Toronto Blue Jays: Looming Payroll Squeeze This Offseason

After their historic collapse in game two of the Wild Card series on Saturday, the Toronto Blue Jays head into an offseason full of difficult decisions.

The looming payroll squeeze is the elephant in the room; to retain the end-2022 roster again next year would require a payroll of almost $230 million. That’s without any new “swing-and-miss” high-leverage bullpen arms or additional starting pitching depth, or without any left-handed power bat additions; and, without any contract extensions to buy out the arbitration-eligible years for some of the young core.

Also, is it a reasonable assumption that unless ownership agrees to exceed the 2023 luxury tax threshold of $233 million (C$321 million), there will likely have to be some significant changes compared to the 2022 roster?

According to MLBTR, Saturday’s Game 2 in Toronto is only the third playoff game ever in which a team came back to win from a deficit of seven runs or more and holds the record for the largest deficit surmounted (seven runs) in a playoff comeback by a road team (Seattle).

That stings given the Blue Jays’ competitive balance tax (CBT), or “luxury tax” payroll stood at $204.4 million at the end of this regular season according to Spotrac. That’s below the 2022 luxury tax threshold of $230 million, but still is a record dollar amount payroll for the Blue Jays. The fact this team isn’t going deeper than two games into the postseason is an expensive failure, with lost additional playoff revenues as well.

Looming Payroll Squeeze This Offseason for Blue Jays

In his season-ending press availability on Tuesday, General Manager Ross Atkins noted that they think starter Ross Stripling is a good fit for the organization but he wouldn’t commit to any further discussion on Strip’s future with the Blue Jays out of respect for his status as a pending free agent.

A Ross Stripling QO implies a $14-15 million annual increase

But looking at potential options, a one-year qualifying offer (QO) of $18-19 million based on the average of the top 125 salaries in MLB would imply a $14-15 million annual raise for Stripling, who made a very reasonable $3.79 million in 2022.

The other pending free agents – David Phelps and Jackie Bradley Jr., only made a combined $2.45 million in 2022. That difference would be easily spent if the Jays exercise their $3 million club option on reliever Anthony Bass, who only counted as a $1.05 million added to the 2022 luxury tax payroll after arriving in a trade deadline acquisition.

Whit Merrifield counted as a $1.43 million cost in the 2022 luxury tax payroll after he was acquired. He’ll cost $6.75 million in 2023 ($2.75 million base + $4 million incentive bonus for staying off the IL for more than 110 days in 2022). For luxury tax payroll purposes, that counts as a combined $4.8 million salary in 2023, a $3.4 million annual increase per Spotrac.

13 Arbitration Eligible Players for 2023 implies a $29 million increase

MLBTR noted that the Jays have 13 players eligible for arbitration awards in 2023. They project total arbitration salaries of $62 million for the following players (with the now official updated years of MLB service time in descending order):

Teoscar Hernandez (5.097): $14.1 million
Raimel Tapia (5.020): $5.2 million
Adam Cimber (4.156): $3.2 million
Trevor Richards (4.084): $1.5 million
Bradley Zimmer (4.077): $1.3 million
Danny Jansen (4.050): $3.7 million
Vladimir Guerrero Jr. (3.157): $14.8 million
Tim Mayza (3.156): $1.9 million
Cavan Biggio (3.129): $2.6 million
Trent Thornton (3.073): $1.1 million
Bo Bichette (3.063): $6.1 million
Jordan Romano (3.051): $4.4 million
Santiago Espinal (2.149): $2.1 million

That implies an annual increase of $28.7 million compared to what these 13 players earned in 2022.

Note also that there is not yet an established Super Two cutoff for service time. While unlikely given recent cutoffs, that could potentially lead to more names being added to this list, like catcher Alejandro Kirk (2.047 years of service time).

Retained Salaries in 2023

In terms of retained salaries which will count against the 2023 luxury tax payroll, the Blue Jays still owe $4.33 million of traded Randal Grichuk’s salary. The injured Hyun Jin Ryu’s $20 million salary also counts against the luxury tax threshold even if his contract was insured.

2023 Luxury Tax Payroll Almost $230 million?

Ross Atkins implied with a succinct “no” in his season-ending press availability today that the Blue Jays would not be moving any of their young core away, similar to the franchise-altering Fred McGriff/Tony Fernandez trade for Roberto Alomar and Joe Carter ahead of the 1991 season.

