2022 Mets Payroll Primer
Everything you need to know about the Mets' payroll
Good Morning,
Today is one of my favorite issues of the year: I provide a full breakdown of the Mets’ 2022 luxury tax payroll (and an overview of the 40-man roster). Yes, I am a nerd (and economist by trade).
Since I devote a lot of space to the payroll primer, I will be quick in highlighting the latest news. The Mets had an off day on their Grapefruit schedule yesterday, but return to action tonight (weather permitting). Since rain is in the forecast, both Carlos Carrasco and Chris Bassitt will avoid tonight’s game and instead face a Marlins minor-league squad in the afternoon.
As politicians do best, new Mayor Eric Adams is expected to reverse his stance from earlier this week and ease the city’s private vaccine mandate for performers and athletes, which would allow unvaccinated Mets players to play in home games.
Starling Marte tried out right field in a minor league contest yesterday, a position he expects to play a lot, meaning Mark Canha (who last night was named by MLB Network as the 9th best right fielder in baseball right now) will likely man left and Brandon Nimmo will remain in center field.
A promising sign for Marte’s sore oblique, he looked pretty healthy running the bases yesterday:
Also of note, Buck Showalter confirmed the Mets have been experimenting with MLB’s new PitchCom device, which allows the catcher to use buttons on his wristband to call pitches that are transmitted to an audio piece in the pitcher’s hat, and to as many as five fielders’ hats.
Speaking of technology, SNY launches a new app this morning, which should make it a lot easier for authenticated users to stream the Mets and check out their latest content (this is not a paid ad, I’m just excited because the NBC Sports app sucked for streaming).
Ok, with all of that covered, let’s get into the payroll primer.
With Steve Cohen writing the checks at 41 Seaver Way, you could argue it doesn’t really matter how much the Mets are spending these days. He will spend what it takes to win. It’s not our money, anyways!
This is all true. And I suppose whether you care about the details of the Mets’ payroll depends on whether you are the type of person who orders the most expensive thing when someone else is picking up the dinner tab, or if you still scan the prices to find a reasonably-priced meal (🙋♂️).
But if you believe there is some limit to Cohen’s spending — the Mets aren’t going to end the season with a $400 million payroll — it’s worthwhile to understand where the payroll stands relative to the new luxury tax thresholds.
To help you navigate this topic, I will break it into two sections. Choose your own adventure as to which section(s) you read.
Give me the high-level points.
I want the nitty, gritty details.
❶ Give me the high-level points:
⚠️ DISCLAIMER: It’s important to note that a team’s luxury tax payroll is always a projection until the end of the year. Only time will tell how much the Mets will actually spend on players throughout the course of the season. This is why the league calculates each team’s luxury tax or “Competitive Balance Tax” figure in December.
Also, please keep in mind that not all contract details are made public, so there is a lot of guesswork involved when estimating payroll from afar. Any luxury tax number you see, including this one, is simply an estimate. And that’s why you should expect to see numbers that are slightly different from each other, depending on the source.
Below is my best estimate, along with an overview of the 40-man roster heading into the 2022 season. If salaries aren’t your thing, this table gives you a good idea of where the Mets have depth on their 40-man roster, and where they don’t. You can also find each player’s service time, remaining options, and expected free agency date (assuming opt-outs in a few cases).
💰 PROJECTED PAYROLL: At this point in time, I estimate the Mets will spend at least $289 million on luxury tax payroll this season, unless they surprise us and trade away salary during the course of the summer. That number could be a bit inflated based on the buffer I include for potential bonuses, but it also could underestimate the number of injuries the team inevitably suffers, so I feel comfortable around $289 million.
Note: the payroll discussed in this issue relates to the luxury tax payroll, which is different than the team’s cash-flow payroll that is based on the dollar amount players are actually paid in 2022 without consideration for average annual value. I use my own common-sense terms for these payrolls rather than the official CBA terms.
My projected luxury tax payroll includes salary estimates for pre-arbitration players and veterans on minor league deals who could reach the major leagues. These estimates are based on playing time projections, and assumes the Mets will have a few injuries this season (imagine that!), which will require them to fill out those roster spots with players on split contracts.
Expect some of the pre-arbitration names included above to be cycled out for other players along the way, but whoever claims each spot, the salary projections and “IL Replacement Buffer” provide a rough payroll estimate for players not currently on the active roster.
Otherwise, the salary figures are pretty straight-forward, except for a few cases which I explain in the nitty, gritty section.
