Early Look at the 2012 Payroll

Earlier this week the 2011 40-man roster and payroll page was updated, giving the estimated payroll for the Pittsburgh Pirates in 2011, based off of the Opening Day roster.  A lot can, and will, change between now and the end of the 2011 regular season, so that payroll figure is far from complete.  Today, I updated the future payroll commitments chart, with the salaries, years of control, and arbitration years for the 2012-2015 seasons.  If the 2011 payroll is nearly impossible to predict at this point in the season, then predicting the 2012 payroll is definitely impossible.  However, that doesn’t stop us from taking an early look.

Shedding Salary

The Pirates have options on Paul Maholm, Ryan Doumit, Chris Snyder, Scott Olsen, and Ronny Cedeno.  It’s far too early to predict how those options will play out, although we can give a good estimate on each player.

Paul Maholm – Maholm has an option for $9.75 M, with a $750,000 buyout.  I looked at Maholm’s worth a few months ago, and determined that the salary would be reasonable, especially if he had a bounce back season this year.  At the same time, I don’t see the Pirates holding on to Maholm, since they have a lot of young pitchers coming up from the AA/AAA ranks.  I think this will largely depend on how Maholm pitches, and how the rest of the rotation performs this year.  If Maholm returns to 2008 form, I could see the Pirates keeping him.  If he returns to 2009 form, I think he’s gone, unless the rest of the rotation is a disaster.  If he returns to 2010 form, I think he’s gone, regardless of what happens with the rest of the rotation.

Ryan Doumit – Doumit had a great start to the season yesterday, but he has a long ways to go to rebound from his disaster of a season in 2010.  After having a breakout year at the plate in 2008, Doumit’s hitting slumped in 2009 and 2010.  His option is tricky, as the Pirates would have to pick up his 2012 and 2013 options at the same time, committing $15.5 M to the injury prone catcher.  That’s hard to imagine with Tony Sanchez in the wings.  Doumit’s buyout is $500,000.

Chris Snyder – Snyder has an option for $6.75 M, and seeing him come back would be more realistic than Doumit.  The commitment would be considerably less, and the Pirates wouldn’t have someone making $8.25 M in 2013, a point when Sanchez should be catching full time.  If Snyder rebounds to the strong defensive catcher with a .775 OPS that he has been the past few years, it would be an easy decision to keep him.

Scott Olsen – Olsen is a complete unknown, since he’s starting the season on the disabled list.  Based on recent performance, I don’t see a way where the Pirates would pick up his $4 M option.  He’d have to put up some surprising numbers when he returned in order to receive that amount.  His buyout is only $100,000.

Ronny Cedeno – Just like Olsen, Cedeno will have to turn his recent numbers around this year if he wants his option picked up in 2012.  His buyout is $200,000, and his option has the chance to go up, based on playing time.  Cedeno could also be impacted by other players in the system, such as Pedro Ciriaco and Chase D’Arnaud.

The one person I could see the Pirates keeping is Chris Snyder.  My “way too early” prediction has the other four leaving the team.

Estimated Minimum Payroll From This Group: $8,300,000

Guaranteed Salaries

The Pirates only have three players under contract for the 2012 season: Kevin Correia, Matt Diaz, and Pedro Alvarez.  Correia will make $3 M, plus a $1 M signing bonus.  Diaz will make $2 M.  Alvarez will make $700,000, as part of the deal he signed out of the draft.

Estimated Minimum Payroll From This Group: $5,700,000

Arbitration Eligible Players

Hanrahan could be in line for a big raise in arbitration next year.

The Pirates have a lot of players eligible for arbitration next year, which should off-set the salaries that were cut from the first group.  Jeff Karstens, Joel Hanrahan, Jose Veras, and Ross Ohlendorf will enter their second arbitration eligible years.

Jeff Karstens – Karstens would be due a raise over his $1.1 M salary this year.  He was a nice fill in for the rotation last year, and isn’t a bad value at his current price, serving as a sort of utility pitcher.  However, I don’t think his current role would be worth the raise that he would get through arbitration next year, and I don’t predict that the Pirates would hold on to him, unless he improves on his 2010 season.

Joel Hanrahan – Depending on how Hanrahan does in the closer’s role this year, he could be due for a huge raise in arbitration.  He’s only making $1.4 M this year in his first year of arbitration.  However, the arbitration process favors saves, so it wouldn’t surprise me if he ended up making $3.5-4.5 M in his second year of arbitration, assuming he has a great year in the closer’s role.

Jose Veras – The Pirates signed Veras for $1 M, and he’s eligible for arbitration after the season.  Like Karstens, I really think the future of Veras depends on his performance this year.  If he shows that he can be a strong late inning reliever, I could see the Pirates offering him arbitration.  If he ends up being just a middle reliever, I think he will be gone.  My prediction right now is that he won’t get tendered an offer.

Ross Ohlendorf – There’s a lot of concern with Ohlendorf, based off of his horrible Spring.  He was awarded $2.025 M as a Super Two eligible player this off-season, and would get a raise over that number, even if he has a bad season in 2011.  For now, I’ll say the Pirates keep him around, and I’ll put him in the $3.5 M range.  His future could largely be impacted by his performance in 2011, and by the performance of other pitchers entering the rotation this year.

