Where the Reds payroll stands and a shopping list

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Now that the first wave of Reds roster moves has taken place, let’s look where the club’s payroll stands.

News Items

In case you haven’t been keeping up with current events …

Free Agent Departures The Reds lost RP Michael Lorenzen, RP Mychal Givens and 3B Asdrubal Cabrera to free agency. Each of those players is eligible to negotiate with all 30 teams now. 

Team-Option Decisions The Reds faced team-option decisions that were due this Sunday (tomorrow) on C Tucker Barnhart and SP Wade Miley. The Reds would have had to paid Barnhart $7.5 million to play for the Reds in 2022 or pay him a $500,000 buyout. The Reds traded Barnhart to Detroit for minor league 3B Nick Quintana. That meant the Tigers assumed Barnhart’s $7.5 million salary and the Reds were off the hook for the buyout. 

Miley’s team option put him under contract for $10 million with a $1 million buyout. Yesterday, the Cubs picked up Miley from waivers so they take over responsibility for his $10 million salary in 2022 and the Reds no longer have to pay Miley’s buyout. Miley being placed on waivers means the Reds tried to trade Miley this past month and had no suitors — at least none willing to offer anything for Miley. 

Player-Option Decisions As expected, OF Nick Castellanos took advantage of the opt-out provision in his four-year deal with the Reds. The Reds plan to make Castellanos a one-year offer of at least $18.4 million that will qualify them to earn a compensation pick if Castellanos declines it and signs with another team.

RP Justin Wilson, who the Reds had to take from the Yankees in the Luis Cessa deadline trade, exercised his player-option to play for the Reds for a $2.3 million 2022 salary.

Reds Baseline Roster

With all the decisions regarding Barnhart, Castellanos etc. now made, let’s see where the Reds are with remaining payroll. This is the bare minimum of what the club would spend assuming they tender offers to most of the arbitration candidates. It fills empty 26-man roster slots with placeholders who earn league minimum. 

• SP (5): Sonny Gray, Luis Castillo, Tyler Mahle, Vlad Gutierrez, Hunter Greene
• RP (8): Lucas Sims, Art Warren, Luis Cessa, Tony Santillan, Dauri Moreta, Justin Wilson (L), Cionel Perez (L), Reiver Sanmartín (L)
• C (2): Tyler Stephenson, Mark Kolozsvary
• IF (6): Joey Votto, Jonathan India, Kyle Farmer, Eugenio Suarez, Mike Moustakas, Jose Barrero
• OF (5): Jesse Winker, Nick Senzel, Tyler Naquin, Shogo Akiyama, Aristides Aquino

To get to our hypothetical bare minimum, this roster assumes the Reds decline arbitration offers to Amir Garrett (ARB2) and Jeff Hoffman (ARB1). More on Hoffman and Garrett in a minute. It also includes Aristides Aquino, who would play for league minimum again in 2022 but is out of options. Whether it be Aquino, Max Schrock or TJ Friedl in that final roster spot, the budget impact would be the same, and that’s what we’re looking at here — payroll.

Reds Baseline Payroll

Players on a major league roster fall into three salary categories: (1) those with guaranteed contracts, (2) those who have enough service time to have earned the right to arbitrate a salary, and (3) those who don’t have enough service time and will work for league minimum. The league minimum will be determined by the new Collective Bargaining Agreement which is being negotiated. 

Players Under Contract Joey Votto ($25m), Mike Moustakas ($16m), Eugenio Suarez ($11.3m), Sonny Gray ($10.7m), Shogo Akiyama ($8m), Justin Wilson ($2.3m).

Those six players have guaranteed contracts that add to $73.3 million. The only way the Reds can avoid paying these salaries is through a trade(s).

Pre-Arbitration Players Vlad Gutierrez, Hunter Greene, Art Warren, Tony Santillan, Dauri Moreta, Cionel Perez, Reiver Sanmartin, Tyler Stephenson, Mark Kolozsvary, Jonathan India, Jose Barrero, Aristides Aquino.

Those 12 players will earn league minimum salaries. League minimum was $570,500 in 2021. For this exercise, let’s assume it’s $600K in 2022. That’s a conservative assumption because the new CBA may boost league minimums quite a bit, as the union tries to push more money in the direction of younger players. I could see that number ending up $800,000 or even $1 million. But for now, let’s stick with $600,000 which means the 12 players in this category of our Reds baseline roster will cost $7.2 million.

Arbitration-Eligible Players That leaves eight players on our baseline roster who are eligible for arbitration. Salaries for these players often won’t be known until February 2022, after negotiations and hearings are finished. But arbitration awards aren’t random. They’re based on careful formulas that look back at what similar players have been paid in the past. That allows us to estimate awards. The folks at MLB Trade Rumors have a long-standing model for predicting arbitration amounts and here’s what they have for the eight Reds:

• Luis Castillo (ARB2) – $7.6m
• Jesse Winker (ARB2) – $6.8m
• Tyler Mahle (ARB2) – $5.6m
• Tyler Naquin (ARB3) – $3.6m
• Kyle Farmer (ARB2) – $2.2m
• Luis Cessa (ARB2) – $1.6m
• Lucas Sims (ARB1) – $1.2m
• Nick Senzel (ARB1) – $1.1m

That adds up to just under $30 million.