💸 LUXURY TAXES: Based on the tax rates in the new CBA, a $289 million payroll would put Cohen on the hook for over $22 million in taxes, which is actually less than he would have paid under the previous thresholds from the CBA they just replaced. It also puts the Mets within a dollar’s width below the new “Steve Cohen” tax level that charges 80% on every cent spent above $290 million.
The luxury tax payroll is calculated using the average annual value (AAV) of each multi-year contract on the 40-man roster, along with the single-season salaries for everyone else, whether they were on the 40-man roster for one day or the entire season. An amount for player benefits and an amount for the new pre-arbitration bonus pool is also included, along with any buyout or money exchanged as part of trades (the Mets receive $3.75 million from Seattle to offset Robinson Canó’s $24 million salary).
⬇ DRAFT PENALTY: Besides a tax penalty, by exceeding $270 million in payroll, the Mets are already on pace to have their highest draft pick drop 10 spots in the 2023 draft.
🔁 TRADES: My payroll estimate doesn’t include a buffer for in-season trades or acquisitions, unless they are on minor-league deals. Obviously, if the Mets are competitive, we should expect them to add major-league salary in the coming months.
This would push their payroll even higher. To give an example, if Billy Eppler trades for a player on July 31, assuming salary isn’t retained by his previous team, the Mets would be on the hook for approximately 1/3 of that player’s salary this season.
💰 BOTTOM LINE: It’s safe to assume the Mets will end the season with a luxury tax payroll that is higher than $289 million.
However, adding an additional $11 million in salary at this point is like adding $20 million with taxes, so the Mets will be cautious, and could look to offset salary add-ons in the future.
❷ I want the nitty, gritty details:
This section is for the nerds. If you are already stressed about income tax season approaching, please skip this section. But if you are one of those fans who wants to know every little detail about the team, including the discount rate used on deferred compensation, this section is for you.
Let’s paste the table into this section to save you some scrolling as we get into the weeds below.
🔺 GUARANTEED SALARIES: As you can see, all of the players on guaranteed contracts are colored in black. These salaries are easy. Whether those players play in the big leagues or in the minors, they will make the same amount.
🔺 ARBITRATION ELIGIBLE: The salary figures for arbitration-eligible players are italicized. While the Mets came to terms with all but one of these players before the deadline this week, they could technically release any of them on or before March 28 and only pay 30 days of termination pay (it jumps to 45 days if released after March 28 and before April 7). This is a relic of the previous CBA. Starting next offseason, players who agree to terms without a hearing would have fully guaranteed deals.
Chris Bassitt is the only player who could reach an arbitration hearing. I use his $9 million filing amount, but that number could end up as low as $8.3 million if they don’t reach a compromise before his hearing and if the arbitrators side with the Mets.
🔺 SPLIT CONTRACTS: Where things get tricky is accounting for players on split contracts, or those who make a different amount based on whether they play in the majors or the minors (colored gray in the table). The majority of these players earn either the minor league minimum ($57,200 for first-time contracts, $114,100 for everyone else) or the major league minimum ($700,000), with a few exceptions.
For all of these split-contract players, we need to make some playing time assumptions to build out their anticipated salary figures. I use playing time projections from FanGraphs to pro-rate the salaries for the pre-arbitration players who are on the 40-man-roster. I also take into account the minimum salary rules, which require players to earn at least 50% of their minor league salary from the previous season (which, for split contracts valued below the major-league minimum, it is technically their actual earnings from both major- and minor-league play in the previous season).
We could make this easy and assume there will be two spots on the active roster that will always be filled by a cycling group of players making the league-minimum. However, as Mets fans, we know better than that. Injuries happen. So we need to account for the players who fill-in when there are injuries to guys on guaranteed contracts. I include an added buffer for this.
🔺 BUYOUTS: The Mets carry a charge of $1.75 million for buying out Kevin Pillar in November. They originally signed him to a one-year, $5 million deal that paid him $3.6 million in 2021 and included both a $2.9 million player option (with no buyout and thus considered a guaranteed season for AAV purposes) and a $6.4 million club option (with a $1.4 million buyout) for the 2022 season.
For tax purposes, the Mets were charged $3.25 million last season (based on Pillar earning up to $6.5 million over two “guaranteed” seasons with his player option). Once Pillar declined his player option and the Mets declined his club option, he received a $1.4 million buyout, leaving the Mets on the hook this season for the difference between the total amount paid to Pillar ($3.6 + $1.4 = $5 million) and the amount they were already charged ($3.25 million), which equals $1.75 million.
