How Much Can the Pirates Spend?

How much can the Pirates spend over the next few years to complement their young talent?

In my review last week of the 2011 off-season needs for the Pittsburgh Pirates, I noted that the team could add external upgrades at either first base or right field, as well as adding to the starting rotation.  The Pirates could use at least one starter who could be relied upon to match the performances of guys like Paul Maholm and Ross Ohlendorf.  They could also use an extra bat in the lineup to help support the young talent that has emerged in the last year.

The big question is, how much can the team afford to spend?  In my projection of the 2011 40-man roster/payroll, I estimated that the Pirates will have a minimum payroll of just under $31 M, after estimated arbitration raises, and assuming the Pirates non-tender Zach Duke, along with a few other minor players.  The Pirates could easily add two players in 2011 and still end up with a payroll under $50 M, similar to what they finished with in 2010 ($44 M), 2009 ($48 M), and 2008 ($51 M).

Adding payroll isn’t necessarily a one year deal though, unless the Pirates actually give out one year deals, which doesn’t seem like a good practice.  Sure, the players upgrade the 2011 roster, but what happens after 2011?  What do you build on if those players improve the team in 2011?  The ideal situation would be to add a pitcher or a hitter to a multi-year deal, bridging the gap until top prospects like Starling Marte, Andrew Lambo, or the 2010 Altoona rotation arrives in the majors (and providing some insurance should those options not work out).  The Pirates can afford that this year, but what about in future years?

A quick look at the Future Payroll Commitments chart shows that the Pirates don’t have any money committed beyond the 2011 season, outside of the guaranteed money to Pedro Alvarez, and buyouts for Paul Maholm, Chris Snyder, and Ryan Doumit in 2012.  I’ve expanded that chart below with some estimates for the 2012-2014 payrolls, focusing mainly on the key players from the 2010/2011 roster. (Click the image to enlarge the chart.)

A quick disclaimer: projecting future transactions is far from an exact science.  There are millions of questions to ask.  Will Andrew McCutchen improve on his already great start to his career (boosting his arbitration value)?  Will Paul Maholm bounce back in 2011 (making his 2012 option look reasonable)?  Will the Pirates retain all of these players?  Will someone emerge from nowhere to fill a need, similar to what Neil Walker did in 2010?  Will someone regress, similar to what the Pirates saw from Ryan Doumit after the 2008 season?  Will anyone get hurt?  Will the top prospects pan out, filling the projected needs?  Those are just a few of the questions I can think of off the top of my head.

That said, you can’t really talk about spending money, especially on multi-year deals, without at least taking a look at the future payroll projections.  Maybe those projections will change, but if that happens, you can always make adjustments later on.  With that in mind, all of the above projections are based on how the team looks now, while avoiding any attempt to try and predict the many variables that could change those projections.  And now, a look at the year by year payroll commitments:

2011: $30.98 M Minimum Payroll

The only way the minimum payroll estimate could go up is if the Pirates retained Zach Duke, something I don’t think they will do.  The Pirates could luck out by finding someone to take Ryan Doumit, although that’s unlikely unless the team picks up some of his salary, so I don’t see the number going down that much.  As I said above, the Pirates could easily add two players and still be under $50 M.  Being under $50 M isn’t important, outside of illustrating how easy it would be for the Pirates to add payroll this off-season, while still being in the same spending range that they’ve ended up at over the last few seasons.  Adding the players in 2011 is the easy part.  How would the payroll look in future years?

2012: $19.48 M Minimum Payroll

This number is low, due to the options with Snyder, Maholm, and Doumit.  I don’t see Doumit returning at all, as the Pirates would have to pick up his 2012 and 2013 options to retain him.  He would have to have a big turnaround to be worth $15.5 M guaranteed over those two seasons, especially with Tony Sanchez likely arriving by June 2012.  I could see Snyder being retained, as I doubt Sanchez would be ready to start the 2012 season.  Maholm’s option is pricey for what he has done over the last two seasons, although if he returns to his 2008 production, the price tag would be reasonable.

Because I could see the Pirates keeping Snyder, I’d add another $6 M to the minimum payroll (Snyder’s option, minus the $750 K buyout, which is already figured in to the minimum payroll).  Even if they retain Maholm, the payroll would only be around $34.5 M, and that’s after anticipated arbitration raises to Ross Ohlendorf, Joel Hanrahan (assuming Hanrahan gets a closer’s value), Garrett Jones, Evan Meek, and Chris Resop.  Because the Pirates would be shedding Doumit’s salary (and most likely Maholm), the 2012 payroll situation would be similar to the 2011 payroll situation: a minimum in the low $30 M range, capable of adding two players to the roster.

2013: $34.85 M Minimum Payroll

The 2013 payroll will see a spike due to a few key arbitration rulings.  Ross Ohlendorf and Joel Hanrahan will each be in their third arbitration years.  Andrew McCutchen will be first time arbitration eligible, and I anticipate that to be a big price, based on how McCutchen has played over the last year and a half, and the value he should add over the next two seasons.  James McDonald and Neil Walker (Super Two) will also be first time arbitration eligible, which could be decent sized prices if they play like the did this year with the Pirates.

