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Tribe Happenings: Payroll commitments have limited the Indians

Tribe Happenings: Payroll commitments have limited the Indians
January 6, 2014
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Some news, notes and thoughts from my Indians notebook…

Lack of payroll flexibility

With the new year here and the 2014 season just weeks away, the Indians current opening day payroll sits at about $84.5 million.

In an offseason that has largely been viewed as quiet by Indians fans, that $84.5 million figure is already about $4 million higher than last year’s opening day payroll. That figure includes the Perez release, Stubbs trade and the acquisitions of John AxfordDavid Murphy and Josh Outman.

One important thing to note is the Indians went into this offseason with much more committed payroll than they had after the 2012 season. After the 2012 season the Indians had Travis Hafner come off the books but also had few internal payroll increases which meant they had around $45-50 million in base payroll going into last offseason. With a budget of $80 million, they had around $30-35 million to spend in free agency, and spend they did with the signings of Michael BournNick SwisherMark Reynolds and Brett Myers. Those four players combined made $31 million in 2014.

This offseason things are much different with the setup of their payroll. They went into the offseason with about $75-77 million in committed payroll (including arbitration projections), and with a 2014 payroll budget expected to go up only slightly to somewhere between $85-90 million, the $10 million or so they have had to work with this offseason is about a third of what they had to work with last offseason.

Sometimes that key piece of detail is something people miss when calling into talk shows or posting in social media to air their complaints about the Indians being cheap and doing nothing this offseason. Their splurge last offseason was probably more of a one-time thing because of a unique set of circumstances with available money to spend and a depressed market which pushed players they otherwise would have no chance at signing falling into their lap.

Another thing to remember is that even coming off a very successful season with 92 wins and a playoff berth, the payroll could only be bumped a little because attendance actually went down last season. The Indians drew 1,572, 926 fans last year, but that was actually down over 30,000 from the 1,603,596 they drew in 2012. Yes, they probably made the same in ticket sales or a little more with their new dynamic ticket pricing setup, but bottom line, after spending $110+ million last offseason and contending all season and making the playoffs they still saw an attendance decline and finished 28th out of 30 teams in attendance.

That doesn’t instill much if any confidence in any thoughts of bumping up the budget for 2014 and beyond.

There is a new national TV deal in place which is giving the Indians and other teams about an additional $19 million (after all the taxes and funds are paid), but the Indians already spent over half of that new annual money with the Swisher and Bourn deals last offseason. They structured their contracts last season where they made much less in 2013 and they would pay them a lot more in 2014 and beyond because they knew the TV money was coming in. Swisher and Bourn combined to make $18 million last year and starting in 2014 and going forward they will combine to make a combined $28 million a year.

The way things look, the Indians appear to be about done with their shopping this offseason. Outside of a favorable trade falling in their lap, they probably won’t add a significant player making a good chunk of change via a trade unless they clear money in the same deal or a secondary deal with a trade of someone else (Asdrubal Cabrera or Bourn). Also, there are few if any fits in free agency that could fit their budget and also not result in the loss of their 2014 first round pick and much needed bonus pool money.

What they probably will continue to do is sign several minor league free agents along the lines of what they did last year with the likes of Scott KazmirRyan RaburnRich Hill and Jason Giambi with the hopes one or two make an impression this spring and maybe factor into things.

As far as any guaranteed deals, the only one I see any possible chance of happening is Ubaldo Jimenez coming back if his market flatlines – but it is important to note that his market still has yet to be established and that he is expected to get a deal with someone. The Masahiro Tanaka saga has held up a lot of the starting pitching market, and once he signs it will unclog the market.  Even if the Indians were to entertain the notion of bringing Jimenez back they would have to get very creative with their payroll in order to fit him in as it would be pushed to close to $100 million in 2014 with him on in tow.

This was a tough offseason for the Indians as they lost three significant pieces to the team in Jimenez, Kazmir andJoe Smith, and also lost several other players who contributed to the team like Perez. Even with all of those losses, they created little payroll flexibility because of the $25-30 million in built in increases from 2013 to 2014 for the existing players on the roster. That has tied their hands this offseason, and they are doing the best they can with a limited budget to work with.

It’s the money, silly

There is a lot of talk how teams are afraid to give up their first round pick as compensation for signing players that have been extended qualifying offers. This is not exactly the case and not even close to the real reason.

