Time For A Mid-Season Payroll Update

The All-Star break, in a way, is a welcomed reprieve. While baseball itself is a fun spectacle to watch, it also feels like a slog to the finish line. A 162-game season will do that to a person, especially coming off a shortened 60-game season last year. We’re basically reacclimating ourselves to the previous standard of seasons past, and it is a chore. A chore I won’t necessarily complain about as loudly as I did in pre-pandemic times, but you get the point.

But a little break from game action can be refreshing. Do something else that you enjoy or that challenges you. For some, it may be reading a researching a subject of interest while not spending the next three evenings glued to a live screen. Perhaps go out and visit an old friend that you haven’t seen in ages for obvious reasons. Spend some time outside before the humidity drains you for the next two weeks. Maybe quit checking Twitter for the latest highlights...or, you know, at all. Or, in my case, crunching payroll numbers as I am at 11 PM on Monday night. After all, I am an accountant by trade, so this kind of stuff is enjoyable to my brain.

So, as you can reasonably assume from the title of this post, I will be breaking down the Astros current player payroll situation. I’ve written about this subject at least once since February, if memory serves me well. No, wait, twice three times. But with the trade deadline quickly approaching, this week felt like an appropriate time to provide a fresh breakdown. If you want to keep on reading then, here is a table of Houston’s player salaries and the other costs that comes into play for future tax calculations, if applicable.

Based on the figures from Cot’s Baseball Contracts, the Astros are currently projected to remain below the tax threshold of $210 million by roughly $3 million. That total can shift somewhat one way or another as some figures (i.e., pre-arb salaries) aren’t entirely known to the general public. Still, this $3 million projection feels appropriate considering the circumstances. As noted by Eric Huysman here last week, Houston would be on the hook for a 30 percent tax considering they exceeded the threshold for the first time last season in addition to potential penalties as it relates to compensatory draft picks. While James Click stating that Jim Crane has authorized him to add salary, even if it causes the club to pass that first-level threshold of $210 million, it remains doubtful that they’ll exceed the $230 million second-level threshold, which would trigger additional surcharges on any potential tax bill.

With all of this financial information, where could the Astros go from here? Well, I have some thoughts.

1. The front office will look to improve on the margins while banking on certain players to return from the IL in the coming weeks (most probable course of action, in my opinion);
2. While a tax bill probably isn’t a preferable option to team ownership (honestly, it doesn’t matter), the true detriment to exceeding any threshold level could be the potential decrease in value for compensation draft picks (the reason why the compensation for George Springer fell to after the fourth round instead of between the second and third round);
3. If the club does aim to bring significant upgrades to the roster, it feels as if that is limited to the bullpen at this point (see Craig Kimbrel rumors plus for a good reason, I might add);
4. A tax bill this season, which would be the second year in a row, probably means that we won’t see the Astros break the bank in the offseason. In other words, next year will be about resetting the tax;
5. Lastly, the current CBA is set to expire sometime in December. The uncertainty surrounding the next agreement is something clubs have to account for. Still, there isn’t much indication about the potential implications this could hold on finances as it pertains to player payrolls—all of that to say that this uncertainty could impact how clubs operate at the trade deadline.

The Astros are in an interesting spot as a club that is already toeing the tax line along with additional draft penalties. The loss of four picks — 2020 and 2021 1st and 2nd round picks — due to their sign-stealing scandal only makes the potential ramifications in 2022 a stronger deterrent in my mind. Of course, it all depends on how much risk in the long-term that Click and Crane want to assume in the process. The trade deadline might be our first true insight into which path that the Astros choose to travel in the future.