Charlie Morton, Chris Resop, Evan Meek, and Garrett Olson are all expected to enter their first year of arbitration in 2012.

Charlie Morton – Morton had a great Spring, but he’s a long way from being a lock to have a good 2011 season.  If he does have a good year, even something in the 4.00-4.50 ERA range, I could see the Pirates keeping him around, especially as a first year arbitration eligible player.  I don’t think he would command much more than $1.5 M, based on past performance, unless he has a complete breakout year.

Chris Resop – I could see the Pirates keeping Resop around, especially if he repeats his numbers from the last two months of the 2010 season.  He probably wouldn’t cost more than $1 M, and I think he will emerge as a strong 7th/8th inning guy this year, similar to what Evan Meek did in 2010.

Evan Meek – The Pirates will definitely keep Meek around, and I could see him getting something around what Hanrahan got this year, which was $1.4 M.  I also wouldn’t rule out Hanrahan being dealt this year, and Meek getting the closer’s role next year, with Resop as the set up, but for now, we’ll assume all three will be on the roster.

Garrett Olson – I don’t see Olson sticking around and getting an arbitration offer.  In fact, there’s a good chance that he won’t even be arbitration eligible, since that would require him being in the majors all season.  I think he gets removed from the roster when Joe Beimel is ready to return.

Garrett Jones, John Bowker, and Steve Pearce are all strong candidates to be Super Two eligible players.  Andrew McCutchen and Jose Ascanio are also on the bubble, based on the 2011 cut-off, but for now we’ll assume they won’t be eligible.

Garrett Jones – Whether the Pirates keep Jones depends on a few things.  First, it depends on how the Jones/Diaz platoon plays out.  Second, it depends on how the 2011 Indianapolis outfield performs.  If one of Andrew Lambo, Gorkys Hernandez, or Alex Presley are able to step up and claim a starting role in the majors, there would be no need for Jones to stick around, especially with Diaz already under contract.  Jones could move back to first base, and could even platoon with Steve Pearce at the position.  Because there are no long term guarantees at first or right field, I’ll predict that Jones sticks around, making about $2 M.

John Bowker – Bowker is similar to Jones in that he can’t hit left handers, but has some power potential.  I don’t see the Pirates keeping him around, since he would be an expensive bench bat, and would basically be a Plan B to Jones.  I do see a scenario where he could overtake Jones this year in a platoon, although for now I’ll leave Jones in the mix.

Steve Pearce – Pearce has been working at third base this off-season, making him a potential utility player, capable of playing all of the corner positions.  As mentioned before, he also can serve as a platoon option against left handers.  I’ll keep him on the roster for all of those reasons, and estimate that he makes around $1 M.

Estimated Minimum Payroll From This Group: $13,900,000

Adding It All Up

The most common thing to do when projecting future payrolls is to look at the current payroll, look at the salaries that are coming off the books, and take the difference.  That is common, but it’s also wrong, as it fails to consider contract raises, buyouts, and most importantly, arbitration raises.  For example, if we assume that Paul Maholm, Ryan Doumit, Lyle Overbay, Ronny Cedeno, Jeff Karstens, and Jose Veras are all coming off the books this year, and compare it to the 2011 estimated payroll, that would give us an estimate of $22.7 M in 2012.  That isn’t correct.

Looking at the estimates from above, we get a $27.9 M payroll, with the following roster:

C – Chris Snyder

1B – Empty

2B – Neil Walker

SS – Empty

3B – Pedro Alvarez

LF – Jose Tabata

CF – Andrew McCutchen

RF – Matt Diaz/Garrett Jones

Bench – Steve Pearce, Jason Jaramillo, Empty, Empty

Rotation – Ross Ohlendorf, Charlie Morton, James McDonald, Kevin Correia, Empty

Bullpen – Joel Hanrahan, Evan Meek, Chris Resop, 4 Empty Spots

I would assume that those empty spots would all be filled by league minimum players, although they also leave room for the Pirates to spend on outside help.  For now, we’ll assume they’re all league minimum players ($414,000), with an estimate of $460,000 for McCutchen, Walker, Tabata, and McDonald, and an estimate of $430,000 for Jaramillo.

All of that combined gives us a total minimum payroll in 2012 of $33,436,000.  That’s similar to what the Pirates started with this past off-season, although it’s a few million higher.  The Pirates ended up spending $12 M on free agents this off-season (Overbay, Correia, Diaz, Veras), and that number should go up a bit when we consider Joe Beimel.

The Pirates would definitely have room to spend next off-season.  For now there are far too many scenarios to run to determine where that spending should occur.  How will the rotation do this year?  What prospects will arrive and stick in the rotation?  Will a shortstop option emerge?  Will a right field option emerge?  Could Matt Hague be a first base option?  Would Jones/Pearce make a good first base platoon?  Will anyone regress?  Will the Pirates add anyone during the 2011 season, similar to when they added McDonald last year?  Those are all questions to be answered throughout the 2011 season.  For now, my estimate is that the Pirates will have a projected $33.4 M payroll in 2012, after anticipated arbitration raises.

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