🔺 ADDITIONAL ACCOUNTING: There are a few more adjustments that are required to build a realistic payroll estimate.
EXPANDED ROSTERS: Since teams are allowed to carry 28 players for the first month of the season, I included a pro-rated amount ($229,508) equivalent to the minimum salary for two extra players in April.
PLAYER BENEFITS: Using the increased amount owners will contribute under the new CBA toward the Major League Baseball Players Benefit Plan ($207 million), and assuming the benefit contributions related to workers’ comp, spring training allowances, moving and traveling expenses, the postseason players’ pool, scholarship funds and medical costs continue to rise at least at the 6% minimum rate set in the 2017 CBA, and you get about $500 million in total club costs for benefits, which equates to $16.7 million per team.
PRE-ARB POOL: As part of the new CBA, each team is on the hook for $1.7 million toward’s the new pre-arbitration player pool that will be distributed to the top 100 players with less than three years of service time.
CALL-UPS: As Mets fans have learned in recent seasons, injuries can create a lot of roster churn. The estimates in the table above show salary figures for players on the 40-man roster, but the Mets could have more injuries that require additional signings or call-ups. I include another $1 million buffer for this.
POTENTIAL BONUSES: The Mets have several players with performance bonuses built into their contracts, which, if ultimately earned, count for luxury tax purposes. I tried to be optimistic in picking the bonuses that could be feasibly reached, adding a total of $1.375 million to my payroll estimate, as detailed below.
Scherzer ($100,000 for being an All-Star, $50,000 for finishing third in Cy Young voting); Lindor ($50,000 for being an All-Star); May ($50,000 for 60 games pitched); Ottavino ($1,000,000 for 60 innings pitched); Trevor Williams ($125,000 for 50 innings pitched).
What about deferred contracts?
Both Jacob deGrom and Francisco Lindor have contracts with deferred compensation. This is relevant to the luxury tax payroll because their AAV is discounted to account for the deferred amount. This is also where you will see a difference in my salary estimates compared to other places, such as FanGraphs or Cot’s Contracts.
Unfortunately, we might never know the real number used on these contracts. Reporters will put out information about a contract’s net present value, but it’s unclear if they are indicating what it is from a value standpoint, or if they are reporting the actual number used for luxury tax accounting.
Based on my reading of the previous CBA (highlighted below), and obviously all of this could have changed in the new CBA, if deferred compensation is paid without interest (which applies to both deGrom and Lindor), the AAV is discounted using the Imputed Loan Interest Rate (defined in the CBA as “the annual ‘Federal mid-term rate’ as defined in Section 1274(d) of the Internal Revenue Code for the October preceding that Contract year”), or if the first Contract Year’s Imputed Rate is not available, using the rate from the month preceding the month in which terms are confirmed.
Since deGrom’s extension started the same year he signed it in 2019, I used the mid-term rate (2.83%) from October 2018; and since Lindor’s extension started a year after he signed it (2022), I used the rate (0.62%) from the preceding month the terms were confirmed (March 2021).
Using the rates above, deGrom’s AAV is discounted from $27 million on a straight five-year, $137.5 million deal to $23.9 million because of his deferrals. Lindor’s ten-year, $341 million contract is only slightly discounted from an AAV of $34.1 million to $33.8 million.
While I’m pretty confident in my interpretation of the CBA, there is no way to confirm the rates used for discounting AAV on deferrals. If you interpret the CBA differently and believe a higher rate or an alternative discount method should be used, you can adjust deGrom’s and Lindor’s AAVs accordingly, but the difference should only be a few million dollars.
QUESTIONS?
And there you have it! If you skipped the nitty gritty details, glad to have you back. If you stayed with me through everything, we are kindred souls.
Of course, if you have any questions about my calculations or my interpretation of the CBA, please reply to this email. Otherwise, I will post an updated payroll estimate as the roster evolves and as details emerge about the new CBA.
🔗 Pull up a chair: Mets’ Robinson Cano offers a deep dive into his defensive philosophies, by Andy Martino, SNY: “On a quiet “Camp Day” at Clover Field Wednesday, the Mets did not have a Grapefruit League game, but they gathered for batting practice, bullpen sessions and fielding drills -- and an early afternoon meeting about defense. In that meeting, Robinson Cano spoke to the group about his extensive knowledge of infield technique. His teammates and manager, Buck Showalter, basked in the chance to hear from an old-school master.”
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You had to be up all night doing this - what detail !
Where’s Bobby Bo?