2016 Los Angeles Angels of Anaheim Primer

[AngelsWin.com]

By Robert Cunningham, AngelsWin.com Senior Writer - 

 

As we did last year, in order to begin any conversation about the 2016 season, we need to understand some of the team’s goals, restrictions, and short and long term needs.

 

Every year the primary goal is to put a winning-caliber team on the field of play to bring home a World Series Championship. Anything less is on a sliding scale of disappointment for the entire organization.

 

The team budget is still a potential issue this year and it is possible that Arte Moreno will enforce maintaining team payroll below the Competitive Balance Tax (Luxury Tax) threshold.

 

However he was recently quoted, by Jeff Fletcher, stating that the front office could exceed the tax for the “right player”.

 

The Luxury Tax threshold for 2016 is $189MM per the current Collective Bargaining Agreement (CBA) as reported at Baseball Prospectus.

 

If new General Manager Billy Eppler is truly restricted by the Luxury Tax threshold then it seems unlikely the Angels will start the season with a payroll higher than $180MM, give or take.

 

The reason is the team needs to maintain payroll margin in order to make potential trade’s in-season, or before the deadline, to reinforce or upgrade their roster. Keeping at least $10MM in reserve maintains flexibility.

 

As it currently stands, if the Angels bring back all of their contracted (including team options), arbitration eligible, and controllable players and you add in benefits and minimum salary players to fill out the 40-man roster, payroll will be approximately $181.9MM based on Average Annual Value (AAV) as seen below:

 

 

 

Per the CBA, Benefits cannot exceed more than 10% of the preceding year’s base number from year to year. The above number represents the maximum dollar amount for 2016 based on the 2015 maximum. It may be slightly lower but for the purposes of this discussion the difference is negligible.

 

In 2015, the minimum player salary was $507,500. For the purposes of this article it has been assumed that an increase of 1.5% will occur bringing the minimum player salary up to $515,115. It could be more than that but the difference should also be fairly negligible.

 

The estimated arbitration numbers for Kole Calhoun (Projected Super Two player), Fernando Salas, Hector Santiago, Cesar Ramos, Garrett Richards, and Collin Cowgill were obtained from MLBTradeRumors.com.

 

There is a small chance that Calhoun misses the Super Two cutoff but it is unlikely based on the estimate reported by the website. If he does miss, it would end up being favorable to the Angels payroll discussion anyway.

 

Additionally certain players, such as Matt Shoemaker and Efren Navarro, had 2015 salaries that were slightly higher than the league minimum salary, per Baseball-Reference.com. The author has made rough estimates of 2016 increases for those particular players. It should have a negligible impact on the payroll discussion.

 

Josh Hamilton’s remaining contract is included in the ‘Payouts’ line. When he was traded his remaining contract was restructured and reduced by approximately 13.3% since he no longer had to pay California State Taxes per COTS contracts.

 

The AAV represents that restructured value minus the approximately $7MM ($1.4MM AAV) the Rangers now carry on their payroll. Because the precise details are not known this number may be off a bit but the difference should be minor.

 

Also David Murphy and David DeJesus are included in the total, above, but both of those figures, $7MM and $5MM respectively, are team options that may or may not be picked up. If they are not picked up the team must still pay their contractual buyouts.

 

So Billy Eppler, who just signed a 4-year contract, will potentially be faced with very little wiggle room to work with in free agency in his first year in office.

 

It is also possible that the outstanding stadium issue, in the form of a large capital outlay to renovate or build a new park, could impact a decision to limit or even cut spending on team payroll.

 

As was stated last year the caveat to all of this payroll discussion is that Arte has consistently and fully funded team payroll so these known or perceived budget issues may just be guidelines and could be violated at Moreno’s whim (see the link at the end of paragraph three above).

 

In fact Moreno did go over the Luxury Tax Threshold once back in 2004, albeit, by a measly $927,000.

 

The reality is that if Arte authorizes Eppler to exceed the Luxury Tax in 2016, the team, if it doesn’t lavishly spend on free agents, would only spend one year over the threshold because a lot of money comes off the books in 2017:

 

 

 

In fact the Angels only have four guaranteed contracts to pay in 2017 for Pujols, Trout, Hamilton, and Street totaling $77,996,077. In 2018, the Angels will only be paying for Pujols, Trout, and Street totaling $57,083,000.

 

Of course there will be arbitration cases that increase those numbers, probably by another $40MM in 2017, but that still leaves over $60MM available for the 2017 and 2018 seasons.

