Behind the Minnesota Twins’ Low 2024 Payroll is a Big 2025 Increase

[Peter Labuza]

While the Minnesota Twins' 2024 payroll remains disappointingly low, the team may be doing more than stashing and redirecting the money they'll receive via their one-year deal to return to Ball Sports North. They might also be planning around inflated costs in 2025. 

Image courtesy of © Jonah Hinebaugh/Naples Daily News/USA Today Network-Florida / USA TODAY NETWORK

Following what felt like the dawn of a new era for Twins baseball, many fans have felt that hype shot through the heart with disappointment, as the team has decreased its payroll in response to broadcast woes. However, as President Dave St. Peter made clear to Evan Drellich in The Athletic, the choice to make that change was only partially due to that uncertainty. 

I am not here to run flack for the organization. However, there are two financial cliffs awaiting the Twins in 2025 that are interesting to look at. The first is that the broadcast nightmare is not over. With a one-year deal with Bally, the Twins will be back on the market next year, with more or less the same set of available partners. Even if Rob Manfred creates an MLB streaming product to fans without blackouts, it will likely fall short of generating the significant cable money the Twins earned in working with Diamond Sports Holdings--barring some kind of miraculous collaboration with several big-market teams, who are not contracted with DSH or Bally and don't have much incentive to join the cabal.

The other issue is more interesting: The Twins will, by nature, have to run a highly inflated payroll in 2025 due to their current contracts and players entering arbitration. If the Twins simply ran back the exact same team next year, they will be adding $20 to $25 million in payroll over what they currently have. Let’s break down the details

Free Agent Contracts with Increases: Carlos Correa, Pablo López, Chris Paddack, Randy Dobnak
Estimated Increase: $23.25 Million
Although the Twins have scored some of the most team-friendly extensions in the game, they have also designed them in a way where some years pay better than others. Next year is when some real money will be due. Correa’s gargantuan contract hits it peak, with a $4-million increase to $37.5 million. López will finally get to the meaty part of his extension, with a $13.5 million increase to $21.75 million (still a team-friendly deal compared to the open market, where Sonny Gray will be earning $25 million). Paddack signed an extension following his Tommy John surgery that essentially re-designed his arbitration years. Whether or not he becomes a reliable starter, the Twins have him for another year at $7.5 million--a $5-million increase from his 2024 salary. Dobnak’s deal also sees a guaranteed increase of $750,000 next year.

Arbitration 1 Players: Joe Ryan, Bailey Ober, Griffin Jax, Jhoan Durán, Royce Lewis, Trevor Larnach
Estimated Increase: $10 Million
The Twins have done well building a deep, team-controlled core. But that core is soon to be due real money, as they begin their arbitration years. Although arbitration is based on previous year performance, there are certain bands of money where we can at least put generalized estimates on what might be needed for 2025. If Ryan and Ober turn into mid-rotation starters, they will each see increases of at least $2 million each. The same could be said for a batting phenom like Lewis. Durán and Jax will be more difficult to estimate, but both are likely due an extra million or more. Larnach is the odd man out, and will be fighting both in Spring Training and all season to retain his roster spot.

Arbitration 2 and 3 Players: Ryan Jeffers, Willi Castro, Josh Staumont, Justin Topa, Steven Okert, Alex Kirilloff
Estimated Increase: $9 Million
This group of players have less chance of breaking the bank, though Jeffers is a notable name here. Just this season, Dodgers catcher Will Smith set a new record for Arbitration 2 as a catcher, with $8.55 Million. Jeffers likely won’t match the All-Star, but another good season should net him a few extra million. Castro is set for $3.3 million this season, and will probably only earn a small increase for 2025. All the bullpen arms remain question marks in how much they might see, or whether the Twins might keep them. Like Larnach, Kirilloff will need to prove himself viable on the field before other batters from the minors may come knocking for his spot.

Option Deals: Kyle Farmer, Jay Jackson, Jorge Alcalá
Estimated Increase: $2.61 Million
The Twins also have three options on their various spare parts. In order to avoid a messy arbitration, the organization and Farmer agreed on adding a mutual option for 2025 that would bump his salary a small but notable $200,000. With the arrival of Brooks Lee, the Twins may once again try and find a trade market for the backup infielder. Jackson also arrives in Minnesota with a team option at $3 million for next year. If he turns out to be as good as advertised, the Twins may add the additional $1.7 million to keep a strong arm. Finally, Alcalá and the Twins agreed to a mutual option for $1.5 million. Alcalá will likely break his injury track record to get the Twins to keep that money on the table.

