The Reds' Payroll

[AmarilloRed]

On the payroll

The Reds don't tell you what their player payroll will be. At least, they haven't since the year they moved into Great American Ball Park. They upped it from $45 million to about $60 million that year.

I've stopped asking. But I keep guessing. My guess is they'll be around $75 million for 2008. When you take Eric Milton's $8.5 million off the books, they would seem to have a lot of money to play with going into the free agency season. Not so.

Consider: The club owes its 13 players under contract for next year $59.72 million – Adam Dunn ($13 million), Ken Griffey Jr. ($12.5 million), Aaron Harang ($6.75 million), Bronson Arroyo ($6.5 million), Alex Gonzalez ($4.62 million), Ryan Freel ($3 million), Mike Stanton ($3 million), David Weathers ($2.75 million), David Ross ($2.5 million), Scott Hatteberg ($1.85 million), Javier Valentin ($1.53 million) Juan Castro ($975,000) and Todd Coffey $925,000).

Three players – Brandon Phillips, Matt Belisle and Jorge Cantu – are eligible for arbitration. They’re going to push the payroll to $65 million or more.

The rest of the roster will be made up of guys making around the big league minimum of $380,000. But that will push the payroll to close to last year’s level of $68.9 million.

So I wouldn't expect the Reds to be able to bid for any top-tier free agents -- unless my guess is wrong and the payroll going to be considerably more than $75 million.

posted by John Fay at 6:41 PM

I suspect that Fay is wrong and that the limit is probably about 8o million. Still, his point is well taken and it would seem it might be difficult for the Reds to afford a top-tier free agent this year. I hope some trades can be made and this salary level can be lowered, but as things stand now Wayne will be hard-pressed to pay for the very best free agents. This is what giving those lucrative contracts to Freel, Stanton, and Ross has done for this team's payroll. I realize that we will not see the very best that free agency has to offer this year, but it will have an effect on our payroll.

[GoReds33]

I hope they can find some money to bid on players like Gagne and any other pitchers out on the market. This team needs pitching, and they won't be getting enough of it from within.

[mlbfan30]

The Reds probably just 1 good pitching signing, which means a great pitcher even if its overpaying (Gagne, Cordero, Mo). Getting any SP on the market is a horrible move when a guy like Moloney, or at least Cueto and Bailey would probably be just as effective for league minimum and no commitment if they fail. Also Belisle is a real #5 starter, and at the very least a solid long relief man so he could be insurance if 1 of Maloney/Cueto/Bailey fail.

[hippie07]

Okay, so the Red's current payroll w/ no changes will be around $69 mil. The Reds COULD operate on a much higher payroll, but the question is not can ... it's will.

I broke out my calculator and did some math today. The Reds actually paid $69 mil for their players and staff last year according to http://mlbcontracts.blogspot.com/200...i-reds_24.html
The Reds total revenue was $146 mil according to Forbes (revenue data is 2006, latest availabe- but I think the analogy still works). Does that surprise you? Even if you tack on another 15 mil in administrative costs, the Reds still pocketed about $60 mil last year... I mean I'm sure there are other elements to this that I'm not aware of, but, still... Baseball's a good business.

In other words, if the Reds ownership wanted to raise the player payroll - it's not like they'd have to take a loan, or even tap into their personal bank accounts, they would just have to concede to make less of a profits.

Anyway, the Reds aren't particularly greedy in comparison to the rest of baseball. They spent 47% of their revenue on player payroll. Oakaland had the exact same revenue as us $146mil, but they spent 54% of revenue on player payroll. The NL Central shakes out like this:

Cubs: 51%
St. Louis: 49%
Pirates: 28%
Astros: 48%
Brewers: 49%

So, 4 out of 5 teams in our division spent a higher % on player payroll than we did (though not by much).
What's interesting is that the "large market" teams actually spends quite a bit more of their revenue on players' pay roll: Yankees spent 63% and Red Sox spent 61%.

In other words, I don't think we need to worry about what the Reds CAN do, it's more of a question of what they're willing to do.

I know my methodology is not perfect - if you have ideas on how to make it better - let me know, because I'd love to determine what the Reds profits look like.

[Bip Roberts]

heres to hoping Burton stays amazing and Stanton loses 120 pounds

[ChatterRed]

The Reds probably just 1 good pitching signing, which means a great pitcher even if its overpaying (Gagne, Cordero, Mo). Getting any SP on the market is a horrible move when a guy like Moloney, or at least Cueto and Bailey would probably be just as effective for league minimum and no commitment if they fail. Also Belisle is a real #5 starter, and at the very least a solid long relief man so he could be insurance if 1 of Maloney/Cueto/Bailey fail.