Teams have always lost a first round pick or other picks when they signed players. Under the old Collective Bargaining Agreement (CBA) where there were Type A, B, and C free agents, teams lost drafts picks for signing Type A free agents.  If a team lost a Type-A rated free agent that they had offered salary arbitration to they in turn received compensation in the form of the signing team's first round pick (or second round pick depending on the signing team's draft slot) and a supplemental pick between the first and second rounds. Type B brought in compensation through a supplemental pick only, and Type C did not bring any compensation.

Under the new CBA, the Type A, B and C designations were thrown out and it was simplified where if a team wishes to receive compensation they must extend a qualifying offer to a player eligible for free agency. A qualifying offer requires a team to extend a one year guaranteed salary – should the player accept it – that is the average salary of the top 125 free agents from the previous winter. Last offseason it was $13.3 million and this offseason it was $14.1 million, so it is a very significant commitment and they are only extended to the top free agents.

Teams have always had to forfeit first round picks to sign the best free agents, but the difference now is that with the new bonus pool setup teams also lose a big chunk of valuable money to sign draft picks. That is the reason why teams are now so hesitant to sign players with qualifying offers; not the actual loss of a first round pick, but the limitations placed on them with the loss of such valuable money to sign picks.  A first round pick carries with it close to 30-50% of a team's draft bonus pool depending on where they pick in the first round. That is a huge amount of money to lose.

In the past, if a team lost a first round pick it was no big deal because under the old system they could simply overspend on other picks. The could throw as much as they wanted at a guy that slipped for signability reasons and take him later in the draft, essentially getting a first round talent later in the first ten rounds – sometimes as late as the 30th or 40th round.

But teams can't do that anymore. Teams now have a capped bonus pool that they can spend on their picks in the first 10 rounds. If they go over that cap, they pay a significant penalty that can include the loss of future first round picks and heavy taxes on the overage. Also, teams can only spend up to $100,000 on picks after the 10th round unless they have leftover money from their bonus pool. This severely limits the ability for teams to reach late and get first round talent like they once did.

And that is why the money is what ultimately matters for teams when considering signing players with qualifying offers. It is the one significant change in the free agent compensation process, and why it really depresses the market for players that decline qualifying offers made to them by their former teams.

Final rotation spot favors Carrasco, Marcum

Spring training gets underway soon, and probably the biggest question mark going into the season is who will fill the final spot in the rotation for the Indians.

There is still a month and a half for the Indians to make a trade or free agent signing to add to the mix and eliminate that concern, but at the moment the Indians appear content going with the options they have in place internally.

Barring injury, the first four pitchers in the Indians opening day rotation will be Justin MastersonDanny Salazar,Corey Kluber and Zach McAllister. The competition for the fifth and final spot is between Carlos CarrascoShaun MarcumJosh Tomlin and Trevor Bauer.

The Indians have already gone out of their way to let it be known that Carrasco has a sizable leg up on the other three pitchers in the fifth starter competition. He is probably the most talented and has the best stuff of the four, and most importantly, he is out of options so he has to make the team. He is too talented to risk losing on waivers, so they want to see him through before doing so.

With a plus fastball that averages 95 MPH and touches 98 MPH to go along with a very impressive curveball and changeup, Carrasco has the three pitch mix which profiles him as more of a frontend starter rather than a backend starter. He has the delivery, the size and ability to haul innings, and has the pedigree as a former number one ranked prospect.

But while Carrasco has dominated the minors and proven he no longer belongs there, he has had trouble translating to the major league level and pitching with the consistency needed in the rotation. A big reason for that is his mental makeup as the game often speeds up on him and when he gets into jams he has a hard time working his way out of them. It has been his biggest knock throughout his time in the minors, and something he will need to overcome in order to have consistent success in the majors.

Last season Carrasco made 15 appearances (7 starts) for the Indians and went 1-4 with a 6.75 ERA and 1.76 WHIP. In his major league career he has made 48 appearances (40 starts) and compiled an 11-19 record, 5.29 ERA and 1.53 WHIP. Aside from an impressive six week stretch in 2011 before he went down with an elbow injury that required Tommy John surgery, that is not a very impressive major league career to date. Short as it may be, it does not instill a lot of confidence in him for next season.

The wildcard in all of this is that Carrasco showed some promise as a reliever last season, although it was just eight appearances and it is tough to get a true feel from such a small sample size. But if Carrasco struggles in the rotation early next season, or he doesn’t win the fifth starter role coming out of spring training, then he most definitely will at least pitch out of the bullpen in some sort of swing or long man role.

A poor showing by Carrasco this spring would open the door for another pitcher in the rotation. He could also pitch well and miss out on the spot and open the year in the bullpen if Marcum has a very good showing this spring.

