Digging In To the Royals Payroll Situation

Many will scoff at the idea of a group of billionaires having a budget, but whether we like it or not, they do.

With the season mercifully over, we can start to look to the future. I’ve said this before and I’ll say it again - this is the most important offseason the Royals have ever had. I was hopeful heading into the year that they’d be building toward turning that final corner to contention, but they showed how far away they are in 2023. That fact doesn’t make this offseason any less important. In fact, it might be even more vital to the future of this franchise to get back on track to at least make 2025 a year for potential contention. Whether we like it or not, everything starts with the payroll because every team has a budget, whether they should or not.

In 2023, according to the amazingly valuable Cot’s Baseball Contracts, the Royals opened the year with a payroll of roughly $92.5 million. That was their 40-man roster to begin the season and includes every minimum contract they have. Throughout the year, they traded away the remaining dollars left on the contracts for Scott Barlow, Aroldis Chapman, Nicky Lopez, Ryan Yarbrough and Jose Cuas. They acquired very little in new money, with only Taylor Hearn making more than the league minimum. They also released Hunter Dozier, Amir Garrett, Franmil Reyes and Jackie Bradley Jr., all members of the Opening Day 40-man roster and received no salary relief for them.

Of those four, only Dozier is owed money in 2024. And with that in mind, they have $38.55 million in guaranteed contracts owed next season. That’s $20 million for Salvador Perez, $9 million for Hunter Dozier, $8.5 million for Jordan Lyles and $1.05 million for Jake Brentz. So far, it’s pretty easy. By my count, I see seven players eligible for arbitration. Sometime relatively soon, MLB Trade Rumors will come out with their arbitration estimates. I like to do my own and then compare (and then change mine to what MLBTR says because they’re smarter than me). This is what I have, as of now:

Kris Bubic - $3.1 million
Taylor Clarke - $2.1 million
Taylor Hearn - $1.5 million
Carlos Hernandez - $1.3 million
Edward Olivares - $2.4 million
Brady Singer - $4.2 million

Not all of these players will be tendered a contract. I’d wager that Hearn will be cast aside. Let’s assume that’s true and not worry too much right now if it isn’t because the salary is fairly negligible either way. That’s another $13.1 million. Now we’re up to $51.65 million for nine players.

I’m just going to make things easy here because each pre-arbitration player gets a little bit different. The minimum salary is $740,000 in 2024, so let’s say that the remaining 32 players (remember, Dozier’s salary counts but he’s not on the roster) on the 40-man roster are under contract for $775,000, which is probably high, but doesn’t put us over by a lot in estimates. That’s roughly $25 million to give us a grand total of $76.5 million or so. This is a baseline. Why is it not just the number? Because they’re not going into next season with eight guys making money and the rest on pre-arb deals.

There will be plenty on pre-arb deals though. That’s just the nature of a team like this. I think, assuming health and before examining trades, these 16 will be playing for less than $1 million in 2024:

Steven Cruz
Freddy Fermin
Maikel Garcia
Kyle Isbel
Nick Loftin
Daniel Lynch IV
Alec Marsh
Michael Massey
James McArthur
John McMillon
MJ Melendez
Vinnie Pasquantino
Cole Ragans
Nelson Velazquez
Drew Waters
Angel Zerpa

Honestly, that’s more than I expected to have on the 2024 roster heading into this exercise. So that’s eight players either with guaranteed money or going into arbitration and 16 pre-arbitration players. Before we start to extract players from the roster, that leaves two big league spots available.

There are candidates who aren’t listed above like Dairon Blanco, Dylan Coleman, Nate Eaton Jackson Kowar, Logan Porter, Nick Pratto and Samad Taylor. Austin Cox will likely be on the big league roster but moved to the 60-day IL at the first opportunity to open up a 40-man spot for someone. I don’t think it’s unrealistic to think at least a couple of the names who could be considered will be non-tendered in a few weeks.

Okay, but who is leaving this roster who is still on track to be a part of it in 2024? Because without any changes, they’re sitting at about $75 million.