 

Another point to consider is that a new Collective Bargaining Agreement will very likely increase the Luxury Tax Threshold to $200MM or more, beginning in the 2017 season.

 

If this happens it would certainly allow Billy the freedom to grab a top-tier free agent or two without having to overly sacrifice current roster players or prospects.

 

That’s what the Angels need right now in order to help rebuild the farm system while simultaneously making shrewd trades to bring in talent to compete. If money is an obstacle Billy will have to creatively tackle the potential payroll restrictions in order to solve the roster composition issues.

 

It is also important to note that Eppler appears to have a solid scouting and financial background. He has been praised within the Yankees organization for his ability to identify Minor League talent and find reclamation players that add incremental value.

 

Since Eppler hasn’t provided a lot of sound bites, regarding team needs, we’ll take a stab at it from the outside looking in.

 

Clearly left field has been a black hole for the Halos the last couple of years. Finding reliable production, preferably from both sides of the plate, is a priority.

 

Beyond that the Angels have potential concerns at shortstop, designated hitter, second and third base, catcher, the rotation, and the bullpen. Only first base and center and right field have long term, solid contributors.

 

The short term shopping wish list should include a solid LF, an upgrade at 2B and 3B, a potential replacement SS, a potential veteran catcher, a frontline starter, and a potential bullpen arm, likely a LHP.

 

Long term the Angels focus should be on the 2016-2020 seasons. Those are the five seasons leading up to Mike Trout’s walk year in 2020 unless he is offered, and signs, another extension.

 

Every effort should be made to position this team to make a serious playoff push, each and every year between now and the beginning of 2020, to maximize the probability of another Angels World Series Championship.

 

Billy Eppler will be absolutely critical to that one and only primary goal.

 

It seems that Arte Moreno and John Carpino have spent due diligence in identifying and bringing in the right candidate with the skill set that the Angels need right now.

 

Only time will tell the full story but the Eppler acquisition has a positive aura surrounding it out of the gate.

 

In the next section we will generally discuss the team roster composition, arbitration and option decisions, and a list of likely Angels trade assets.

[ettin]

As a FYI, there are hyperlinks in this article and I've asked Chuck to work on highlighting them for clarity so that if anyone reading wants to reference the source they can do so.

[AngelsWin.com]

As a FYI, there are hyperlinks in this article and I've asked Chuck to work on highlighting them for clarity so that if anyone reading wants to reference the source they can do so.

 

Done.

[JoJo26]

We have some vastly overpaid players on our roster...and on other teams rosters...

[AngelsLakersFan]

The payroll figure is sobering. The team is willing to go over the luxury tax for "the right player" but apparently we are already approaching that total. Who can say who "the right player" is but the fact of the matter is, this team needs to go over the threshold even for 'the wrong player' or really 'multiple players.' If they plan on maintaining payroll at the current level they may as well pack it in.

[gotbeer]

Some good information.  Unfortunately, I disagree that the CBT is going to go up significantly.  Especially with rumblings right now that the Mets and Pirates don't have the money to keep all their free agents.  While I can somewhat understand the Pirates, the Mets not being able to sign their players should be a red flag about the real health of the game.  

[ettin]

The payroll figure is sobering. The team is willing to go over the luxury tax for "the right player" but apparently we are already approaching that total. Who can say who "the right player" is but the fact of the matter is, this team needs to go over the threshold even for 'the wrong player' or really 'multiple players.' If they plan on maintaining payroll at the current level they may as well pack it in.

And this is exactly why, as I wrote this series, one of the conclusions that I've arrived at is that Arte has no choice to blow past the Luxury Tax and, in my personal opinion, we will pick up at least one Major free agent and possibly two or one Major and one or two mid-tier or minor free agents.

The good news is that, if needed, the team can probably spend upwards of $60MM if they want to because in 2017 the Luxury Tax Threshold will almost certainly be raised. In 2018 we will have even more space.

[elbooboo]

Some good information.  Unfortunately, I disagree that the CBT is going to go up significantly.  Especially with rumblings right now that the Mets and Pirates don't have the money to keep all their free agents.  While I can somewhat understand the Pirates, the Mets not being able to sign their players should be a red flag about the real health of the game.  

 

If TV contracts keep on going up, the CBT will go up as well. Just look at the NFL and NBA. Of course, the cable bubble could burst and then who knows what happens. 

[ten ocho recon scout]

Some good information. Unfortunately, I disagree that the CBT is going to go up significantly. Especially with rumblings right now that the Mets and Pirates don't have the money to keep all their free agents. While I can somewhat understand the Pirates, the Mets not being able to sign their players should be a red flag about the real health of the game.

arent the mets a special case though? I thought their finances were dogshit because of ownerships stock investments.

