How Davis & Napoli Change the Tribe’s Financial Situation

While generally known as one of the cheapest franchises in baseball (they have been in the bottom eight in team salary each of the past five years), the Indians made some surprising moves last week that should ensure they don’t begin the 2016 season with a payroll below $70M.

On the surface, it may seem that the biggest addition to salary was Mike Napoli, the Tribe’s new first baseman who comes in on a one year deal worth $7M, but in actuality, the big difference maker was the removing Chris Johnson from the 40 man roster. Because he signed an extension with Atlanta before coming over to Cleveland in the Nick Swisher/Michael Bourn trade, he was guaranteed his salary for each of the next two seasons with an option for 2017. Rather than waste a roster spot on him for two more years, Chris Antonetti and Mike Chernoff made the tough decision to eat his $17.5M still owed over the next three years ($1M is for the buyout of his 2018 option).

In the past, the Indians have been reluctant to make decisions like this and that largely lead to moves like the trade of Swisher and Bourn. The team will likely still save a a few million in the deal, but considering that they now have a similar, albeit right handed, version of Bourn in Rajai Davis, it would seem that they may have been better off financially if they had just cut Swisher and retained Bourn. That way they would only be throwing away the $15M owed to Swisher.

There is no question, however, that the moves made were the best to make the Indians a better baseball team. Davis has been more productive than Bourn in the past few years and Johnson looked to be a decent option against left handed pitching before Napoli joined the team. While still small compared to the rest of the league, these moves that focus on improving the team irrelevant of the cost in dollars are a good sign that the Indians may finally be placing a little larger percent of their focus on winning than making money.

Instead of projecting below $70M for next year, the Indians now have $54.5M in guaranteed contracts already and (using the arbitration projections from MLB Trade Rumors), they look the be fielding a team worth about $79.1M this year. This number includes both Johnson’s salary for 2016 and $5M in cash sent to Atlanta and would still be almost $9M less than their salary last year and would have been the fourth lowest salary in baseball in 2015. Given that team salaries have risen by an average of $7.3M per season over the past five years and that the trend appears to be continuing, it wouldn’t be surprising if that total represented the second lowest number of all teams in 2016.

The chart above shows a breakdown of the Indians salary obligations through 2021 with the guaranteed minimum owed (using buy outs instead of full team option totals) for each year shown on the bottom. Included in both that and the expected team salary are the figures mentioned above pertaining to Johnson and Atlanta. The expected salary for 2017 is the roughest of estimates based on an increase in arbitration eligible players.

One thing that the two moves did in addition to add salary was to increase the number of expected free agents at the end of the 2016 season. Prior to the two free agent signings, Josh Tomlin was the only Indian whose contract expired at the end of the year (no matter how much some fans hate him, there is little chance of the Indians declining Carlos Santana’s $12M option at this point). Now, Davis and Napoli join him as both possible trade bait come July. The Indians have done an excellent job in recent years avoiding losing players to free agency by extending those they could and trading those they couldn’t or didn’t want to and after losing only Mike Aviles and Ryan Raburn to free agency after 2015, they won’t lose much more in 2016. In fact, even after 2017 only three more players, Bryan Shaw, Lonnie Chisenhall and Santana, are set to become free agents and there are many Tribe fans who would rather be rid of the lot.

Considering both the Indians extremely low salary heading into 2016 and the expected increase in the following years, now is a prime time to extend a few players. Earlier this off-season we highlighted a few candidates and one in particular that still sticks out is Danny Salazar, who will hit arbitration for the first time in 2017. Looking at the projected arbitration totals for less talented and less used pitchers like Cody Allen and Tomlin (both expected to break $3M this Spring) and considering the inflated prices free agent pitchers have been signing at, it wouldn’t be surprising for Salazar to bring in $6-8M in his first go around in 2017 and he has four years of arbitration thanks to his Super 2 status. Signing him, or someone like him, to an extension now and paying him early could help spread the total cost out, making future teams more flexible. It is rare for a team to pay much for pre-arb years even in an extension (Corey Kluber made just $1M last year), but Salazar is a rare talent and this is a great opportunity to off-set some future costs by paying them today.