I'm not saying it will solve all the problems, but adding one quality starter pitcher and one quality reliever/closer type pitcher, factoring in the natural progression of young players improving, could put this team in contention for a division title in a weak division.

[AmarilloRed]

One caveat here: I think CEO Bob Castellini might be willing to bump the payroll if it means getting someone who really can help in 2008. The problem is the list of free-agent starting pitchers - the Reds' top need - is overwhelmingly underwhelming.

General manager Wayne Krivsky was at the GM meetings last week. He is typically vague on the club's plans, but he did say the Reds have contacted some free agents. They can't talk money until Tuesday.

"It's like any other year," Krivsky said. "We're looking to upgrade - whether it be by trade, free agent, or minor-league free agent. We've got people scouting the Winter Leagues."

The GM meetings are often where trade talk begins. The Winter Meetings (Dec. 3-6) are typically where the trades get done.

The Reds' biggest splash last year at the Winter Meetings came when they took Josh Hamilton in the Rule 5 Draft.

Hamilton and the club's other Rule 5 pick, Jared Burton, had a huge impact on the team.

"It's unusual for an organization to have two picks that turn out that well," Krivsky said.

[redsfanmia]

If Castelinni raises payroll significantly I would be shocked, pleasently surprised but mostly shocked.

[ChatterRed]

http://www.mlbtraderumors.com/2007/1...ave-rough.html

John Fay says the payroll will be around $75 million next year and that Reds have approximately $6 million to spend on Free Agents. Woo-hoo!

Unless someone is traded to free up money.

[*BaseClogger*]

...This is what giving those lucrative contracts to Freel, Stanton, and Ross has done for this team's payroll...

Is Mike Stanton really going to get $3 million!? I thought that was the total for the two years... However, I have to respectfully disagree that David Ross's contract is killing our payroll...

[redsfanmia]

As a fanbase we need to come to the realization that Castellini is not going to raise payroll. It is what it is and lets face it the Reds are not I repeat not going to be major players in free agency ever. The payroll is probably maxed out now thats why resigning Dunn is a mistake, it leaves no flexibility.

[AmarilloRed]

I wonder if any savings would be realized by buying out Griffey's option year for 4 million in 2009? Aren't Harang and Arroyo due for very big pay increases that year? This thread makes a very good point on why we should have Votto, Hamilton , Bailey, Cueto, Bruce and Maloney on the Reds in a couple of years. They will all be very cheap for some time to come, and keeping them might be preferable to trading them.

[Screwball]

As a fanbase we need to come to the realization that Castellini is not going to raise payroll.

In Castellini's tenure he's given the OK on all of Krivsky's attempts to fix the bullpen in '06. He OKed a 15% payroll increase from 2006 to 2007. He's allowed Krivsky to sign Arroyo and Harang to their lucrative contract extensions. Where you're getting this penny-pinching assessment of B-Cast is beyond me.

As for your take on free agency, well I hope that's the case this year. I wouldn't mind seeing a gamble on Gagne, but other than that this year's FA looks to be chock full of Milton scenarios.

[terminator]

The Reds total revenue was $146 mil according to Forbes (revenue data is 2006, latest availabe- but I think the analogy still works). Does that surprise you? Even if you tack on another 15 mil in administrative costs, the Reds still pocketed about $60 mil last year... I mean I'm sure there are other elements to this that I'm not aware of, but, still... Baseball's a good business.

Forbes also shows their operating profit as $20MM -- which is before taxes, interest and depreciation. And most teams argue the Forbes' estimates are too high. Regardless, I don't think they are making anything close to $60MM. Remember, something like $100MM of Castellini's purchase price was debt -- i.e. more interest. After interest and taxes I wouldn't be surprised if they were close to breaking even.

[*BaseClogger*]

Forbes also shows their operating profit as $20MM -- which is before taxes, interest and depreciation. And most teams argue the Forbes' estimates are too high. Regardless, I don't think they are making anything close to $60MM. Remember, something like $100MM of Castellini's purchase price was debt -- i.e. more interest. After interest and taxes I wouldn't be surprised if they were close to breaking even.

This sounds more accurate... I don't think professional sports teams are as profitable as a lot of people think... Otherwise, you would see all of the best businessman in the country buying up teams... However, most owners are smart men who are making their money elsewhere and just have a love for sports...