[gotbeer]

arent the mets a special case though? I thought their finances were dogshit because of ownerships stock investments.

 

I don't think so, but maybe.  Looking at Forbes business of baseball, Mets are ranked 8th with only a 26% debt to value and a positive revenue.  And looking at BoB, 5 teams (4 because one spends like a drunk sailor and lives in a latrine) are in negative revenue.  

 

If you look at the team salaries, since there really isn't a CBT figure for all teams.  Top 8 will probably have to deal with some CBT issues.  That leaves the other 22 as not coming close to the CBT.  Interestingly 7 of the 10 teams to make the playoffs are on the bottom end.  

 

I really think this is the long term goal of baseball.  To have parity between the have's and have nots.  And the best way to do it, since the have's have the best local tv deals that MLB can't entirely control and only get a small piece of.  Is to make sure the top teams get taxed to go over.  

[ten ocho recon scout]

Ok, its been a while, but i just remember hearing the mets ownership got hit hard with one of the loan disasters from the recession. I thought thats why theyd gone cheap the last several years. Like not baseball related, their owners' out of baseball investments. I want to say it had something to do with bernie madoff?

[AngelsLakersFan]

Some good information.  Unfortunately, I disagree that the CBT is going to go up significantly.  Especially with rumblings right now that the Mets and Pirates don't have the money to keep all their free agents.  While I can somewhat understand the Pirates, the Mets not being able to sign their players should be a red flag about the real health of the game.  

 

I just can't agree with this. The Pirates and Mets have to be absolutely full of shit. MLB is practically PRINTING money these days, and most of it is shared. If the Mets can't pay their guys then they must've given more money to Bernie Madoff than was reported.

[AngelsLakersFan]

MLB Advanced Media is a BILLION dollar business that these owners own 1/30th of. The national television deal is worth another $1.5 billion annually ($50m per team). Licensing, merchandizing and who knows what else is all shared among the teams. This is all before the big revenue drivers, local television and gate receipts. 

 

It's not that teams cannot afford to pay these players, it's simply that the way the game is going, the money is becoming less important. With 2 wildcards, a crapshoot post season and a lights out, young, cost controlled starting rotation, who needs to spend money?

[ettin]

Ok, its been a while, but i just remember hearing the mets ownership got hit hard with one of the loan disasters from the recession. I thought thats why theyd gone cheap the last several years. Like not baseball related, their owners' out of baseball investments. I want to say it had something to do with bernie madoff?

 

Yes the Wilpons were heavily invested with Madoff and they had to get a loan from MLB of which they may or may not still be paying back. Either way it sort of crippled them for a while but as ALF said they aren't hurting to badly anymore.

 

It wouldn't totally surprise me to see new language in the CBA that accounts for revenue sharing especially with the players as I'm sure that will be a bone they pick with the owners. It will be interesting to see what develops in talks over the next year.

[ten ocho recon scout]

Totally off topic, but does anyone else agree with me that angels lakers fan needs to change his avatar to alf? (Even though i still miss the one you have now with the bag on her head)

[Docwaukee]

Nice job Robert.  Well researched and thoughtful.  

 

Just a couple of things to note.  

 

Revenue sharing is an important consideration for the CBT threshold.  

34% of each teams revenue goes into a pool.  Then it's divided equally and distributed to all teams.  

So the total revenue for 2014 was $7.864b

Which means that $2.674b is divided by 30 and distributed.  So each team gets about 90 mil minus their contribution

 

A couple of examples:

 

Yankees revenue was about 500mil so their contribution to the pool was 170mil.  Meaning they contribute about 80mil to revenue sharing.  

 

Angels revenue was about 300mil so their net contribution was 12mil.

 

The Astros revenue was 175mil so their net so they actually got a check for 30mil.  

 

So the first thing to note is that all of these big TV contracts to large market teams directly contribute to small market teams.   Another reason why a guy like Loria isn't as concerned about losing a little top line money.  

 

Second, you have to not only look at the purpose of the CBT and the threshold associated, but the collateral damage of having one, who it affects, and how.  

 

Every agrees that a CBT and threshold is in the best interest in baseball overall.  The revenue generated by baseball indirectly relates to having parity so that benefits everyone, but the exact number is fluid.  Generally though, baseball revenues are going to be market driven and even if there wasn't a threshold or as much parity, the overall number isn't going isn't going to fluctuate a great deal.  So what baseball generates is going to be a pretty finite number with only minimal variance.  