So from that, we can assume the 2023 roster should remain quite similar to the playoff roster we just saw this past weekend, with the injured Lourdes Gurriel Jr. still under contract as well. As Toronto Star writer and former Sportsnet radio announcer, Mike Wilner, put it, “Major changes to the roster are highly unlikely.”

And prior to any QO for Ross Stripling being accepted, prior to any arbitration salary awards to their 13 arbitration-eligible players, and prior to adding any new players to replace free agents Stripling, Phelps and Bradley Jr., the Blue Jays 2023 luxury tax payroll already stands at $148.4 million.

Add in the projected $62 million in arbitration awards, and that number jumps to $210.4 million. Add in the projected one-year $18-19 million QO to Stripling, assuming he accepts it, and that’s $229 million, which is just under the $233 million luxury tax threshold.

But that’s without adding any new “swing-and-miss” type arms to the bullpen, without any additional new left-handed hitting power bats, and most definitely without extending any of the team’s young, homegrown core like Vlad Jr., Bo, Manoah, Kirk and Romano to long term contracts to buy out their arbitration-eligible years.

And that most likely assumes that Yusei Kikuchi will be back in the rotation again in 2023 if they can’t sign another back-of-the-rotation starter. Or that they’re hoping for some sort of contribution from the seemingly always-injured Nate Pearson and/or top pitching prospect Ricky Tiedemann towards the end of the year?

Will ownership commit to having a payroll at or above $230 million for 2023 and beyond? Remember that locking up those five young core players above will add somewhere around $100 million more to the annual competitive balance (luxury) tax payroll, with the threshold rising to $244 million by 2026 in the final year of the current collective bargaining agreement between MLB and the players.

Time to Extend Young Core Will Have to Wait Until 2024?

In 2024, the Blue Jays have currently committed $99 million in payroll salaries before any arbitration awards or long-term extensions. Obviously, the $20 million Hyun Jin Ryu contract falls off that year, but 3B Matt Chapman, RF Teoscar Hernandez, OF Ramiel Tapia, LF Lourdes Gurriel Jr., 2B/CF Whit Merrifield (mutual option at $18 million), and relievers Yimi Garcia ($5 million club option), Adam Cimber and Anthony Bass are all pending free agents after 2023, and would likely require new replacements.

Long-term contract extensions and arbitration awards for eligible players will likely take up a good chunk of payroll room for 2024 as well, leaving the front office $30-40 million under the CBT threshold of $237 million that year to replace Chapman, Ryu, and Hernandez, as well as adding 2-3 high leverage relief arms to replace Garcia, Cimber and Bass (should none of these players re-sign).

Could We See Significant Roster Changes This Offseason?

Given how little payroll space is left under the 2023 CBT threshold – maybe $3-4 million after arbitration awards and assuming a successful QO to Ross Stripling – it’s probably unlikely the Jays commit to any long-term extensions in the 2022/23 offseason. Those will most likely have to wait until the 2023/24 offseason.

So how can they add some established MLB-level starting pitching and more high-leverage relief arms?

Certainly, many pundits have suggested trading one or both of Teoscar Hernandez and Lourdes Gurriel Jr., given a surplus of corner outfielders, and the likelihood the team will eventually want George Springer to play a corner OF spot to reduce the wear and tear on his body from playing CF. That could free up potentially $17.2 million in the projected CBT payroll next year.

A surplus catcher could also be moved in a trade. Moving Danny Jansen (projected salary of $3.7 million) would give the team almost $21 million in space under the luxury tax threshold if Hernandez and Gurriel, Jr. were also traded.

Given his poor record on trades of established MLB players like Happ, Donaldson, and Stroman, does GM Ross Atkins have the vision and the creativity needed to turn Hernandez, Gurriel and Jansen into a young middle rotation starting pitcher, 2-3 swing and miss relievers, and the unicorn for Jays fans: a defensive wizard, left-handed power bat CF who would allow Springer to shift to a corner OF position?  Someone, say, like Jays legend and switch-hitting CF Devon White, but with more pop in his bat?

We shall see in the coming weeks and months how those decisions will be made, what sort of payroll capacity the front will be working with (i.e. will they make a QO to Stripling next month?), and how the roster construction might change given a payroll already near the luxury tax threshold. But with the window of contention wide open at present, could fortune favour some bold moves this offseason?