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Breaking Down the Pirates 2018 Year-End Payroll

Pirates general manager Neal Huntington addresses the Jung Ho Kang situation with reporters Tuesday, Feb. 14, 2017, at Pirate City in Bradenton, Fla.

What kind of team payroll did Neal Huntington construct in 2018? Photo by Christopher Horner/Tribune-Review

Well, it ?s official. Another season is in the books, and now a year-end payroll figure can be broken down and finalized.

In just my second article for TPOP, I looked at where the Pirates ? payroll stood to start the season so that fans could have a true reference point of how much money the team was spending ?not just some columnist ?s uneducated opinion on the matter. I ?ve continued studying the subject as the season has gone on, learning new and interesting facts about the intricacies of true payroll figures, making many changes to my model along the way. All the work seems to be paying off, as it appears I could have perfectly matched an MLB audit of the Pirates ? payroll through August, so you ?ve come to the right place on the matter.

First, some housekeeping. Looking back at my aforementioned article, it seems I focused more on the rules of what was going into the total than the numbers themselves. When I started the Payroll Rewind Series after that, I started comparing year-over-year, which I didn ?t do in the 2018 starting article either. Therefore, I ?m going to format this article similarly, looking at what happened between Opening Day 2017 and 2018 for reference, as well as in-season 2018. Then, if I ?m lucky enough to write a 2019 Opening Day article, I ?ll look at comparisons to 2018 at that time, not at the end. For greater insight on the rules and how they impact the final total, check out the 2018 Opening Day article first, as well as the rewind series.

Here we go:

Major League Salary: As many fans are eager to bring up, the Pirates didn ?t spend any money on free agency during the 2017-18 offseason ?they did spend $545,000 on waiver claim Nik Turley, however. This was accompanied by waiving $11,251,000 worth of salary (mostly Antonio Bastardo and Juan Nicasio), declining options of $2,150,000, and losing $4,000,000 to retirement. Meanwhile, the team traded for $13,762,000 in salary, while trading away $28,850,000. Many fans hated it at the time, but effectively trading Corey Dickerson for Andrew McCutchen seems to have been the right move; however, these figures include the still perplexing Sean Rodriguez acquisition.

After a hot start to the season, the Pirates plummeted in the standings, and it was looking like they would be certain sellers come the deadline. Another hot streak around the All-Star Break ?including 11 games in a row at one point ?brought them back into the fringes of contention, leading to the big acquisitions of Chris Archer and Keone Kela at the trade deadline. These moves didn ?t come with huge financial burdens (for this season) though ?payroll only went up $2,082,035, not counting bonuses. The team brought in Adeiny Hechavarria as well but turned right around and traded him ?plus David Freese ?at the August 31 deadline, shedding $773,387 in all after those two moves shook out.

Finally, the Pirates saw arbitration increases of $5,150,000 between two players, while contracted salaries for eight other players increased $11,250,000.

Major League Salary Starting Total: $79,740,000

Major League Salary Final Total: $79,864,634

Minor League Salary: As with the two seasons prior, minor league salaries were severely thrown off by the presence of a seasoned veteran in the system, but few probably expected to see this added salary in 2018, if ever.

Jung Ho Kang started the season on the Restricted List, and personally, I was done holding out any kind of hope that he would play for the team again. In a surprising turn of events, Kang was able to clear up his visa issues and return to the states in June, and the Pirates eventually removed him from the Restricted List. At that point, Kang was free to draw a salary again ?albeit in the minors for much of the season. In total, Kang ?s unforeseen return raised the payroll $1,741,935.

The Pirates treated the Indianapolis pitching staff much like a carousel, switching pitchers in and out almost on a daily basis for a beleaguered bullpen midseason. Nick Kingham, Clay Holmes, and Dovydas Neverauskas were among the names to spend three or more stints in the minors in 2018, while being joined by Max Moroff, Jacob Stallings, Jordan Luplow, and Jose Osuna on the position player side.

Minor League Salary Starting Total: $844,700

Minor League Salary Final Total: $2,513,358

Signing Bonuses: The Pirates had Prorated Signing Bonuses on the books for Sean Rodriguez, Ivan Nova, Gregory Polanco, Felipe V zquez, Starling Marte, and Josh Harrison. The final amount was higher due to the acquisition of Chris Archer.

Signing Bonuses Starting Total: $3,100,000

Signing Bonuses Final Total: $3,154,660

Signing Bonuses (or Prorated Buyouts): This list also includes the Polanco, Marte, V zquez and Harrison deals, as well as buyouts for David Freese and Jung Ho Kang. This amount also went up due to the Archer trade.

Signing Bonuses (or Pro-Rated Buyouts) Starting Total: $1,745,833

Signing Bonuses (or Pro-Rated Buyouts) Final Total: $1,801,165

Performance Bonuses: Many bonuses are hard to pin down, so only reported incentives are included in these totals. Several incentives were triggered this season.*

The first incentive was reached when Felipe V zquez made the All-Star team. This resulted in a payment of $50,000. The next wasn ?t realized until near the end of the season, when Ivan Nova made his 28th start. Nova was unfortunate yet again, missing out on the opportunity to earn another $750,000, as his final start was cancelled when the makeup date with the Marlins on what would have been the new final day of the season was cancelled. This was after missing out on $1,000,000 last year, even though that situation was far more nefarious than this year.

