Barry Jackson

Jeter’s business model has payrolls well below MLB average, then a big jump in 2021

Miami Marlins co-owner Derek Jeter speaks during a town hall meeting at Marlins Park on Tuesday, Dec. 19, 2017.
Miami Marlins co-owner Derek Jeter speaks during a town hall meeting at Marlins Park on Tuesday, Dec. 19, 2017.

Second of a 5-part series examining new Marlins ownership’s plans and projections.

That $115 million payroll that Jeffrey Loria financed last season before selling the Miami Marlins?

New Marlins CEO Derek Jeter’s business model circulated to potential investors indicates the team doesn’t plan to reach that payroll level again until the fourth year of Jeter’s and Bruce Sherman’s ownership, in 2021.

And those payroll projections are based on the Marlins reaching highly ambitious attendance and sponsorship revenue projections.

The payroll plans are included in Jeter’s Project Wolverine, a financial document that was given to potential Jeter investors and subsequently shared with The Miami Herald by two sources.

The Marlins had a payroll of $115 million last season but it was actually nearly $125 million including required pension benefits and other costs.

According to numbers in an August copy of Project Wolverine, the team’s projected 2018 payroll will be $100 million, but the projected payroll for this coming season is actually $90 million or a bit above without those pension benefits and other costs.

Subtracting $10 million in those payments from future listed payrolls in the August copy of Wolverine, the Marlins project payrolls of $81 million in 2019, $84.8 million in 2020, $116 million in 2021 and $118.7 million in 2022.

One reason for the projected payroll jump in 2021: The Marlins project local broadcast revenue to jump from $20.1 million in 2020 to $51.6 million in 2021.

Fox and the Marlins have been discussing a new contract beyond the expiration of their deal after the 2020 season, but nothing is considered imminent.

A May version of Project Wolverine also included payroll projections from 2023 to 2027, ranging from $127 million to $179 million.

For perspective, the team that ranked in the middle of MLB payroll last season — the Kansas City Royals — had a payroll of $141 million without pension payments.

The Marlins declined to share numbers from more recent versions of Project Wolverine or comment at all for this Miami Herald series.

Before the city of Miami and Miami-Dade County in 2008 approved public financing to be used toward Marlins Park, Marlins officials said a new stadium would allow the team to have a payroll in the midrange of MLB teams — something that hasn’t materialized.

Next season’s projected payroll would be $50 million short of last season’s midrange payroll.

The question is whether the payroll could go even lower if the Marlins fail to reach Jeter’s projections in attendance revenue (which he predicts will rise from $30 million last season to $37.5 million, $40.6 million and $45.8 million over the next three years) and sponsorship (which he projects will rise from $19.1 million in 2017 to $41.6 million by 2021).

It also remains to be seen if payroll would sink even lower if the Marlins fail to achieve Wolverine’s projected profits figures for the next four seasons: $68 million, $10 million, $15.8 million and $22 million. Despite those high profit projections, the Marlins’ payroll numbers for the next two years are on pace to rank among the bottom five in baseball.

The Marlins — who currently have about $104 million in payroll commitments for 2018 and are looking to reduce that figure — have one particularly onerous contract on their books:

Wei Yin Chen
Miami Marlins pitcher Wei-Yin Chen pitches in a game in September. Chen, who has a hefty contract, has pitched in only 31 games combined for the Marlins over his first two seasons, including nine last season, because of a sore elbow. CHARLES TRAINOR JR.

Wei-Yin Chen, limited to nine games last season because of elbow discomfort, is due $18 million, $20 million and $22 million the next three seasons, with a $16 million player option for 2021 that is automatically exercised if he has 180 innings pitched in 2020 or 360 innings pitched in 2019 and 2020 combined and 2) if he is not on the disabled list at the end of the 2020 season and 3) if he is healthy for 2021 spring training. Chen is considered untradable.

Though many players are under team control for several more years (including Justin Bour and J.T. Realmuto), there are only three other Marlins with firm financial commitments extending beyond 2018: third baseman Martin Prado is due $28.5 million over the next two seasons; outfielder Christian Yelich is due $43.25 million over the next four seasons (plus a $14 million team option for 2022, or a $1.25 million team buyout); and second baseman Starlin Castro is due $21 million combined over the next two years, with a $16 million team option (or $1 million buyout) in 2020.

Three onerous contracts expire after 2018: pitchers Edinson Volquez (will miss this season after Tommy John surgery but will be paid $13 million), Junichi Tazawa (due $7 million in 2018) and Brad Ziegler (due $9 million in 2018).

But even though those contracts account for $29 million on 2018 payroll and nothing for 2019 payroll, Project Wolverine nevertheless projects a payroll decline of $9 million from 2018 to 2019.

That could be in part because every team is receiving a one-time payment of $50 million from MLB in 2018 as part of Disney’s acquisition of MLB’s digital arm, BamTech.

The Marlins have told teams that Yelich and catcher J.T. Realmuto (projected to make $4.2 million in 2018 if he goes to arbitration) are available for the right price, according to a team that has spoken to the Marlins. That would also be the case for Castro, and the Marlins would be receptive to dealing Tazawa or Ziegler.

Here’s my UM post on Wednesday, including a discussion with Chris Fowler and Kirk Herbstreit about the state of the Miami program.

Here’s my Heat post on Wednesday, including a look at Erik Spoelstra’s two-big lineups and an injury update.

Please check back Wednesday night for a Dolphins post.... Twitter: @flasportsbuzz