How to Interpret Ken Kendrick's Payroll Comments

The Diamondbacks owner pledged to increase payroll. We help you put that in context.

The Diamondbacks are coming off a dream season in which they exceeded many people's expectations. Winning 84 games, making the postseason as the third Wild Card, and fighting all the way to the World Series before losing to the Texas Rangers in five games, shocking many in the baseball world along the way.  After all the team was 52-110 in 2021 and 74-88 in 2022. 

Here at Inside the Diamondbacks we knew that the team was up and coming however. In November of last year we published an article stating The Diamondbacks are Better Than You Think, projecting exactly 84 wins and a shot at the Wild Card.  In that article we exhorted ownership to increase payroll to match the upward wave of youth and mature veterans that appeared ready to make a big step forward. Three months afterwards as Spring Training began we were able to report that the team had indeed increased payroll over 20%.  Opening Day payroll was approximately $115 million in 2023, compared to just $90-95M the two years prior.  

Speaking two days ago on the Burns and Gambo show on Arizona Sports radio, team owner Ken Kendrick indicated that he will increase payroll again for 2024. What did he mean? Could the D-backs get into the $120-$140 M range in 2024?

"The opportunity that playing all these games creates is an economic windfall that was not planned....There is a windfall of this last month and we will use that to invest back in the players on the field and it will allow us to make some additions to the roster."

This is great news for fans of the Diamondbacks. There has been concern that losing their television contract with Bally Sports would result in the team cutting payroll, not increasing it. However based on Kendrick's comments one can surmise that they must feel they'll be able to replace a significant portion of those T.V. revenues and the increased revenues not only from the postseason run, but also anticipated increased season ticket sales will more than offset any T.V. revenue shortfall. 

Pressed for a specific number Kendrick declined to be pinned down, but insisted the team is in position to  "make not insubstantial investments".  Just what would constitute substantial investments is open to interpretation depending on who is spending the money of course.  Kendrick concluded this segment by saying "Obviously as we spend the money it becomes public and I think our fans will be proud that their money is going to the right cause, and that’s to build a more talented and better roster."

He is 100% right about that. The numbers for the most part are public, and here at Inside the Diamondbacks we like to track and report these numbers to you periodically.  First a bit of history. Over the last 10 years the team's Opening Day payroll rank among all 30 MLB franchises has fluctuated from a high of 13th in 2014 to a low of 26th in 2017. Overall the team payroll rank has averaged 20th in the league during the last 10 years. 

The current payroll snapshot of what they are committed to looks to be about $100M at the moment. This is broken out into guaranteed contracts, arbitration eligible player contracts, and pre arbitration player contracts as follows.

Category	Amount (Millions)
Guaranteed Contracts	49.5
Arbitration Estimates	37.5
Pre Arb Players	13.0
Total	100

By way of explanation, guaranteed contracts are free agent contracts or  contracts for players that have already been extended. Different sites will report these slightly differently based on how they handle things like signing and incentive bonuses, which can be a bit murky at times. At the same time these numbers are not the numbers that are used to determine luxury tax thresholds under the collective bargaining agreement. That is a separate number that is calculated under a complicated set of accounting rules, and also includes things such as player health benefits, payments into central bonus pool funds, and the like. To keep things simple, and apples to apples, we are just adding up the publicly known payroll amounts of each player. 

Considering the table above and Kendrick's comments it's reasonable to assume General Manager Mike Hazen has at least $20 million to work with, bringing payroll up to $120M, which would be a modest $5M increase over 2023 opening day payroll. That might not seem "substantial" to many.  Based on his past track record, it seems possible Kendrick may go as high as 2018's peak of $131M, giving Hazen $30M to work with. In an absolute best case scenario, payroll cold top out at $140M, but it would be wise not to set that high an expectation.

Below is a breakdown of the current payroll commits and estimates. We will update this just as spring training starts and the off season moves have mostly concluded. 

D-backs Payroll Commits as of November 4, 2023 / Jack Sommers

Notes:

The above table makes the assumption that Mark Melancon's $5m option will not be picked up and the D-backs will pay him a $2M buyout within 2023 calendar year. 

MLB's league minimum salary is set at $740K for 2023, but pre arb players with more than one year of service time will typically make $10-20K over league minimum, so we used $750K as the average.

Teams budget for injury replacements from the minor leagues. While that is not technically part of Opening Day payroll, I included that amount here. 

If Hazen is looking to squeeze a few million extra savings, he may decide to "non tender" Kyle Lewis and Austin Adams, who both went through health and performance issues at the major league level in 2023.