Money Coming Off the Books: Max Kepler, Carlos Santana, Anthony DeSclafani, Caleb Thielbar
Estimated Decrease: $22.25 Million
Of course, players reaching free agency means the Twins will shed some payroll, as well. Kepler’s money remains the most significant, as the team will get out from under his team-friendly $10 million contract. The others are quite small, but add up in the aggregate. However, this all remains an issue for the Twins: they will be losing a right fielder, a first baseman, a starting pitcher, and a solid left-handed reliever. The team will almost certainly spend all season evaluating their prospects, to see if any of them can act as legitimate replacements. But if there are holes, they will certainly have to take some of this money and convert it into new spending to remain competitive.

Although things could shake out in several ways, it is almost certain that the Twins will see an additional $20 million added to their payroll next season, and that's before making any external additions. That's why, despite their unexpectedly non-calamitous short-term TV deal, they've been reluctant to commit to a free agent who could end up being on the books for another $20 million in 2025. It hardly excuses the team for pocketing the money, but the Twins will need to think creatively as this young team ages into big money--whether they like it or not.

View full article

[DJL44]

It would make sense to do some long-term deals with arb eligible players that pulls future earnings into this season.

[roger]

Excellent review of what the Twins are facing going forward.

I expect the payroll was more than they wanted in 2023.  2024 will be under what they could absorb, now that a tv deal is in place.  And 2025 looks like it is going to be a big problem.  Sure makes sense to me that they would conserve their spending this year.

Also makes it almost 100% certain that Max is gone next year.  Not real certain who they have for right field that I can get excited about.  I guess the best case would be Wallner with either ERod or the wonderboy, Jenkins, shocks the heck out of everyone and takes that left field spot.  

Expect the only other player who could give them real dollars would be to revisit trading Vazquez.  You are showing an increase of around $22.61M.  Without any other adds, that would put them around $140+M.  We don't know what the tv revenue will be and whether or not that works.  Unfortunately, neither do the Twins.  Hopefully, they are having meaningful discussions with the league about how their streaming service would work and the dollars the Twins could expect from it.

[Linus]

So it puts them back to where their were last year. They are 20th out of 30 in payroll right now. Their current payroll relative to the league is the lowest since they were in the Metrodome. I guess the Pohlads just can’t afford to own a team that wants to compete. Perhaps they should sell and pocket the nearly $2 billion increase in the value of the franchise. I’m sure the Pohlads thank you for your concern over their finances. 

[Heiny]

I think this scenario is toally accurate.  The best scenario for this season is to sign someone to a one year deal with team options.  And although I have a lot of confidence in Varland, I think the best way to spend on a one-year contract is to sign Bauer.  High reward - low risk.  He is willing to sign a major league minimum deal to prove himself.  If there is a problem with attitude or behavior or a lack of performance he can be DFA'd at a minimal cost.  I think he deserves a chance.  And with the great attitudes of guys like Correa, Lopez, Lewis, Farmer and Vasquez, who knows, he may really like a manager like Rocco.  I realize I am in the minority here but it almost seems like a no-brainer to me.  This could really improve the strength of our starting staff.  And the key here is the low risk factor.

[Nashvilletwin]

Thank you for laying this all out.  So next year costs go up and expected revenues go down. Some things might change around the edges, of course.  But the directional gist is correct.

Do my fellow TDers really think that our owners have some sort of civic duty to run the team at a cash loss year in and year out? Should they just be satisfied with capital appreciation and forget operating earnings/cash flow? Are we as fans not receiving a fairly consistent high level of baseball entertainment from our supposedly parsimonious owners?

Sure, we don’t have Stevie Cohen as our owner or the revenues of the Dodgers or Yankees.  But overall we are a pretty well run franchise that does most things the right way.  I’ll take our level of entertainment and success over a lot of the rest of the league, including some bigger market teams.   

[tony&rodney]

No worries, the roster budget will only be about $5-10 million higher and fit the players the team needs.

Would be nice to see a bump up to $150 million+ but we can wait to worry about that. A number of players listed will no longer be on the roster, options will be bought, players move on, and Julien still has a year to go before arb 1.

