level is reset.”"
Indeed, according to Spotrac, only three large market teams exceeded the 2019 threshold of $206mn (all figures rounded): the Red Sox at $242mn, the Cubs at $235mn, and the Yankees at $231mn.
The threshold stands at $208 million in 2020 and $210 million for 2021. Again according to Spotrac, which uses MLBTR’s projections for arbitration awards, five teams at present risk triggering the luxury tax in 2020:
- Astros ($223mn)
- Red Sox ($219mn)
- Cubs ($208mn)
- Yankees ($206mn)
- Mets ($196.5mn not including Wheeler who they’d like to resign assuming he rejects his QO)
Open Your Wallets
So which of these top payroll teams are “all in” on the top-tier free agents given their offseason priorities and financial means?
Houston Astros ($223mn projected competitive balance payroll even without Gerrit Cole)
Unless Houston is willing to pay a luxury tax on the $50mn or so above the threshold they’d be at if they re-sign Gerrit Cole at MLBTR’s estimated $32mn AAV, it appears unlikely. They can certainly non-tender a number of players by December 2nd to save salary space, i.e. injured Aaron Sanchez‘s expected $5.6mn salary, Joe Biagini‘s $1.5mn, or soon to be 32-year old Brad Peacock‘s $4.6mn, thereby saving $12mn or so.
They could try to trade or restructure contracts like soon to be 33-year old Josh Reddick‘s $13mn after he posted a declining OPS .728 versus career average .753? He’ll be an UFA after 2020. Or 36-year old 1B Yuli Gurriel‘s $9.5mn after a career year (3.2 bWAR), and 33-year old LF Michael Brantley‘s $16mn (4.6 bWAR), given the emergence of 22-year old DH/LF Yordan Alvarez and 22-year old RF Kyle Tucker, and the fact both Yuli and Brantley will be UFAs after 2020?
No doubt Astros GM Jeff Luhnow and his analytics team are crunching the numbers, but apart from trying to re-sign Cole, it’s hard to imagine the Astros aggressively pursuing top-tier FAs. Astros owner Jim Crane has also told Brian McTaggart of MLB.com here that the Astros are at least “going to take a run at it.” He said, “We don’t know if we can get to where they want to get. [Agent Scott] Boras is tough to deal with.”
Red Sox ($219mn)
Owner John Henry has ordered that his new front office under highly regarded Chief Baseball Officer Chaim Bloom and GM Brian O’Halloran get under the $208 million luxury tax threshold. 32-year old DH J.D. Martinez did not opt out of three years at $62.5mn left on his contract. That shouldn’t be a problem if they can find a way to offload David Price‘s $31mn salary hit in 2020 and the remaining three years on his seven-year/$217mn contract signed after the 2015 Jays ALCS run.
Joel Sherman of the NY Post has imagined up a pipe dream of 2018 AL MVP Mookie Betts straight up for Mets starter Noah Syndergaard in a trade of 27-year old players in their prime, which in addition to removing Betts’ $27.7mn luxury tax hit in 2020 (a $17.8mn savings vs. the expected $9.9mn Thor is seen winning in arbitration for 2020) before he becomes an UFA in 2021, would immediately improve the Red Sox starting pitching, which has widely been blamed for their failure to run back the 2018 World Series Championship.
Starter Nathan Eovaldi‘s remaining three years at $17mn AAV could also be potentially moved. However, Bloom’s hands are largely tied in terms of chasing premium FAs this off-season.
Chicago is another team that hasn’t shied away from taking risks on top FA starters like Jon Lester and Yu Darvish, not to mention OF Jason Heyward. However, with $208mn already committed, Cubs President Theo Epstein and his GM Jed Hoyer don’t have much flexibility to keep their competitive window open. They’ve already picked up 1B Anthony Rizzo‘s $16.5mn option for 2020, and a $10.5mn team option on starter Jose Quintana. Darvish and Heyward both decided not to opt out of their deals, so it’s unlikely the Cubs will be bidding on premium FAs.
In fact, Hoyer will be hard pressed to re-sign a long list of aging Cubs free agents, including soon to be 36-year old Cole Hamels, 39-year old Ben Zobrist, Nick Castellanos, Steve Cishek and Pedro Strop. Castellanos is probably the most intriguing target there. In terms of players they could trade in a “retool rather than full rebuild”, ESPN’s Jeff Passan has tweeted that “multiple teams” believe Chicago will listen to offers for 27-year-old offensively minded catcher Willson Contreras, who is projected to win $4.5mn in arbitration.
