The Angels’ payroll picture heading into 2019

Projecting payroll and average annual value (AAV) is important as the two are both functions of population size and density, team quality, team enthusiasm, unemployment, consumer wages, and consumer confidence, among other factors.

While the AAV is used for luxury tax calculations, and teams receive fines and penalties for exceeding the luxury tax threshold (which is $206 million this year), the actual figure is incredibly important as it represents how much money is spent on the roster each year. It is important to remember that major league baseball is a business first, and businesses lose money if they incur more costs than they generate in revenue.

As for this year’s data, Jeff Fletcher, a team beat writer with the Orange County Register, maintains an updated spreadsheet which has the team’s AAV for luxury tax purposes at $144,152,381.

By adjusting that figure for how much players will actually make (recall that AAV is simply the average amount per year that a player makes, and frontloading or backloading the contract makes the actual amount vary from the AAV) by adding in players on the 40-man roster ($2.25M) and estimated player benefits ($14.5M), we arrive at an actual payroll that would clock in at $161,500,000 if no changes are made to the roster.

While accurately predicting the exact year-end payroll of a given year is a crapshoot, the best we can do is evaluate past year-end payrolls and revise payroll accordingly based on the changes that have occurred.

Cot’s Contracts is a big help here, as they have the past five years of the team’s actual baseball payroll data; they have luxury tax calculations on their site, too.

• Throughout this time, you’ll also see that the Angels find themselves in the mid-to-upper tier of teams, not wealthy enough to exceed the luxury tax threshold on a consistent basis yet having the funds to stay competitive.
• There are several reasons for the payroll increase over the last five years: most prominent of those are the backloading of the contracts of Albert Pujols, Josh Hamilton, Jered Weaver, and Mike Trout.
• While 2018 year-end numbers have not yet been published, I foresee this to be in the mid to high-170 million dollar range, due to not having spent much money during the season, trading away Ian Kinsler and Martin Maldonado at the trade deadline, and adding in player benefits and 40-man roster expenses.

So long as the Angels are competitive throughout the season, which I expect to be the case as the Mariners are looking to “reshape” their roster and the 25-man roster isn’t hit with the bubonic plague, I expect the organization to be in the $188-193 million range in actual payroll, due to several factors: (1) increased pressure to win now, due to the perhaps dwindling future presence of Mike Trout, (2) high stadium attendance and booming sales figures of team store items, (3) international interest in the organization (thanks to both Shohei Ohtani and Mike Trout), and (4) strong consumer confidence which bodes well for discretionary-income-centric businesses such as professional sports organizations.

To be conservative in each of the staff’s general manager scenarios over the next several weeks, we will be using $190 million as the actual payroll, which means the organization would have an all-encompassing additional $28.5 million to spend this winter.

Celebrate responsibly.