Going into the offseason, it was well-known that the Mets did not have much payroll space to work with, and they’d probably need to clear some salary in order to make additions. The team did add some players before clearing any payroll, but on Friday they restructured Yoenis Cespedes’s contract to free up a lot more space. So let’s have a look at where the team’s payroll stands now, and how much room they still have to navigate.
According to Cot’s Contracts, the Mets had $171.29 million on the books coming into the offseason, including all of the 0-to-3-year player salaries and arbitration projections. Then they went out and signed Rick Porcello for $10 million, Michael Wacha for $3 million, Brad Brach for $850k, and traded for Jake Marisnick and his projected $3.25 million arbitration figure. That raised the Mets’ payroll to $188.39 million before the adjustment of the Cespedes deal, as reflected on this spreadsheet from Cot’s.
However, the $188.39 million figure did not represent how much money the Mets actually had against the competitive balance threshold. Payroll against the CBT is calculated differently. It views all contracts by their average annual value, and it includes the salaries of all players on the 40-man rosters as well as the cost of all player benefits.
With all of that factored in, the Mets’ payroll against the CBT was actually at $202.45 million before the new Cespedes agreement. The CBT threshold this year is $208 million, so the Mets were right up against it, with the chance that the incentives in Wacha’s deal—which could reach a maximum of $10 million—would take them over the limit.
We don’t know the exact terms of the agreement with Cespedes as of right now, but reports indicate that his revised contract for 2020 includes less than $10 million guaranteed, with certain performance escalators that can still take it up to $20 million. Without the benefit of having the exact details, let’s just assume that Cespedes is getting about $10 million guaranteed as a base salary. That would knock $19.5 million off of the payroll and bring it down to $169.59 million.
For luxury tax purposes, it gets a little muddy without us knowing how MLB will view the reduction in his salaries the last two years and if that will affect the AAV of the contract for CBT purposes. If they do, then it drops the AAV from $27.5 million to about $19 million, which gives the Mets about $8.5 million of space against the CBT and lowers their current CBT payroll to $193.95 million.
However, there is some belief that the salary reduction will be entirely subtracted from the luxury tax payroll. If that is the case, the Mets would save the full $19.5 million against the luxury tax and their current CBT payroll would drop to $182.95 million.
Either way, we can safely the Mets are still within $25 million of reaching the CBT threshold. However, as Chris McShane pointed out, going over the limit is not actually a big deal and shouldn’t deter them from continuing to pursue players. The penalty for a first time offense for going over the CBT threshold is merely a 20% tax of the overage, as long as you stay within $20 million of the threshold. This means that, if they saved the full amount of Cespedes’s salary reduction against the CBT, the Mets could add up to $45 million more to the payroll and the largest possible fine they would endure for it is $4 million—in other words, only a bit more than Travis d’Arnaud’s 2019 arbitration price, which the Mets ate as a sunk cost for 5 months.
The Mets might still try to shed more payroll than they add going forward, and as they do it, they will talk about how close they are to the luxury tax or justify their lack of spending by how high the payroll already is. Just remember that neither excuse is a valid one because the luxury tax is not the boogeyman they make it out to be, and the team has saved anywhere from $24-$34 million from the Cespedes contract and insurance is paying most of the $12 million owed to David Wright. They should still have room to add several good players.