 

So as the amount of money pouring in is somewhat predictable, each of the various interests are going to want their chunk.  If you set the CBT threshold at a certain level, market forces will determine what the monetary value of a player becomes.  Minus the other fixed costs, and the rest goes to the owner.  

 

If you raise the threshold, the market will adjust and the monetary value of a players performance goes up.  It's one pool of money.  It's either going to the players or the owners.  So you can bet that an important part of the next CBA is going to be the negotiation between MLB and the players union as to what that CBT threshold will be.  The players - regardless of whether they are on a big or small market club - are going to want to maximize the ability for teams to spend more money without penalty.  Keep in mind, the proceeds of the CBT ie the collected % overage doesn't get divided up and distributed to the have not teams.  It gets divided up into player benefits as well as to the league as follows:

 

Competitive Balance Tax proceeds collected pursuant to Section B(4) above shall be used as follows. (1) The first $2,375,400 of proceeds collected for each Contract Year shall be used to fund benefits to Players, as provided in the Major League Baseball Players Benefit Plan Agreements. (2) 50% of the remaining proceeds collected for each Contract Year, with accrued interest, shall be used to fund benefits to Players, as provided in the Major League Baseball Players Benefit Plan Agreements. (3) 25% of the remaining proceeds collected for each Contract Year shall be contributed to the Industry Growth Fund and, with accrued interest, used for the purposes set out in Article XXV.(4) 25% of the remaining proceeds collected for each Contract Year, with accrued interest, shall be used to defray the Clubs’ funding obligations arising from the Major League Baseball Players Benefit Plan Agreements.

 

The league did this to motivate the players to want to keep the tax low, but the bottom line is that a higher threshold equals bigger free agent contracts.  Not just the ability for large market teams to spend more without penalty.  

[Guest]

God, what an awkward picture.

[Docwaukee]

Yes the Wilpons were heavily invested with Madoff and they had to get a loan from MLB of which they may or may not still be paying back. Either way it sort of crippled them for a while but as ALF said they aren't hurting to badly anymore.

 

It wouldn't totally surprise me to see new language in the CBA that accounts for revenue sharing especially with the players as I'm sure that will be a bone they pick with the owners. It will be interesting to see what develops in talks over the next year.

http://www.amazinavenue.com/2015/3/30/8288295/new-york-mets-wilpon-madoff

 

How much did the Mets lose when Madoff went bust?

When Madoff went bust, the Mets’ ownership had, according to their eventual settlement, approximately $500 million invested in Madoff accounts. The Wilpons also had used that money as collateral for other loans. The collateral going bust resulted in ownership having to borrow an additional $430 million against the team (now down to $250 million), and $450 million against SNY (now up to over $600 million). Financing these debts, as well as the $43 million annual payment on Citi Field, costs the Mets over $100 million each year, before any of the principal is paid down.

The article is from march of 2015

[gotbeer]

I think that is another advantage the Angels have over most if not all teams.  $0 annual payment for the stadium.  Where most will have some kind of annual payment like $43 million for Citi, and whatever god aweful amount the Yanks must have.  

[ettin]

I think that is another advantage the Angels have over most if not all teams.  $0 annual payment for the stadium.  Where most will have some kind of annual payment like $43 million for Citi, and whatever god aweful amount the Yanks must have.  

 

This is true, Arte has no debt.

[ettin]

Nice job Robert.  Well researched and thoughtful.  

 

Just a couple of things to note.  

 

Revenue sharing is an important consideration for the CBT threshold.  

34% of each teams revenue goes into a pool.  Then it's divided equally and distributed to all teams.  

So the total revenue for 2014 was $7.864b

Which means that $2.674b is divided by 30 and distributed.  So each team gets about 90 mil minus their contribution

 

A couple of examples:

 

Yankees revenue was about 500mil so their contribution to the pool was 170mil.  Meaning they contribute about 80mil to revenue sharing.  

 

Angels revenue was about 300mil so their net contribution was 12mil.

 

The Astros revenue was 175mil so their net so they actually got a check for 30mil.  

 

So the first thing to note is that all of these big TV contracts to large market teams directly contribute to small market teams.   Another reason why a guy like Loria isn't as concerned about losing a little top line money.  

 

Second, you have to not only look at the purpose of the CBT and the threshold associated, but the collateral damage of having one, who it affects, and how.  