Finally, an assignment bonus was triggered when Archer was traded to the Pirates, resulting in an extra $500,000 payout. As I ?ve already detailed, the specifics are murky when it comes to this payment, but all signs point to it being the Pirates ? responsibility.

Performance Bonuses Starting Total: $0

Performance Bonuses Final Total: $800,000

Termination Pay: This is essentially a ?go away ? payment total for the season. It includes players who were either released or outrighted off the roster during the season. Therefore, the Pirates paid the likes of George Kontos, Casey Sadler, A.J. Schugel, Sean Rodriguez, and Buddy Boshers to not stick around on the Reserve List at some point this season.

Termination Pay Starting Total: $0

Termination Pay Final Total: $2,749,784

Cash Considerations: In a relatively new development, the Pirates sent out salary in the trades of Andrew McCutchen and Daniel Hudson. The team also paid down a portion of Adeiny Hechavarria ?s salary when he was sent to the Yankees, leaving New York responsible for only the prorated minimum; however, these funds were basically offset by the considerations originally sent to the Pirates by the Rays.

In addition, the Pirates sent out considerations in the Bryce Brentz and Josh Smoker trades before the season, with both amounts going unreported.

Cash Considerations Starting Total: $3,500,000

Cash Considerations Final Total: $4,363,710

Credits: The team didn ?t have to pay the salaries of Jung Ho Kang or Nik Turley while they were on the Restricted List, with the amount for Kang ?s contract significantly less than expected at the beginning of the season after his unforeseen reinstatement. A ?payback ? of Andrew McCutchen ?s buyout was credited to the team as well ?as described in the original 2018 article ?after his option was picked up.

George Kontos ? termination pay was also offset after Cleveland signed and eventually purchased his contract, negating some of the Pirates ? responsibility to him. The entire amount from the Rays for Adeiny Hechavarria ?which was meant to leave the Pirates with the responsibility of only the prorated minimum ?was also included in this total, even though they in effect turned around and sent some of it to the Yankees.

Finally, the Pirates traded Gift Ngoepe, Shane Carle, Engelb Vielma, and Chris Bostick for considerations, all unknown. Considering that he pitched quite well for the Braves, it seems the Pirates gave up a usable piece in Carle when they were clearing roster space over the offseason.

Credits Starting Total: $4,326,210

Credits Final Total: $4,439,113

2018 Opening Day Payroll: $84,604,323

Final 2018 Payroll: $90,808,198

Cash Spent and AAV

To close this out, we ?ll look at two additional ways the final payroll figure can be calculated.

Recently on Twitter I saw someone ask just how much the Pirates spent out of pocket on payroll this season. It ?s an interesting question that does have some value, even though I focus on the payroll calculation for Luxury Tax purposes. I do this because it better aligns to what teams are essentially doing, but also because it ?s seemingly what fans truly care about. If fans cared about what teams actually spent, they would take into consideration taxes, salaries, and all the other operating expenses that are on a teams ? books, but they don ?t, just a bottom-line payroll figure is what matters.

Since this amount isn ?t too hard to derive from what I already have, I ?ll list a total, just for kicks and giggles.

The only amounts that need taken out are the credit for McCutchen ?s option, plus signing bonus and buyout amounts, excluding V zquez ?s new signing bonus and the buyouts of Chris Stewart and Wade LeBlanc, since those cash expenditures would fall under the 2018 umbrella. Add that all up and the cash outlay for 2018 was $87,652,374, which obviously wasn ?t far off from the Luxury Tax total. Remember, this doesn ?t include benefits, which some sources have as much as $14 million.

Speaking of payroll calculations for Luxury Tax purposes, the numbers above aren ?t exactly how the CBA outlines the calculations for final payroll. Per Article XXIII (E)(2):

A Uniform Player ?s Contract with a term of more than one (1) championship season ( ?Multi-Year Contract ?) shall be deemed to have a Salary in each Guaranteed Year equal to the ?Average Annual Value ? ( ?AAV ?) of the Contract (plus any bonuses subsequently included by operation of Section E(4) below)

Basically, it ?s saying to take the base rate of the entire contract, add the signing bonuses in, divide by the total length of the contract, and assign that same value over every guaranteed year. I realize that by not doing this I ?m not following the CBA exactly, and while I have considered changing my method, I like assigning year-to-year base salaries at their actual rates, as it ?s more representative to what is being spent every year.

Either way, the final payroll figure using the AAV method is $87,867,562. Please don ?t quote me on this one, as I ?m not as confident in it, but again, it was just for fun anyway.

*While it won ?t be determined until the award is announced, this amount could go up if Felipe V zquez places in the Reliever of the Year Award voting. Final payroll could go up $325,000, $150,000, or $100,000, depending on what place he finishes in.

Ethan is a Pirates contributor to The Point of Pittsburgh. An Accountant by trade, Ethan is passionate about the business of sports and won't apologize for enjoying it more than the actual games. He's a believer in analytics, hasn't played a game since little league, and can be contacted via Twitter @EthanHullihen

1 Comment on Breaking Down the Pirates 2018 Year-End Payroll

  1. Excellent article

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