Marcum might be just as intriguing as Carrasco as he has the proven success at the major league level the Indians covet for the final spot, but he has struggled with some health issues the past few years. That is the main reason the Indians were able to sign him to a minor league deal two weeks ago.

Marcum has had a solid career but has struggled with injuries the last two years making 21 starts in 2012 with the Brewers (7-4, 3.70 ERA) and 12 starts with the Mets last season (1-10, 5.29 ERA). He is recovering from Thoracic Outlet Syndrome surgery and will need to show he is healthy and effective this spring to make the major league roster.

The intrigue with Marcum and Carrasco makes both pitchers the clear frontrunners for the fifth starter spot. While Carrasco is the favorite for the spot, Marcum may actually have the inside track because he has an opt out in his minor league deal where he can elect free agency if he is not on the Indians opening day 25-man roster.  If Marcum is healthy and effective this spring the Indians may be inclined to keep him around as the fifth starter and see where he takes them. They could then always just shift Carrasco to a pen role in the meantime and easily switch him back to a spot in the rotation if needed.

One thing to remember in all of this is at this time last year Carrasco went into spring training as the favorite for the fifth starter spot and Scott Kazmir was a minor league signing that was in the mix.  Kazmir looked great in the spring, won the fifth spot, and had a fantastic season. If Marcum can do the same this spring and just be an average performer that gives the Indians some innings and competes well, then he should be the fifth starter for as long as his health allows.

The fifth starter battle this spring will carry the most attention. Let’s just hope that all parties involved pitch well and make the decision tough on the Indians.

Hegan passes

I was on vacation last week so I did not get a chance to make note of the Mike Hegan passing, but the Cleveland Indians and their fans lost one of their own on Christmas with his passing.  He passed away from heart failure with his family by his side in Hilton Head, SC.

Hegan, 71, spent 50 years of his life in the game of baseball with almost half of that covering Cleveland Indians baseball.  His father Jim Hegan was the catcher during the Indians' glory years for most of the 40s and 50s, and Mike attended high school at St. Ignatius in Cleveland. He played 12 years in the major leagues, most of them with the Milwaukee Brewers, and hit .242 with 53 HR, 229 RBI and .712 OPS in 965 career games.

After Hegan retired from professional baseball in 1977, he spent the next 12 seasons as a television color commentator for the Brewers before being hired by the Indians in 1989 as the color commentary for WUAB Channel 43. Over the years he did both television and radio before exclusively moving to the radio booth in 2007. He retired after the 2011 season due to health issues he battled with during his final days in the radio booth which contributed to a premature departure from the game.

Hegan is someone who I will always remember as one of the “voices” of the Indians and who was like family to me as I went through my teen years and into adulthood as an Indians fan. I listened to a few radio games as a kid growing up with Herb Score as the “voice” of the Indians, but for me, I mostly caught my Indians action on WUAB Channel 43 when they were on TV. First it was Bruce Drennan and Joe Tait on those WUAB broadcasts, then Reggie Rucker and Tait.

But for me the TV tag team on WUAB I will always remember is Jack Corrigan and Hegan that came about in 1989. That was Indians baseball to me. Turning on the TV and listening to Corrigan’s great “touch ‘em all time” home run call and Hegan’s color commentary. When Sportschannel came along in 1990 and the games were split between there and WUAB, I always disliked the telecasts on Sportschannel with John Sanders and Rick Manning and was relieved when the game was on WUAB with Corrigan and Hegan.

Bottom line, though it was after my childhood, Hegan came along when I was about 15 years old and when I was really starting to watch and follow the Indians on my own and becoming more and more of a fan. And he had been there ever since calling games up until a few years ago….and now he is gone. Time rolls on, but the Indians family certainly lost a big part of it over the holidays, and he will be missed.

Coming soon

Sometime over the next few weeks we will begin our 2014 Indians prospect coverage here at the IBI. I plan on first doing an overview at each position like I did last year year, and then doing the prospect countdown. Or perhaps I will mix the two together – I am not sure yet as I am still working out the details and timing of it all. In any case, expect to begin seeing a lot of prospect related material start popping up next week or possibly later this week.

I have been asked by many if I am doing another prospect book this year. Last spring I hinted that I was on the fence about doing another book for 2014, and I have to say that at least at this moment I probably will not do one. There are a lot of reasons as to why I will probably not do it, which I will not go into. But fear not as most of the material will still be available on-line at the site over the course of the year – just it will no longer come in a handy reference book.  We will see how things go over the next few months as I may still do a late print of a modified book with the coveted prospect information more toward the start of the season for the diehards!