The Pirates will definitely have the salaries of Maholm and Snyder off the books by 2013, as Tony Sanchez should be up by then to replace Snyder, and the Altoona pitchers should force Maholm off the roster.  The minimum payroll would be just shy of $35 M, although I don’t really think the Pirates would pay $5.7 M to Hanrahan.  I think he could get that as a closer in his third arbitration year, assuming he continues with his 2010 success.  However, the Pirates would also have Meek, and by that point they should have options like Diego Moreno in the majors.  If they kept Hanrahan, and still had the two additions from this off-season, the payroll would probably be in the $53-55 M range.

Keep in mind that the 2013 season is the earliest I expect Jameson Taillon in the majors, and if the Pirates draft Anthony Rendon and everything goes well on that front, he could also be in the majors this year.  Neither would arrive before June 2013, and if they did arrive, the team would probably shed some payroll (Garrett Jones, Ross Ohlendorf, as examples) to make room for them.  This is just a projection, and nothing the Pirates should bank on, obviously.

2014: $50.30 M Minimum Payroll

The price really goes up in 2014, as a lot of the young players will be in their arbitration years.  Ross Ohlendorf will be in his fourth arbitration year (he’s a Super Two in 2011), although I could see the Pirates getting rid of him, especially if Taillon arrives in 2013.  The same goes for Garrett Jones and Anthony Rendon (or even Starling Marte or Andrew Lambo).  The big prices would be Andrew McCutchen, James McDonald, and Neil Walker in their second arbitration years, plus Pedro Alvarez and Jose Tabata in their first arbitration years.

I don’t really see Ohlendorf and Jones still on the roster, so it’s likely that the minimum payroll would be around the $40 M range, rather than the $50 M range.

2015 and Beyond

The 2014 season marks the beginning of when the Pirates will have to spend to keep their own players.  The 2015 season will mark the third arbitration year for McCutchen, Walker, and McDonald, and will also be the second arbitration year for Alvarez and Tabata.  It would also be the first arbitration year for anyone who arrives to the majors during the 2011 season (Rudy Owens, Bryan Morris, Jeff Locke, and/or Justin Wilson).

What Can the Pirates Afford?

Again, these projections are subject to many variables that are hard to predict, but for the most part, they show that the Pirates can afford to add payroll for the upcoming seasons.  The top players on the team right now will be playing for league minimum prices over the next 2-3 years, keeping the overall payroll low.  I keep throwing the $50 M ceiling around, and that’s not because I subscribe to a theory that Bob Nutting is cheap, or that the Pirates can’t spend over that level.  It’s to illustrate how the Pirates can add two key pieces this off-season, and still be spending what they’ve been spending over the last few years, all thanks to the cheap prices they’re getting from top producers like McCutchen, Alvarez, Walker, and Tabata over the next few seasons.

Assuming any player acquired through free agency makes a flat rate each year, the Pirates could add two players at $8 M each in 2011, and end up under $50 M.  The 2012 payroll will be similar to 2011, if not lower, and the 2013 payroll will be slightly higher than the 2011 payroll, although the Pirates could easily make a move to shed a few million in payroll, if needed.  Due to the similarly low payrolls in 2012 and 2013, the Pirates could afford to give out three year deals to two different free agents, around $8 M a year, and still be around the $50 M mark over the next three seasons.

I don’t think the Pirates can go beyond three years, and I don’t think they should go beyond three years.  For one, it’s hard to predict what the needs will be by 2014.  In the short term we can say that there are no internal options at first base, right field, or the two spots in the rotation that aren’t held by Ohlendorf/Maholm/McDonald.  The Pirates have internal options, like the 2010 Altoona rotation, Starling Marte, and Andrew Lambo, but there’s no guarantee on how soon they will arrive, and how well they will do.  As it gets closer to the 2014 season, it becomes more likely that the Pirates fill their needs internally, especially when you consider future drafts, and all of the possibilities that could emerge over the next three seasons from within.

The Pirates also will have to start paying to retain their own players in 2014.  Hopefully they’ll start earlier than this, extending guys like McCutchen, Walker, and Tabata before they reach arbitration, and buying out some free agent years (since Alvarez is a Boras client, I don’t see him taking any such deal).  Regardless of when they commit the money, the payroll focus from 2014 on should be on the players the Pirates have developed, and not external additions.

Overall I’d say the Pirates could afford to add anywhere from $16-20 M in payroll per year from 2011-2013, which amounts to two good players at $8-10 M each per year, over three seasons.  This could be achieved while spending in the same range the Pirates have ended up at during the 2008-2010 seasons.  The most important thing is spending the money wisely.  The Pirates have money to spend, but that doesn’t mean they should go out and give Jon Garland a 3/$24 M deal.  If they spend the money, it needs to be on someone who can help the team improve, opposed to just spending on any player to fill the position of need.  So the next question is: who should the Pirates spend the money on?  That’s something I’ll take a look at, position by position, over the next few days.

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Tim, thank you for your analysis

I would think the Bucs could trade for a pretty good player with 2 years left on their contracts for 8-10mil a year.
I think the lineup is not constructed correctly. I believe Alvarez should move to 1st base, Walker should move to 3rd and Jones should move to right field, leaving them looking for a 2nd basemen and a pitcher. It would not be out of the question to look for a steady SS also. Defense was a major problem for the pitching last year IMO.

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