What happens if they trade Perez and have to eat, let’s say, $10 million of his 2024 salary? Assuming the return is all prospects, that brings the payroll down to about $65 million. I think they probably tender Olivares a deal but move on from him in a minor deal. Now we’re down to about $62.5 million. Melendez could easily go. That’s $61.8 million. I’m not so sure Singer can be traded at this point, so we’ll leave his salary where it is. But now they’ve moved on from three more, which leaves big league room for five more players.

This is where it gets sort of fun. Let’s say they don’t acquire any big league pieces in any of the deals above (I sort of think they get a big leaguer back for Perez and maybe Melendez, but we can ignore that for now). I’ve heard each of the last two seasons that if the right player was available and agreed to come to KC that they were willing to go to about $110 million. I’m making an assumption now, but let’s say that’s jumped a bit because of how important this offseason is and how badly this ownership group needs a “yes” vote on a new stadium in a few months.

I’ll call it $120 million even though I wouldn’t be terribly shocked if they’d go higher than that. Stopping at $120 million would be the 21st-highest payroll based on 2023 money and going as high as $135 million would them at 18th. That’s still bottom-third or bottom half, but considerably above their current number. If they’re sitting at the $120 million number, that leaves about $58 million for free agents (and trades) to fill out the roster. There’s some serious damage that can be done with that.

At this point, you’re probably wondering where long-term extensions come into play. I believe the Royals will get something done with Witt and will explore with others like Garcia and Pasquantino and maybe even Ragans or McArthur. But I also believe that it won’t impact the 2024 payroll all that much as most of those deals will likely pay them close to the minimum for the upcoming season regardless. So while an extension may change their numbers by a bit, I don’t imagine it would be more than $3 million even if all five signed long-term. That’s basically a rounding error when you’re getting into nine figures for a team.

The unfortunate reality the Royals are in is they have to pay the bad team tax, which comes in the way of annual average value (AAV) and years. My rule of thumb there is that if a player is willing to sign for three years and $36 million with a good team, it will take four years and $52 million with the Royals. That’s an extra year and an extra $1 million per year. But there’s also a positive to being a team like the Royals in that they can provide an opportunity to a player looking to rebuild value.

Look at a pitcher like Frankie Montas. Maybe a good team would look at him and see an interesting piece they can use out of the bullpen or for depth. The Royals could easily offer him the opportunity to start that better teams may not have available for him. For a pitcher who made 59 starts between 2021 and 2022 with a 3.67 ERA and roughly 3.5 to 1 strikeout-to-walk ratio, he’s someone who will greatly benefit from a one-year deal with a chance to showcase that he’s back to that level. And the Royals offer an intriguing collection of very good infield defense with a large yard that does suppress home runs. So he, or any number of pitchers like him, could be a fit.

I’ll get more into this as the offseason progresses, but as a 106-loss team, the Royals don’t have a lot nailed down. They believe they have a long-term offensive core in place that includes Garcia, Witt and Pasquantino. While they won’t replace everyone other than those three, that leaves room for anyone else to be moved or anyone else to lose their job to a free agent signing. They can love Massey or Melendez or Isbel or Velazquez or anyone else, but they still have some proving to do. With that in mind, they can add on the infield or in the outfield and even behind the plate. That opens things up.

The end of season press conference yesterday didn’t bring up anything that I wasn’t expecting other than JJ Picollo pretty much saying that they likely wouldn’t focus on the infield when it comes to adding bats. They do seem to be happy with that group, but I think there will be some competition with Massey at least. He did mention that they’d look to add bats and that the outfield was likely the place. Combine that with the specific mention of Isbel showing that he can handle center field, and it sure seems like they’re anticipating some player movement.

They clearly have plenty of spots on the pitching staff that could be upgraded, so there’s not even a world where you have to think who they’d move on from. Picollo was pretty clear that they’re going to look to get more pitching. And I’ll repeat what I’ve said all year long regarding the vote for the stadium. They know they can’t go into next season without spending more than they have in just about any winter since maybe 2015/2016 to upgrade the roster. There’s a baseball argument to be made that they can go sign 10 reclamation projects and see how it goes, but the business argument is that they need players who are without question better than what they have. And it’s pretty easy to see that they have the payroll space to accommodate that. Now we just wait to see what they do.