Follow Tony and the Indians Baseball Insider on Twitter @TonyIBI. Also, his new book the 2014 Cleveland Indians Baseball Insider which profiles the Indians' Top 100 Prospects and more is available for sale.

User Comments

Spills
January 8, 2014 - 10:42 AM EST
Curious for your guys take on where the money is going. If you assume we come in at around 85 million this year in payroll, that is around a 6% increase from our average in 2008/2009. I think we are in a similar developmental place to those teams.

I have to believe that total revenue has gone up more than 6% over the previous 4 or 5 years just looking at TV alone. With the reduction in costs on the draft and international signings due to the latest CBA, where has that increase in revenue gone?
Norm
January 7, 2014 - 4:09 PM EST
We disagree on the articles main premise Tony but I enjoyed the read. The problem, IMO, has nothing to do with payroll which is pretty well managed for a bottom dweller franchise. However you cut it, the problem is Cleveland which puts very few people in its franchise's seats. If Cleveland doubled its attendance to the ML average, you would not be hearing anything about the payroll. Blaming the Indians for the problem with the franchise location seems silly to me. Put the same team in St Louis or even Cincy and more than enough fans will come to see them play to be competitive. I believe it is time to quit making excuses for Cleveland and blaming the Indians for the problem.
Hermie13
January 7, 2014 - 11:52 AM EST
I'm assuming you meant David Cooper there and not David Murphy.

Adams, Cooper, Hermann, Wood, Barnes, and Hynes are the first ones off the top of my head. Of course that's assuming that you need to drop someone for a guy like Marcum or Giambi....hoping it doesn't happen but never know with injuries and could end up with a 60-day DL guy. Even if it's a minor leaguer, Tribe did do that with Goedert a few years ago...
Tony
January 7, 2014 - 9:23 AM EST
John L, yes, Barnes is a fringe guy for sure on the 40-man. Other like David Adams and David Murphy could be as well since they have minimal deals and could be let go after spring training if the Indians aren't high on what they saw. Frank Herrmann and Blake Wood are two relievers who could also potentially be let go.....but I would think one of the others listed above would go first since Herrmann/Wood have options and have some value at least as depth pen guys.
Walter
January 6, 2014 - 9:49 PM EST
Was Atchison in Boston when Francona was manager of the Red Sox? Could Francouer be competition to Giambi? Sign another former red sox to minor deal in Bard.
Willie
January 6, 2014 - 7:10 PM EST
Mlbtraderumors.com is reporting the Indians have signed Scott Atchison RHRP and Jeff Francouer RF to minor league deals. Francouer struggled last season but if he returns to form he could contribute at the big league level. I mentioned Francouer as a possibility a week or two ago. He could be a decent buy low talent, coming off a poor yr. He recently under went LASIK surgery. Hopefully that fixes his woes.
Jim
January 6, 2014 - 5:36 PM EST
I feel like we've already said it a million times...lol...
John
January 6, 2014 - 5:35 PM EST
Might as well copy that part about the money, not the draft pick into Microsoft Word because you're going to have to repeatedly explain that to folks for the next 10 years! Hahahaha
BTNH
January 6, 2014 - 5:33 PM EST
Please believe I was pourin' out a little liquor for Mike Hegan on the corner of East 99th and St. Clair Ave the other day. That guy was good.

The news is even worse when you realize we're stuck with Matt Underwood. Hope he pulls a Chuck Galeti and gets fired.
Hermie13
January 6, 2014 - 4:59 PM EST
I'd feel better about our chances of adding a SP if we indeed can go up to $90M in payroll to start the year. Could leave us with around $8-9M still without any moves (I only have them at $81M right now even with arby additions though perhaps I'm a bit off).

Still think for a significant move to happen you'll need to move AC or Bourn (or maybe Brantley).

If the Tribe doesn't add more payroll/players...wonder if they use the last tiny bit of payroll room on a Kipnis extesnsion? Could maybe offer him $1-1.5M in 2014 (a year in which he'll make only a bit over the league minimum if nothing happens) to try and get him to agree to buyout some free agent years....
Walter
January 6, 2014 - 4:54 PM EST
Small market teams cant always make big splashes in the FA market every year. Reds are in same boat as the Indians with limited funds this off season. Just hope Swisher and Bourn have rebound this season.. Blue Jays have been fairly quite this offseason. They could be one of the teams that Jimenez could go to.
John L.
January 6, 2014 - 4:26 PM EST
It will be interesting with the NRI's like Marcum and Giambi because roster moves will need to be made. Tony, who do you think are the fringe players on the 40 man, Scott Barnes comes to mind.

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