While Hal Steinbrenner has implied the Yankees might not be in on Gerrit Cole here, honestly how can GM Brian Cashman not be very interested with top starters Masahiro Tanaka and James Paxton both UFAs after 2020, the retirement of longtime Yankee rotation stalwart C.C. Sabathia, and the uncertainty surrounding Domingo German‘s status for 2020 and beyond?
Their payroll won’t be affected much by closer Aroldis Chapman re-upping with them, costing the Yanks $17.5mn in luxury tax salary over the next three years vs. $17.2mn in 2019. They also declined to make a qualifying offer to SS Didi Gregorius. They are likely stuck with DH Giancarlo Stanton‘s albatross 13 year / $325mn contract ($25mn AAV ~2027). Could CF Jacoby Ellsbury‘s $21.9mn luxury tax hit for 2020 and 2021 club option that can be bought out for $5mn be moved if the Yankees absorb most of it? Now 37-year old left-handed starter J.A. Happ‘s remaining two years at $17mn AAV could also potentially be moved if the Yankees swallow a chunk?
In terms of FA signings, the Yankees appear to have more interest in Gerrit Cole and Zack Wheeler than in Bumgarner, Strasburg or Ryu. If owner Hal Steinbrenner wants the team under the second luxury tax penalty level of $228mn, they could still spend $20mn without any salary dumps. Regardless, chances are good that at least one of Gerrit Cole (8 yrs/$256~280mn) or Zack Wheeler (4~5 yrs/$85~100mn) signs with the Yankees. Whether they can also re-sign LF Brett Gardner, reliever Dellin Betances and Gregorius depends on what happens with Cole or Wheeler?
Of any team willing to take risks on free agent pitching contracts, Washington certainly comes to mind with their 7 year/$210mn contract for Max Scherzer, and 6 year/$140mn deal with Patrick Corbin. With a luxury tax payroll of only $102.5mn committed to date, the consensus seems to be that World Series MVP Stephen Strasburg (MLBTR projects 6 yrs/$182mn) and 3B Anthony Rendon (7 yrs/$232mn) will both re-sign with Washington. Even then, they should still be well under the 2020 luxury tax threshold with room to bring back postseason hero Howie Kendrick (1 yr/$6mn), and add former Giants closer Will Smith (3 yrs/$40mn).
While not scientific, I’ve complied a list of free agent predictions from MLB Trade Rumors, FanGraphs and the NY Post, then overlaid that with payroll flexibility under the luxury tax threshold (using data from both Spotrac and Cot’s Baseball Contracts, plus a recent willingness by respective ownership groups to spend, and then considered stated ambitions to be competitive. Teams including the Phillies, Padres, Rangers, Brewers, Braves, and Angels all fall in to this category of “wannabe contenders” to spend on premium FAs.
The Jays could potentially be added to this group given recent comments from CEO Mark Shapiro and GM Ross Atkins, plus talk of a much bigger salary budget and willingness to drive the market on certain FA arms from Jays beat writers Ben Nicholson-Smith and Shi Davidi.
Gerrit Cole is from California and went to UCLA, so the Angels are the consensus destination for him to join Mike Trout and new manager Joe Maddon. The Angels only have $140mn committed in luxury tax payroll. Buster Olney tweeted that the bidding could start at more than $300mn, also most projections have him signing for more than David Price’s 7 year/$217mn with the Red Sox in the 7-8 year/$242-280mn range. The Angels are also said to be interested in Wheeler, Miley, catcher Jason Castro and 3B Mike Moustakas.
The Braves are seen in on Cole, Wheeler, Bumgarner, Hamels and to re-sign 3B Josh Donaldson. They have $110mn committed so far for 2020, but spent as much as $136mn as recently as 2018. They could certainly move former Gold Glove CF Ender Inciarte‘s $7.7mn contract to free up more salary room.
With $97.5mn committed so far to the 2020 luxury tax payroll vs. an Opening Day salary as high as $165mn as recently as 2017, the Rangers are seen as serious contenders for Cole, Rendon, Donaldson, Porcello and Castellanos. GM Jon Daniels has said they will be a major open-market player, noting, “We have signed [top FAs] before and at some point I have to suspect we will again.”
After signing Bryce Harper, GM Matt Klentak says bolstering the rotation is the key offseason goal for the Phils, saying, “I think it makes sense for us to look to pour some more resources, and our time and attention, into improving our run prevention. That starts in the starting rotation.” With $133mn committed already to their 2020 luxury tax payroll, they’ve spent as much as $178mn on their Opening Day roster as recently as 2014 and $141mn last year. They could save $7.35mn if CF Odubel Herrera‘s contract is voided after a domestic violence suspension, plus 2B Cesar Hernandez ($11.8mn) and 3B Maikel Franco ($6.7mn) are both non-tender candidates. That would help free up room for the FAs they’re seen pursuing, including Wheeler, Donaldson and reliever Will Harris, plus a potential return of Cole Hamels who appears willing to sign a one-year deal as a veteran who just wants to win with a “win-now” club like the Phillies.
