Image   In 2014, the economic landscape for all Major League Baseball teams is about to undergo a dramatic shift for the positive.  Next year the new national TV contracts kick in between MLB and the networks of FOX, TBS, and ESPN.

This will result in each team’s equal share of the national TV deal jumping from approximately $23 million in 2013 to approximately $50 million in 2014.  When coupled with the estimated $20 million per year that the Pirates receive from ROOT Sports for the local TV rights, the Pirates will receive $70 million of revenue before even one ticket (the Pirates get 90% of all ticket revenue), one hot dog (they get 40% from Aramark) or one t-shirt (the same 40%) is sold.

For the 2013 season, the Pirates’ opening day payroll was $66.8 million.  In theory, the Pirates should re-invest that additional $27 million right back into the major league team, as they are already eking out minor surpluses (as per Forbes) on the current payroll.  There are no other good uses, or excuses, on where to put the money as the new Collective Bargaining Agreement caps the amateur draft spending for teams in a pool, and the international bonuses are greatly restricted, as well.  

Using the indispensable Cot’s Baseball Contracts site, the Pirates have $31.9 million of commitments for 2014 already.  These commitments are Russell Martin ($9.5M), Andrew McCutchen ($7.45M), Jason Grilli ($4.25M), and Jose Tabata ($3.167M).  This also includes the net of $7.5M (thanks for the $5.5M of his $13M option, Houston) that would be owed to Wandy Rodriguez should he exercise his player option for 2014.  I’m not 100% positive Wandy won’t turn that option down and try to seek a higher contract on the open market for multiple years, but for now let’s go with it.

The above number of $31.9 million does not include players such as Neil Walker and Pedro Alvarez, among others, who will eligible for arbitration again.  Nor does it include players like Starling Marte who are still in the minimum salary scale portion, either.  Doing some very rough back-of-the-envelope figures, it is very easy to assume that the Pirates will spend $30 additional million on these arbitration and pre-arbitration players, which would bring them right into the neighborhood of this year’s $60 million payroll.

So where will the additional $27 million be spent?  The easy answer is to say that the Pirates should try and retain their own internal free agents first.  Chief on that list is A.J. Burnett.  Not only has Burnett dazzled at times with his on-field performance, but his off-field manner of setting the tone for the pitching staff and imbuing this team with swagger and leadership can be seen as well.  He has already hinted that he’s been thinking of retiring, but it’s clear that he has 1 or 2 more good years in that right arm.  I would like to see him re-sign for 1 year at around $14 to $15 million.

None of the other free agents on the team (Clint Barmes, Jeff Karstens, John McDonald) are worth keeping, especially at their current salaries, so I would suggest the Pirates explore the trade market to bolster either their starting rotation or shortstop position with a player that another team may either not need anymore or not be able to afford, if they are re-building.  It’s too early to identify those types of candidates, as that market develops later in the year and the early part of the off-season.

All of this extra infusion of cash has the possibility of raising free agent prices across the board, resulting in the same situation where the Pirates can’t afford free agents, but I don’t feel that is the most likely outcome.  It’s hard to fathom that any team is going to want to breach the $30M/year threshold for a single player, no matter how much additional revenue there is.  Rather, it seems like the “middle class” of free agents are the ones that will benefit the most from the new TV deals.  If you were a player that could command $6 to $8M/year, perhaps now you will make $8 to $10M/year.  Relievers that get $4M/year may get $5M/year and so forth.

A portion of it should probably go towards the continuation of paying down debt, but the Pirates can’t view this extra $27 million as found money and just pay down debt.  The reason being that every team is getting an additional $27 million so the whole payroll level will be raised accordingly.  They have to re-invest the lion’s share or else risk being left even further behind.


Kevin Creagh

Steel City Buzz Pirate Blogger