$130-135 for 2025 does it. No worries.

[DJL44]

11 minutes ago, Nashvilletwin said:

Do my fellow TDers really think that our owners have some sort of civic duty to run the team at a cash loss year in and year out?

I don't believe they have ever run at a cash loss with the possible exception of the pandemic year.

[TopGunn#22]

The better the team on the field is, the more revenue they will see from ticket sales and novelty sales.  Sometimes you gotta spend a little to make a little more.  This was an excellent layout for how next year could develop.  There will certainly be other player moves that will affect what will ultimately be the outcome.  

[Linus]

2 minutes ago, DJL44 said:

I don't believe they have ever run at a cash loss with the possible exception of the pandemic year.

Yea the idea that a franchise purchased for $32 million increased in value to almost $2 billion but doesnt make a profit on an annual basis is pretty far fetched 

[weneedneshek]

So doing the math, there is a net increase on the books of $22M next year. That would still put us over $20M under LAST years salary. What is the purpose of this article?

[Nashvilletwin]

20 minutes ago, DJL44 said:

I don't believe they have ever run at a cash loss with the possible exception of the pandemic year.

Exactly my point - they shouldn’t have to. Ever.  Thank you.

[FlyingFinn]

I don't think your projection is what is going to happen. I'm expecting $ to come off the books for Farmer and Jackson to the tune of $7 million. I don't expect all of the arb 1 and 2 players to be on the team (Larnach and some of the relief pitchers). Lots of things will change by the end of the season.

[Jocko87]

Appreciate this article. There is a heck of a lot more going than "cheap Pohlads".  This place is going to be unbearable next year.

I haven't thought all the way through how this would work but as a hypothetical, what if they used this alleged found TV money to make a big down-payment on an extention for someone?

What future cost control can you buy with a 15-20m signing bonus for Lewis for example? It's a big check to write but if it locks in another two years at a decent rate it would be well worth it.

It's a better use of this year's money than any free agent out there.

[IndianaTwin]

@Peter Labuza, this is a really, really great layout and reflects what a number of us seem to be thinking about their spending this offseason. If you are up to it, I'd love to see the addition of a "2024 total: ___ million" in each grouping.

Beyond that, are Buxton, Vazquez (no change) and the various pre-arb players the only ones missing? Buxton and Vazquez are basically their own category, "Contracts with no change."

[IndianaTwin]

In terms of comments...

1. Some will continue to name dumping Vazquez as a way of saving money. I'm not so sure. Either he plays well and the Twins want to retain him at $10M or he plays poorly and the Twins would have to cover a part of his salary to trade him. 
2. Farmer and Alcala are both on mutual options. These rarely get taken. Either the player plays poorly and the team declines it or the player plays well and wants to test the market. (EDIT to add: As noted in a comment I make below, it looks Alcala's is actually a team option.)
3. From a roster management standpoint, it's hard not to see Larnach and some of the guys in the Arb 2/Arb 3 category as non-tender candidates. We can't guess which ones at this point, but probably one or two or more. If they all play well and are worth tendering, that's a great problem to have! 

[Cap'n Piranha]

36 minutes ago, DJL44 said:

I don't believe they have ever run at a cash loss with the possible exception of the pandemic year.

 

32 minutes ago, Linus said:

Yea the idea that a franchise purchased for $32 million increased in value to almost $2 billion but doesnt make a profit on an annual basis is pretty far fetched 

No one is saying the Twins don't make an annual profit.  People are saying that the Twins operate the way they do to ensure they turn an annual profit.  Nashville was specifically asking if the expectation from some posters (the ones expressing disappointment in the Pohlads not spending more) is that the Twins will lose money if it serves the purpose of having a higher payroll.

[Cap'n Piranha]

25 minutes ago, weneedneshek said:

So doing the math, there is a net increase on the books of $22M next year. That would still put us over $20M under LAST years salary. What is the purpose of this article?

To outline the fact that the Twins have uncertain revenue outlooks for next year, and due to the combination of that and a near guarantee of increased payroll, the historically conservative Twins are operating conservatively.

[Cap'n Piranha]

39 minutes ago, TopGunn#22 said:

The better the team on the field is, the more revenue they will see from ticket sales and novelty sales.  Sometimes you gotta spend a little to make a little more.  This was an excellent layout for how next year could develop.  There will certainly be other player moves that will affect what will ultimately be the outcome.  

