NEWSLETTER
The New York Mets under owner Steve Cohen are going to boast a league record payroll next season, which will push their commitments well over $400 million when factoring in the luxury tax. Must be nice.
But even at that spending scale, it’s not as if they wouldn’t mind shaving off some cash if possible. Or opening up roster spots at the same time.
So this report is not the least bit surprising:
Having added a fourth catcher in Omar Narvaez, and having added Justin Verlander, Kodai Senga, and Jose Quintana to the rotation (even after the other departures), there is plenty of roster room to move James McCann and Carlos Carrasco. To say nothing of the financial reasons to move them, and that’s where you might want to see the Cubs make a phone call.
McCann is under contract for two more seasons at about $12 million (~$10M AVV), and Carrasco for one more season at $14 million ($14M AAV).
What makes this interesting is the potential for inefficiencies here, where the Cubs (or another club) might be able to take advantage and land themselves some quality prospects or young players.
Because the Mets are over the third tier of the luxury tax, that means every incremental dollar of payroll is taxed at 90%. That means everything costs them nearly double the actual price. So, in turn, that means unloading $10 million in AAV salary actually amounts to $19 million in savings (even though the receiving team is adding only that $10 million). There is an inefficiency there that SHOULD be able to enhance the return in trade of an underwater contract, even if the Mets are eating a lot of the salary.
Things get a little complicated when you start talking about the “actual” payroll as compared to the “luxury tax AAV” payroll, but the inefficiency is still there.
For example, consider a situation where the Cubs were willing to add both Carrasco and McCann from the Mets. To the Cubs, that would be an addition of about $28 million in actual payroll for 2023 (they are likely to be less interested in luxury tax AAV at this time), and an addition of about $12 million in actual payroll for 2024.
For the Mets, it would be the subtraction of about $24 million in AAV for 2023, and about $10 million in AAV for 2024. But when factoring in the highest tier of the luxury tax, together with the actual salaries, it would be a savings of about $48 million in 2023, and about $21 million in 2024. In other words, the Mets would be saving a LOT more money than the Cubs would be taking on! That huge gap represents additional room to play with whatever the Mets would have to give the Cubs to take these players, and both sides could wind up very happy about it: the Mets saving more than you might expect, and the Cubs getting a better return than you might expect.
Now then, you do also have to factor in the potential value of the players, themselves, because that isn’t zero.
Carrasco pitches next season at age 36, and while he won’t be a great bet for a ton of innings, he does project to be around a league-average starting pitcher. That has value. Maybe not $14 million, even in this market, but probably pretty close. McCann, 32, saw his offense plummet the last two years, but his glove still rates out as average or slightly better. I don’t know how he does in the soft factors, but let’s say he has the look of a solid back-up catcher at this point. That certainly isn’t worth two years and $24 million, but maybe two years and, say, $8 million? We don’t have to be too precise here, because I’m only making the point that it isn’t zero. (This part doesn’t even matter all that much in the bigger picture of a trade like this.)
At the end of it, the Mets could save themselves $70 million in real money by trading these two, and the receiving team would have to pay only about $40 million, for about, say, $20 million in value. That’s $20 million of waste for one team, but $50(!) million of waste for the other team. So much inefficiency to take advantage of! How much would the Mets be willing to kick in to save tens and tens of millions of dollars?
To put that another way, a team like the Cubs should be willing to do this trade in exchange for receiving a “$20 million prospect.” The Mets, however, should be willing to do this trade in exchange for GIVING UP a “$50 million prospect.” That gap means there’s a good chance to get a REALLY good return in a trade like this – overpay! – and still make your trade partner very happy to do the deal.
So, then, if the Mets wanted to trade both of these guys, they’d first have to find a team with a ton of open payroll space (Cubs: check), with the possibility of using a back-end starting pitcher and a not-quite-a-starting catcher (Cubs: check), and the desire to add more prospects or quality young players (Cubs: check). Then, by taking advantage of the financial inefficiencies presented by the top tier luxury tax, it would theoretically be possible for the Cubs to acquire prospects WAY more valuable than you might expect for the dead salary they are taking on.
At that point, any value you get out of Carrasco and/or McCann is just gravy, because the real point of the trade is landing whatever sweeteners the Mets have to include to get the deal done. It’s the old “buying prospects” trade, except made all the more extreme by the luxury tax inefficiencies.
Just thinking out loud.
