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The Astros’ remaining wish list likely dependent on tax threshold adjustments

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The ongoing CBA negotiations will dictate how clubs approach free agency when labor peace is restored.

World Series - Atlanta Braves v Houston Astros - Game One Photo by Bob Levey/Getty Images

Baseball is dead quiet. Like you can hear a pin drop in an empty room kind of quiet. OK, I might be exaggerating somewhat, but the expiration of the most recent CBA has left Major League Baseball in this peculiar state of limbo. While there was a bevy of signings in the days leading up to December 1st, it wasn’t meant to last for long. Today’s most prominent news — outside of any new developments on the CBA front — might just be a pair of former Astros in Tyler White and Jon Singelton(!) signing minor league contracts with the Brewers. When minor league signings capture your attention in December, you probably have too much free time on your hands.

This calm state of baseball is a double-edged sword in a way. On the one hand, it does free up valuable time to revisit interesting projects left in the dust during the season. I’ve decided to leap back into courses for R and Python to help boost my analytic chops, in addition to a couple of other side projects. But as a blogger, I don’t have the convenience of the hot stove to draw from for material in my writing. Even if a rumor ultimately stays just that, at least it provides a spring to initiate some fruitful conversations. On the days when the writers’ block hits particularly hard, there was a chance you can write about how rumored Player X could impact your favorite ballclub to give you a spark. Needless to say, there hasn’t been much to write about as it pertains to rumors as of late, and we can only write about Carlos Correa so much before the topic becomes redundant.

One of those side projects that I mentioned earlier is keeping up with team payrolls and how the new CBA could impact how clubs behave when free agency resumes. For the clubs comfortably below the previous threshold of $210 million, an increase probably won’t incentivize much additional spending. There might be some here and there, but it likely won’t become rampant. But for the teams who are already toeing or over that soft “cap” line, it may change their offseason plans to some degree. The Astros are likely one of those teams.

Per Cot’s Baseball Contracts, Houston currently sports a $189 million 40-man roster payroll as it pertains to Average Annual Value (AAV). The AAV is vital in determining how much a club can spend without paying a tax to the league. The critical caveat for the Astros is that Cot’s includes Justin Verlander’s agreed salary of $25 million, yet the deal wasn’t made official before December 1st. Until the physical is passed and the dotted line signed, this $189 million figure is subject to change. If Verlander’s deal is made official, the organization roughly has $20.659 million to spend before their subject to any tax penalties imposed by MLB. For most clubs, the threshold has acted like a de facto salary cap more than anything else to suppress spending and player salaries. The Astros are no different in this regard, and that is why it remains doubtful for Correa to return on a long-term contract without his likely $30M-plus AAV pushing the club over the previous threshold.

Of course, this tax threshold is also subject to change. Although the owners a couple of months ago proposed a salary floor of $100 million with the condition of lowering the threshold to $180 million, the threshold will probably increase for 2022. The question is by what amount. Even a modest increase of $5 to $10 million would likely keep the Astros from re-signing Correa as they would be pressing up against the tax line at $30 million per season. General manager James Click could always free up a portion of his budget by trading a veteran, especially if he were willing to attach prospects as a sweetener. Jake Odorizzi, for example, is set to have a threshold figure of $7.833 million, and there is notable depth in the rotation if Verlander returns. However, I would caution against that plan of action in any case as the farm system isn’t exactly brimming with the over-the-top talent of past years, and it is always a risk to trade away depth from the pitching staff. And, honestly, I don’t think the Astros would entertain such a transaction of trading prospects to save money at this juncture.

Once the new CBA is in place — whenever that is — we will get a better idea of how clubs will probably spend. An increase to thresholds would be an excellent place to start, but for the Astros, it all hinges on the exact degrees of those adjustments. At this point, I doubt we will see enough of an increase for Correa to return, but I could be wrong. It wouldn’t be the first time.