Hidden Vigorish

Detailed Analysis of The Pittsburgh Pirates

Arbitration Settlements and the Pirates Payroll

The Pirates came to terms last week with nine arbitration eligible players. The big winners were Mark Melancon and Josh Harrison. Both received substantial raises. The biggest news was not who the Pirates settled with, but who they did not settle with. Agreements could not be reached with Neil Walker, Pedro Alvarez, and Vance Worley. Team policy is to not negotiate once arbitration figures have been submitted, so it appears the Pirates are headed to an arbitration showdown with Walker, Alvarez, and Worley. The Pirates have not had an arbitration hearing with one of their players since Ross Ohlendorf in 2011.
Even if the Pirates win all three arbitration cases they will still likely have a payroll north of $90 million. I have not written much about the Pirates’ payroll this offseason. I was highly critical of the lack of spending last winter, but GM Neal Huntington has been much more aggressive with signing talent to the major league roster this offseason. Signing Francisco Liriano to a multi-year contract and taking a gamble on Korean SS Jung-ho Kang were bold moves that added payroll. But let’s not get too carried away yet with praise for the Pirates’ financial commitments. Getting payroll to this level has been a long time coming. Many people, myself included, feel this was overdue. It should also be noted that while the major league payroll has been gradually increasing, the amount spent on procuring minor league talent has dropped considerably due to amateur draft rule changes that fixed the amount that each team could spend on draft pick bonuses. In 2011 The Pirates spent a record $17 million on draft bonuses. In 2014 they were limited to around $7 million in draft spending. With less money the team can allocate for the draft they should be finding other places to commit those dollars. This year that happened. The Pirates spent $5 million on the posting fee to negotiate exclusively with Kang. Then they signed him to a 4 year deal worth $11 million. If the Pirates were still able to freely spend on draft pick bonuses it is very likely the $16 million commitment to bring Kang to Pittsburgh would never have happened. Kudos to the team for putting the money to good use this offseason. But it has been just one offseason. It is still too early to know whether this becomes standard operating procedure.

1 Comment

  1. Not getting carried away here, but my confidence and trust in Pgh’s FO & GMNH has only grown these past 4 years. Payroll aside, the Pirates have made some undeniably great decisions in recent years. Could they have spent more? Probably. But they’ve proven that their payroll each year has been sufficient.

    I was very critical when they signed Russell Martin… brother was I wrong about that one. I also thought it was a mistake to allow Burnett to leave – wrong again… he’s back now and Pgh saved themselves $$ and avoided his poor ’14 campaign. I was disappointed last off-season when they didn’t add/spend more for starting pitching, and they proved me wrong yet again w/ Edinson Volquez & Vance Worley, who pitched their asses off in ’14. I understand they pushed hard to get James Loney last year (can’t fault them if a guy chooses to sign elsewhere) so we end up with Ike & Gabby… can’t win them all.

    Thus I am encouraged by the increased payroll this year, as it indicates that the Pgh FO & GMNH believe such an increase is necessary to compete for the division & a WS. They’ve made a believer out of me, and I’ve stopped second-guessing their judgement… got tired of being wrong, and I’m happy to have broken that habit of always doubting Pgh’s FO. Old habits die hard.

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