Sometimes you spend a lot more, and make a lot less.  Go look at what's happening in San Diego.  There are multiple ways to improve on the field, and handing out free agent contracts is not universally the best option.  There's maybe 3 teams that could truly attempt to buy a championship; the Mets tried (and failed spectacularly) last year, the Dodgers are trying this year.

[Beast]

This is an asinine defense.

Every team in every season of history faces arbitration.

They almost certainly will not carry all of those players listed into 2025.

A $20M increase in payroll from where it is now is peanuts, and still way too low.

We need new ownership and less propaganda.

[Mike Sixel]

Poor Pohlads, how ever will they survive?

[DJL44]

52 minutes ago, Nashvilletwin said:

Exactly my point - they shouldn’t have to. Ever.  Thank you.

I guess not, but I'd like the team more if they were willing to do it occasionally in order to take a shot at the World Series.

[Mike Sixel]

7 minutes ago, Mike Sixel said:

Poor Pohlads, how ever will they survive?

that said, I 100% think this is why payroll is what it is this year.

I also think they believe (rightly?) in the SP in AA and AAA and don't think they need to sign a FA SP to a 2+ year deal. 

[CCHOF5yearstoolate]

Very disappointing to see so many people's takeaway from this article is to sling more "pocket protector" mud when the author states many times that the payroll drop is negative.

The unrelenting desire to be negative has ruined the comments of an article I guarantee none of you had previously thought about, in a way that attributes some kind of billionaire defense that doesn't exist.

I swear some people are physically incapable of discussing the Twins without devolving into a whine-fest about the payroll. Yes, it's sheisty how they run the team like a greedy greedy business but does every comment section need to be a black void of people shouting into the ether about the payroll? My god, it's so tiresome. 

[Schmoeman5]

58 minutes ago, weneedneshek said:

So doing the math, there is a net increase on the books of $22M next year. That would still put us over $20M under LAST years salary. What is the purpose of this article?

I think the purpose of the article was. If you think the Twins didn't do much this offseason. Pretty much stood pat. You ain't seen nothing yet. Wait till next year. It'll make this year seem busy. The Twins org. is reinventing the wheel. How to do more with less

[Mike Sixel]

Just now, CCHOF5yearstoolate said:

Very disappointing to see so many people's takeaway from this article is to sling more "pocket protector" mud when the author states many times that the payroll drop is negative.

The unrelenting desire to be negative has ruined the comments of an article I guarantee none of you had previously thought about, in a way that attributes some kind of billionaire defense that doesn't exist.

I swear some people are physically incapable of discussing the Twins without devolving into a whine-fest about the payroll. Yes, it's ****** how they run the team like a greedy greedy business but does every comment section need to be a black void of people shouting into the ether about the payroll? My god, it's so tiresome. 

It's literally an article about payroll....what id you expect?

[CCHOF5yearstoolate]

1 minute ago, Mike Sixel said:

It's literally an article about payroll....what id you expect?

Which means we have to call the author a pocket protector defending this year's payroll? That there's no opportunity for discussion about what was actually written?

[TwinsDr2021]

3 minutes ago, Mike Sixel said:

It's literally an article about payroll....what id you expect?

IMO, it is because some only see the home town team through rose-tinted glasses and see those that try to be objective or realistic as just whining.

[Woof Bronzer]

1 hour ago, Nashvilletwin said:

Do my fellow TDers really think that our owners have some sort of civic duty to run the team at a cash loss year in and year out? 

Hahahha the Twins propaganda machine has brainwashed you into oblivion if you think any MLB owner takes a loss, ever.  The value of the franchise has grown by a billion dollars since they bought it, and the team received a half billion dollar subsidy from fans.  Yes, the people of the state of MN have helped make the Pohlads even more wildy wealthy than they were, and yes, I think that means the Pohlads have a civic duty to spend appropriately.  Professional sports franchises are NOT "just another business".  Every business does not receive welfare to the tune of $500mil, so why would we treat the Twins as such?

I continue to be blown away by the number of fans who blindly do the Pohlads propaganda work for them in order to...what?  I don't know.  I really don't.  

[lukeduke1980]

If either Correa or Buxton have good healthy seasons, should they be considered on the block?