So, if you add together the salaries of Reds players under contract, those who will be pre-arb and earn league minimum and the players who will be paid under arbitration, the baseline payroll for an in-house roster is about $110 million.

Shopping List

In an ideal world, the Reds would offload Akiyama and either Mike Moustakas or Eugenio Suarez (and their salaries). But the Reds would have to pay a huge percentage of those salaries or exchange them for another team’s dead weight.

The Reds current payroll, using baseline assumptions, is about $110 million. What does a shopping list look like?

Extensions We wrote in May that the club should try to negotiate extension agreements with several players (Winker, Mahle, Castillo). As far as we know, that hasn’t happened. Extensions won’t impact the short-term payroll much, if at all, though.

Veteran Catcher The Reds now need to add a veteran backup catcher. Think along the lines of Curt Casali a couple years ago for around $1 million.

Outfield With the Castellanos opt-out, outfield is a significant need. Nick Senzel’s future with the Reds is way, way up in the air. Shogo Akiyama hasn’t been able to hit major league pitching. The Reds need to add a legitimate outfielder or two. One of them has to be able to play center. At least one, if not both, should be right-handed to platoon with Tyler Naquin (and Akiyama).

Bullpen Adding bullpen depth is at the top of the Reds list. Only four of the eight names on our baseline roster are solid bullpen citizens. One of those is Tony Santillan, who the Reds may choose to move back into a starting role. A couple in-house names are Jeff Hoffman and Amir Garrett, who are up for arbitration. The Reds could pay Hoffman around $1.1 million and have him pitch out of the bullpen where he was much more effective. He’s a likely add. A strong left-handed reliever would be helpful. They could pay Garrett around $2.2 million if they want to keep him. They could also use a top back-end guy, like a Raisel Iglesias. The downside of spending money on a reliever is how inconsistent they are. The Reds suffered the slings and arrows of trying to get by with waiver wire pick ups last year. While spending more enhances the odds, it’s nothing close to a guarantee.

Starting Pitcher With waiving Miley, signing a solid starting pitcher becomes important. Even if they are counting on a combination of Hunter Greene, Nick Lodolo and Vlad Gutierrez to come through. Adding a veteran guy for depth (a Tanner Roark type) makes sense.

What will Reds ownership spend?

We don’t know the answer to this yet. To offer context, here are the payroll spending amounts for the Reds for the past few seasons, based on FanGraphs Roster Resource:

• 2021: $132 million
• 2020: $149 million (assuming 162 games)
• 2019: $132 million
• 2018: $101 million

Average MLB payroll spending  in 2021 was $134.7 million. In 2021, the Reds outspent 14 of the other 29 teams.

Spitballing the Reds 2022 payroll is loaded with more guesswork that most years. There’s wide variance in what the Reds could spend. Ownership could return to the team’s pre-COVID trajectory and boost payroll back to the $145-155 million level, or even slightly above. Or, they could retrench if the pessimism about attendance that drove them to make cutbacks in 2021 lingers. In that case, payroll might end up in the $120-130 million range.

A big variable is how the team did financially in 2021. I’ve heard revenues far exceeded expectations and budgets.

And those are just the routine financial vagaries. Two other issues have enormous overhang when trying to predict the 2022 Reds payroll. First, an awkward ownership succession in the Castellini family could re-direct strategic decision making or cause hesitancy. Second, the new CBA will establish different revenue sharing parameters, salary caps and possibly salary floors. Each of those could have a considerable impact on Reds spending decisions.

What Do Early Signs Indicate?

The Reds declined the options for Barnhart and Miley. One view of that is the Reds are cutting payroll again and that’s possible.

On the other hand, it could be that the Reds saw the Barnhart and Miley decisions as close calls from a baseball standpoint. If they’ve come to the conclusion that it’s time for Tyler Stephenson to be the everyday catcher, that would make Tucker Barnhart an expensive back-up catcher at $7.5 million. You can count on one hand major league teams that would spend that much on their #2 catcher.

Wade Miley had an excellent 2021 season. Just how excellent you judge it depends on what metric(s) you use:

• ERA (3.37) was 24% better than league average (4.22).
• FIP (3.97) was 10% better than average (4.22).
• xFIP (4.07) was 4% better than average (4.11).
• Miley’s xBA (.250) was a bit above league average (.247)
• Overall xwOBA (.311) was right at league average (.312)

That was for Miley’s age-34 season — his career year. You expect decline. It’s clear the other teams in MLB expect Miley won’t repeat his 2021 performance or anything near it. Otherwise they would have made a trade offer for him.

What direction is Reds payroll headed? We don’t know yet.