San Diego GM A.J. Preller will most certainly be active, with interest in SoCal boys Cole and Strasburg, as well as Wheeler and Hamels. They currently have $97mn committed to the 2020 luxury tax payroll vs $130mn spent as recently as 2018, but could try to move 1B/OF Wil Myer’s $22.5mn contract to free up space. They appear to have a strong ambition to compete, with Executive Chairman Ron Fowler vowing “heads will roll” if 2020 is not a significant improvement from the Padres’ nine consecutive losing seasons by “putting together the type of team in the offseason that we feel can win in 2020 and beyond.” General partner Peter Seidler says they are building in terms of a “decade”, but recently declared, “Our decade starts on Jan. 1.”
Rebuilding teams that are years away from being competitive are the least likely to be big players in this year’s FA market, including the Orioles, Tigers, Pirates, Royals, Mariners and Marlins. The Mets and Rockies have financial challenges and limited payroll flexibility. Oakland, Cleveland, Cincinnati and Tampa haven’t been big spenders in free agency and that’s unlikely to change this offseason, with them looking at potentially cheaper aging FAs like DH Edward Encarnacion, C Travis d’Arnaud and OF Corey Dickerson.
So Where Does that Leave the Jays?
The Jays appear to be ready to spend this offseason, with an estimated added salary budget of anywhere between $40-70mn depending on the source. Of that, $30-60mn remains after the moves for starter Chase Anderson ($8.5mn) and reliever Anthony Bass ($1.7mn estimate). If they’re serious about attracting premium FA talent, there is also an argument to be made to extend closer Ken Giles beyond the remaining one year ($8.4mn) left on his contract.
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With a current luxury tax payroll of $48mn based on players under contract (using MLBTR’s projections for arbitration awards), plus the $14mn in retained salary due to Troy Tulowitzki, and the $9.6mn or so due to the remaining pre-arbitration players who would fill out the 26-man roster, the Jays have ~$72mn already on the books for 2020. As Gregor Chisholm of the Star notes, that “still falls almost $100 million short of the payrolls from 2016-17.”
In fact, Toronto’s payroll dipped to $114.5mn on Opening Day of 2019, per Cot’s Baseball Contracts. Adding an additional $40-50mn more in payroll would get the Jays back to that level. Starters mentioned as legitimate Blue Jays targets so far include:
- a pair of premium 29-year olds in Zack Wheeler and Jake Odorizzi who are both tied to draft pick compensation but would become the immediate ace of the rotation
- Dallas Keuchel and Kyle Gibson who are not tied to draft picks
- Starters likely available on 1~2 year deals like Michael Pineda, Tanner Roark, Julio Teheran, Wade Miley (who they’ve had interest in before), Alex Wood and Jordan Lyles
- Pitchers coming off injury-shortened seasons like Michael Wacha, Ivan Nova & Matt Moore
Of course, we’ve heard before that Jays’ management were focused on pitching and that they were “checking in” on free agents in recent offseasons. But since interim GM Tony LaCava signed then 33-year old starter J.A. Happ (3 years/$36mn) and then 32-year old starter Marco Estrada (2 years/$26mn) in November 2015, the only $10mn+ AAV contract with a pitcher the Jays front office has signed was the one year/$13mn deal to keep Estrada here in 2018 and the one year/$10mn given to Jaime Garcia in 2018.
Since then, they’ve traded away starters Marcus Stroman and Aaron Sanchez, and brought in Clayton Richard (2 yrs/$6mn), Clay Bucholz (1 yr/$3mn), Matt Shoemaker (1 yr/$3.5mn) and others, with 29 different pitchers starting games since 2018.
Let’s hope they really are active players in the current strong free agent market for starting pitching, and that they do make contract offers. Given the success of other professional sports franchises in Toronto attracting stars, Jays fans may be tiring of the excuse that top free agents don’t want to move their families to Toronto and pay Canadian taxes?
The GTA is home to 6.4mn people, which makes Toronto the 4th largest market in MLB after New York, LA and Chicago. However, all of those cities have two MLB franchises in addition to NBA and NHL franchises. The Jays have Toronto and 37.6 million Canadians as their fan base, so is it time Rogers opened their wallet to surround their young core with elite talent before wasting any more years of control of Vladimir Guerrero Jr., Bo Bichette, Cavan Biggio, Lourdes Gurriel Jr., and Nate Pearson? We’ll soon find out.