Ownership, the budget, and Stephen Strasburg!

Posted on October 13, 2022 by Stephen G. "Ghost" Mears

WASHINGTON, DC – September 28, 2022: Washington Nationals owner Mark Lerner on the field; (Photo by Sol Tucker/TalkNats)

So much hinges on the 2023 budget for player payroll for every team. For the  Washington Nationals, this will be a budget that will have great impact on how much the team can improve in 2023 and beyond. What we do not know is how much of that budget hinges on a change of ownership or not.

“We’ll have a conversation with ownership to see where our parameters are,” general manager Mike Rizzo said last week. “Business as usual like any year.”

Can it really be business as usual? No it can’t. The dynamics have changed. This is not a normal business. It is not a normal business cycle. Ownership is up in the air. You hope this is Rizzo’s 2011 when he expanded payroll over a decade ago before the Nats went eight consecutive years of winning, culminating in a World Series title in 2019.

First, it is very important to understand that the Nats are stuck with huge payroll commitments to two players due to carrying Stephen Strasburg‘s $35 million dollar contract and Patrick Corbin‘s $23.33 million deal. Between the two players, the Nats committed a guaranteed total of $385 million. On Strasburg’s deal, there’s still four years remaining, and two years on Corbin’s deal. The Nats still finished the 2022 season with the 20th largest payroll, ranking far ahead of playoff teams like the Mariners, Rays, and Guardians.

The issue is the Nats payroll has so many dollars tied up in non-performing assets. Stale inventory they would call it if this was a luxury goods company. Like a marriage, for better or worse, for richer or poorer and in sickness and in health. Strasburg is that spouse. Corbin has been that spouse. Will Harris too. They all signed guaranteed contracts that are air-tight like a good prenuptial agreement that you aren’t get out of even with a divorce. Short of Strasburg retiring, the Nats are stuck with him for four more years.

Based on MLB Trade Rumors projections for arbitration eligible players, the team’s AAV payroll is $114 million and that is $43 million below Opening Day of 2022 because there is no Nelson Cruz (assuming the team turns down his option), Juan Soto, Josh Bell, Harris, Cesar Hernandez, Joe Ross, Steve Cishek, Sean Doolittle, Ehire Adrianza, etc.

Per Spotrac, the average team spent $163 million in payroll in 2022. Of course with the Nationals trades of Soto, Bell and Adrianza while taking on Luke Voit, the team finished with a payroll of $142 million. We still do not know what Rizzo will do with all of his arbitration-eligible players or with Cruz’s expensive option, but for planning purposes we removed Cruz. We do not know if the Nats will approach Strasburg with a retirement package or if he will approach Rizzo with one. For planning purposes, assume Strasburg keeps collecting the rest of his $245 million deal.

But the 1,000-pound gorilla in the room is the ownership situation. If it was business as usual, it would be owner Mark Lerner giving Rizzo the budget — and allow him to expand payroll. However, if ownership is getting ready to change, would it be the new ownership group setting the budget? There is still a little time for both to happen — but not much given that players will be declaring for free agency in less than four weeks.

What we would like to see is the Nats return to at least the $157 million payroll from Opening Day of 2022 at the very least. Hopefully the budget is closer to the league average at $163 million. If the Nats tender a contract to Voit, that would give Rizzo approximately $50 million to spend. You would hope Rizzo could find a way to spend $60 million on new payroll to get two starting pitchers and a corner outfielder.

“So you’re talking about adding maybe one or two more starters, ” manager Dave Martinez said last week. “We’re going into the winter with a lot of different areas that we need to fix.”

On the ownership situation, we reported last month through sources that billionaire sports mogul Ted Leonsis is the frontrunner to get this done. Sources have also told us that a sale of the team is not a 100 percent certainty. Leonsis has tried to fix the MASN divide between the sides, and sources have told us that has not been successful, leading to MLB trying again to bring the sides together.

Before the Washington Capitals home opener last night, team owner Leonsis saved his best clue yet “…and if we end up with more teams in the portfolio, I hope it’s tripled” for NBC Sports that maybe just maybe our source was correct.

What we don’t know is how Leonsis would be as an owner of an MLB baseball team where the dynamics are far different than his other sports that operate under tight spending caps, and the NBA and NHL collective bargaining agreements have at least addressed how you can retain your own star players. MLB is like the Wild Wild West of all of the sports where Mets’ owner Steve Cohen will have spent nearly $300 million after he pays all of his CBT penalties. And once again, it shows that you cannot buy a championship — but spending big usually gets you into the dance. In fact 9-of-12 of the top spending teams made the playoffs The good news is that an unprecedented 3-of-10 of the lowest spending teams made the playoffs for the first time ever. The expanded playoffs to 12-teams certainly helped.

Lessons to be learned, it is not what you spend — but how you spend it. Having a great player development system seems to be the No. 1 factor in winning long-term. That seems to be the lesson. The Nats hid many of their warts by spending huge from 2015-2020 at the same time that their player development system was on life support. It is not a sustainable model unless you do it the Dodgers way which is to develop players and spend money at the same time.

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