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Oct 16, 2024

An Offseason Payroll Primer - The Crawfish Boxes

Filed under: It really hinges on what happens with Alex Bregman. For the first time in club history, the Astros will pay a CB tax of around $4.5 million this offseason for spending over the initial

Filed under:

It really hinges on what happens with Alex Bregman.

For the first time in club history, the Astros will pay a CB tax of around $4.5 million this offseason for spending over the initial two thresholds of $237 million and $257 million in 2024. The first time, you may wonder? Didn’t Houston also exceed the first threshold back in 2020? Well, technically, yes, but due to MLB suspending the tax during the shortened COVID season, Jim Crane’s pocketbook was unaffected, at least in this regard. The 2024 season was actually the second time the Astros have spent past the initial threshold and the first time beyond the second threshold.

With that said, the player payroll situation remains in flux for 2025. Most importantly, how the Astros address Alex Bregman in free agency will greatly dictate their offseason. Per RosterResource, Houston’s estimated 2025 player payroll for luxury tax purposes is just shy of $237 million, with projected arbitration figures already accounted for. The first tax threshold for next season is $241 million, so Dana Brown and company have little room to operate if they plan to add Major League talent and avoid paying another CB tax if that is the mandate from Crane. A friendly reminder: The tax rate applied to repeat payors escalates from year one to year two, from 20% to 30% for passing the first threshold in consecutive years. For any payroll that exceeds the second threshold, the rate will increase from 32% to 42% if exceeded again in 2025.

For those wondering at home, José Abreu and Rafael Montero will be paid a combined $31 million next season, which does impact payroll for tax purposes. There is no getting around that sizeable roadblock, although Abreu won’t play an inning for Houston and it remains doubtful if Montero will again. Lance McCullers Jr., who has thrown 63 innings in the last three seasons (all from 2022, including that postseason), will account for $17 million against the tax payroll. It is certainly plausible that the Astros will pay out $50 million to three players who will not log a single at-bat or may not throw a pitch for them next season. While it isn’t a budget breaker, those salaries present some real challenges if avoiding the tax is a high priority.

As it stands, the Astros will have to pay the tax again in 2025 if they plan to re-sign Bregman. Matt Chapman’s six-year, $151 million extension with the Giants establishes the floor of expectations, but we all know Bregman will find a more lucrative offer in free agency. Re-signing Bregman also likely means that little else is coming in externally to help bolster a roster that could use it. The rotation for next season is — more or less — set with Framber Valdez, Hunter Brown, Ronel Blanco, and Spencer Arrighetti. Luis García is also expected to return in 2025, with the organization hopeful that Cristian Javier and José Urquidy will be back hopefully by the end of July. There’s also McCullers Jr. to remember, although one would have to see him back on the mound before anything else is decided about his role. Another veteran starter to eat some innings could go a long way. Another leverage reliever, as Brown has stated earlier this month, would be ideal. The lineup certainly needs help, as it struggled with Bregman, even accounting for Kyle Tucker’s absence and return. They’ll need to prioritize one more bat, even if Bregman returns to lengthen a lineup that was one or two batters short all season long.

But if Bregman departs for another club and a more lucrative offer, the Astros will be at a crossroads. Again, they will only be roughly $4 million below the first tax threshold. While it is possible that Brown will add talent to this roster and Crane will be fine with paying another year of CB tax, it isn’t a guarantee. Without Bregman, this roster will need an infusion of talent to help maintain its place among contending clubs. I don’t see how that occurs without either paying for more talent and incurring more tax penalties or trading off some players with higher salaries to lower their payroll commitment while bringing in cost-controlled players.

Honestly, I think it would behoove Brown and his front office to at least explore the trade market for Valdez and Ryan Pressly, who are projected to make a combined $32 million or so in 2025. Both are free agents after next season, so that may limit the return coming back. It is a difficult proposition to consider, especially in the case of Valdez, who is among the top twenty starting pitchers in baseball. But trading someone like him and Pressly would free up salary and bring in cost-controlled talent to help supplement this roster. The Astros are among the better organizations about developing pitchers and there are options to consider in the near future. It is certainly a risk to entertain such a trade to not only lose depth in an area that was an issue last season but also pitchers of that caliber. They’re not easily replaceable. It also places an abundance of faith in the pitchers internally to meet or exceed expectations. But when accounting for the entire situation, a difficult decision could lead to the quickest way to remain in contention in the short-term if Bregman leaves. Otherwise, unless Crane is willing to spend even more, I don’t see how the Astros can reconcile their current payroll situation and hope to continue this run of success without some drastic changes.