 

Every agrees that a CBT and threshold is in the best interest in baseball overall.  The revenue generated by baseball indirectly relates to having parity so that benefits everyone, but the exact number is fluid.  Generally though, baseball revenues are going to be market driven and even if there wasn't a threshold or as much parity, the overall number isn't going isn't going to fluctuate a great deal.  So what baseball generates is going to be a pretty finite number with only minimal variance.  

 

So as the amount of money pouring in is somewhat predictable, each of the various interests are going to want their chunk.  If you set the CBT threshold at a certain level, market forces will determine what the monetary value of a player becomes.  Minus the other fixed costs, and the rest goes to the owner.  

 

If you raise the threshold, the market will adjust and the monetary value of a players performance goes up.  It's one pool of money.  It's either going to the players or the owners.  So you can bet that an important part of the next CBA is going to be the negotiation between MLB and the players union as to what that CBT threshold will be.  The players - regardless of whether they are on a big or small market club - are going to want to maximize the ability for teams to spend more money without penalty.  Keep in mind, the proceeds of the CBT ie the collected % overage doesn't get divided up and distributed to the have not teams.  It gets divided up into player benefits as well as to the league as follows:

 

Competitive Balance Tax proceeds collected pursuant to Section B(4) above shall be used as follows. (1) The first $2,375,400 of proceeds collected for each Contract Year shall be used to fund benefits to Players, as provided in the Major League Baseball Players Benefit Plan Agreements. (2) 50% of the remaining proceeds collected for each Contract Year, with accrued interest, shall be used to fund benefits to Players, as provided in the Major League Baseball Players Benefit Plan Agreements. (3) 25% of the remaining proceeds collected for each Contract Year shall be contributed to the Industry Growth Fund and, with accrued interest, used for the purposes set out in Article XXV.(4) 25% of the remaining proceeds collected for each Contract Year, with accrued interest, shall be used to defray the Clubs’ funding obligations arising from the Major League Baseball Players Benefit Plan Agreements.

 

The league did this to motivate the players to want to keep the tax low, but the bottom line is that a higher threshold equals bigger free agent contracts.  Not just the ability for large market teams to spend more without penalty.  

 

And that is another reason why I sincerely believe that teams are anticipating a higher threshold and you will see bigger contracts this off season for players you'd normally not expect to get such lucrative contracts. It is one factor among many but just like the stock market anticipating a Fed Rate increase you'll see premature action this year I believe.

[Docwaukee]

As far as the Halos payroll and CBT number are concerned, 2016 isn't as important as 2017 and what this years spending does for that year.  I would imagine that Arte would go over 1 yr, but not 2.  He's gonna want it to drop back down for next year.  

 

Their AAV for next year is very close to their actual payroll number. They are around $130 mil for 2017 but that's without any additions to the current club and losing Aybar, Weaver, Wilson and Smith after 2016.  with benefits, they are around $145 for 2017 as their CBT number. BUT, there are a number of players slated for arb in 2017 that will probably get replace by league min guys.  

 

Sorry GB, but I am gonna assume a CBT threshold of around 200mil for 2017.  

 

With that, I am going to give them about 50mil in AAV to spend on a 2b, SS, 3b, LF as well as pen help and SP.  

 

The 2016/17 FA class is brutal btw.  So their best chance is to get most of that done this year while saving some space to get a SS and a pen arm next year.  

 

For 2016, I definitely don't see them exercising Dejesus option for 2016.  I also think they will non-tender Salas, Ramos and Cowgill.  I don't think they'll work on extending Calhoun and Richards till after 2017. Richards' last year of arb is 2018, and that is Calhoun's 2nd to last.  

 

I do think they will exercise Murphy's option regardless of whether they pursue a LFer.  If they get one, Murphy at 7mil has some ok trade value and it could net them a Salas or Ramos replacement.  If not, he's a solid backup plan.  

 

Beyond that, we'll have to see.  

[Docwaukee]

And that is another reason why I sincerely believe that teams are anticipating a higher threshold and you will see bigger contracts this off season for players you'd normally not expect to get such lucrative contracts. It is one factor among many but just like the stock market anticipating a Fed Rate increase you'll see premature action this year I believe.

Plus the fact that the 2017 free agent class sucks.  

[AngelsLakersFan]

Totally off topic, but does anyone else agree with me that angels lakers fan needs to change his avatar to alf? (Even though i still miss the one you have now with the bag on her head)

 

Lol I have to keep the tradition running! Once I change my avatar 2/3rds of you guys won't have a clue who I am. haha

[Angel Oracle]

And if signing a LF and using Murphy's option, they could always deal him plus half of his option money to entice someone to give up a somewhat decent prospect.