Regardless of Deadline strategy, Tigers understand payroll implications

This story was excerpted from Jason Beck’s Tigers Beat newsletter. To read the full newsletter, click here. And subscribe to get it regularly in your inbox.

DETROIT -- The Tigers head into the final week before MLB’s Trade Deadline with still no clear signal whether they’ll be buyers, sellers or sit somewhere in between. Manager A.J. Hinch and his players are doing their best to determine that direction on the field. But there’s another subtle factor off the field that could play into Detroit’s dealings.

The Tigers closed out their offseason building up their pitching staff to make a run this year, from a record arbitration ruling for Tarik Skubal to the late signings of Framber Valdez and Justin Verlander. The combination of signings pushed the Tigers’ payroll into record territory, closing in on the competitive balance tax threshold for the first time since 2017.

FanGraphs lists the Tigers payroll as $216 million. However, there are other costs that go into each team’s payroll when calculated for the tax, from every player on the 40-man roster to additional player benefits.

The tax threshold for this season is $244 million. FanGraphs projects the Tigers payroll at $241 million. Spotrac projects the Tigers payroll for tax purposes at $244,205,638. The MLB Trade Rumors payroll tracker projects the Tigers payroll at about $245.6 million. Cot’s Baseball Contracts, now part of Baseball Prospectus, projects the payroll at $245.9 million.

The official figure won’t be known until season’s end, given all the transactions. But it’s safe to assume the Tigers are acutely aware of where their payroll would land, as they stand now as well as under any hypothetical moves.

If the Tigers were to finish over the threshold, they would pay a 20 percent tax on the additional amount. But that’s not the biggest factor at play. The competitive balance tax also factors into Draft compensation for free agents who reject a qualifying offer.

Under the current collective bargaining agreement, a team that makes a qualifying offer to one of its free agents is entitled to an extra Draft pick if that free agent rejects the offer and signs elsewhere. For teams that receive revenue-sharing money, as the Tigers have been for the last several seasons, that compensation pick is at the end of the first round if the player signs for more than $50 million, or the end of the second round if the player signs for less than $50 million. However, if a team pays into the competitive balance tax, their compensation pick for such free agents falls to the end of the fourth round.

If the Tigers hold on to Skubal and Casey Mize at the Trade Deadline, they could get compensation picks if they leave in free agency in the offseason. It’s not just a consolation, it’s a baseline for the Tigers in any trade discussions: Would a prospect package in a trade top the kind of prospect they would get in the Draft through a compensation pick?

But there’s a big difference between a first-round pick and a fourth-round pick. A compensation pick near the end of the first round would fall around the same range where the Tigers drafted Kevin McGonigle with their Competitive Balance pick in 2023 (37th overall).

It doesn’t mean the Tigers have to be sellers at the Trade Deadline. It doesn’t even mean the Tigers can’t add at the Deadline. But it means the Tigers will likely be cognizant of every potential move’s impact on their payroll. It could mean the Tigers both sell and buy at the Deadline, possibly trading one veteran at a position of depth for another in a position of need. It could mean the Tigers add at the Deadline while asking a seller to absorb a chunk of a player’s remaining salary.

Ultimately, the buy-or-sell decision will likely rest more on whether the Tigers have a realistic path back to the postseason. But the Tigers will know the payroll implications.