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The Royals 2014 Net Surplus Payroll

When examining his purpose in not only life, but on these digital pages, the author has found that perhaps he writes too many theoretical articles or articles based on "what-if" instead of detailing what happened. For better or for worse, the author will be doing another theoretical article today and most assuredly one or more in the future.

Surplus value is a real thing, but I also think it's theoretical too in some manners. Teams don't really receive surplus value tangibly. The Royals didn't really pocket Alex Gordon's $42M in surplus value. What they did instead is pay under the market rate for his production (the whole concept of surplus value). The Royals aren't big spenders in the grand scheme of things, but they didn't have to pay equal dollars for equal production from their left fielder in 2014. Instead, they paid $10.75M for $52.8M in value. That's certainly a discount, it's certainly cost-effective, but I don't think it exists in the real accounting books. Maybe you can convince me it does.

Perhaps in a larger study I would have compiled every teams payroll and surplus to get a sense of where the Royals finished. Maybe that article will come, but maybe it won't.

For the salary amounts I used Craig's article from April 2014. Maybe there's been some changes via player bonuses or slight discrepancies, but unless James Shields pitched for free in 2014, little should change. For the minimum salary guys I used the full minimum salary. I'm not sure if the players actually receive the full amount or a prorated version, but the CBA doesn't mention any proration that I could find. Also of course, we aren't taking into account revenue sharing, insurance, health benefits etc... because this is only the wages section of the income statement (rather than expenses like insurance/health care).

Opening Day guarantees

Player Actual Contract 2014 fWAR $/WAR Value Surplus
James Shields $     13,500,000.00 3.7 $       29,600,000.00 $    16,100,000.00
Alex Gordon $     10,750,000.00 6.6 $       52,800,000.00 $    42,050,000.00
Billy Butler $       8,500,000.00 -0.3 $       (2,400,000.00) $  (10,900,000.00)
Jeremy Guthrie $       8,000,000.00 1.5 $       12,000,000.00 $    4,000,000.00
Jason Vargas $       7,000,000.00 2.6 $       20,800,000.00 $    13,800,000.00
Luke Hochevar $       5,210,000.00 0 $                              - $    (5,210,000.00)
Omar Infante $       5,000,000.00 0.5 $         4,000,000.00 $    (1,000,000.00)
Wade Davis $       4,800,000.00 3.1 $       24,800,000.00 $    20,000,000.00
Greg  Holland $       4,675,000.00 2.3 $       18,400,000.00 $    13,725,000.00
Eric Hosmer $       3,600,000.00 0.2 $         1,600,000.00 $    (2,000,000.00)
Bruce Chen $       3,250,000.00 0.1 $             800,000.00 $    (2,450,000.00)
Alcides Escobar $       3,000,000.00 3.4 $       27,200,000.00 $    24,200,000.00
Nori Aoki $       1,950,000.00 2.3 $       18,400,000.00 $    16,450,000.00
Salvador Perez $       1,500,000.00 3.3 $       26,400,000.00 $    24,900,000.00
Aaron Crow $       1,475,000.00 -0.9 $       (7,200,000.00) $    (8,675,000.00)
Tim Collins $       1,362,500.00 -0.2 $       (1,600,000.00) $    (2,962,500.00)
Justin Maxwell $       1,325,000.00 -1.1 $       (8,800,000.00) $  (10,125,000.00)
Brett Hayes $           630,000.00 -0.6 $       (4,800,000.00) $    (5,430,000.00)
Mike Moustakas $           549,000.00 0.9 $         7,200,000.00 $      6,651,000.00
Lorenzo Cain $           546,000.00 4.9 $       39,200,000.00 $    38,654,000.00
Louis Coleman $           537,000.00 -0.5 $       (4,000,000.00) $    (4,537,000.00)
Danny Valencia $           532,500.00 0 $                              - $        (532,500.00)
Jarrod Dyson $           530,000.00 3.1 $       24,800,000.00 $    24,270,000.00
Kelvin Herrera $           522,500.00 1.4 $       11,200,000.00 $    10,677,500.00
Pedro Ciriaco $           513,500.00 0 $                              - $        (513,500.00)
Francisley Bueno $           504,500.00 0 $                              - $        (504,500.00)
Yordano Ventura $           500,500.00 2.8 $       22,400,000.00 $    21,899,500.00
Noel Arguelles $       1,380,000.00 0 $                              - $    (1,380,000.00)
Emilio Bonifacio $           573,771.00 0 $                              - $        (573,771.00)
Sum $     92,216,771.00 40.2 $    321,600,000.00 $  220,583,229.00

As I would expect most teams to do so, the Royals net surplus payroll was positive, and positive by some measure (almost 2.5x more). We'd actually have to collect the data for the other 29 teams to see where the Royals stand in relation to the league, but I feel like a 2.5 surplus ratio would put them in the middle of the pack. You'd expect teams like the Dodgers and Yankees to have a lower ratio given that it would seem that their cost per win is higher than the Royals (since they are likely overspending relative to player value).

In-season additions

For the in-season addition here I tried my best to find and use the money the Royals actually paid or were relieved of. I mentioned my understanding of players making the minimum (did Lane Adams get the full $500K?), but also there were mid-season acquisitions. For instance the Royals were only liable for $717,000 of Jason Frasor's $1.75M after his trade (according to two sources I found). My biggest question mark of course is if the league minimum guys actually did make the full $500K or not.

Player Actual Contract 2014 fWAR $/WAR Value Surplus
James Shields $     13,500,000.00 3.7 $       29,600,000.00 $    16,100,000.00
Alex Gordon $     10,750,000.00 6.6 $       52,800,000.00 $    42,050,000.00
Billy Butler $       8,500,000.00 -0.3 $       (2,400,000.00) $  (10,900,000.00)
Jeremy Guthrie $       8,000,000.00 1.5 $       12,000,000.00 $      4,000,000.00
Jason Vargas $       7,000,000.00 2.6 $       20,800,000.00 $    13,800,000.00
Luke Hochevar $       5,210,000.00 0 $                              - $    (5,210,000.00)
Omar Infante $       5,000,000.00 0.5 $         4,000,000.00 $    (1,000,000.00)
Wade Davis $       4,800,000.00 3.1 $       24,800,000.00 $    20,000,000.00
Greg  Holland $       4,675,000.00 2.3 $       18,400,000.00 $    13,725,000.00
Eric Hosmer $       3,600,000.00 0.2 $         1,600,000.00 $    (2,000,000.00)
Bruce Chen $       3,250,000.00 0.1 $             800,000.00 $    (2,450,000.00)
Alcides Escobar $       3,000,000.00 3.4 $       27,200,000.00 $    24,200,000.00
Nori Aoki $       1,950,000.00 2.3 $       18,400,000.00 $    16,450,000.00
Josh Willingham $       1,800,000.00 0.3 $         2,400,000.00 $          600,000.00
Salvador Perez $       1,500,000.00 3.3 $       26,400,000.00 $    24,900,000.00
Aaron Crow $       1,475,000.00 -0.9 $       (7,200,000.00) $    (8,675,000.00)
Tim Collins $       1,400,000.00 -0.2 $       (1,600,000.00) $    (3,000,000.00)
Noel Arguelles $       1,380,000.00 0 $                              - $    (1,380,000.00)
Tim Collins $       1,362,500.00 -0.2 $       (1,600,000.00) $    (2,962,500.00)
Justin Maxwell $       1,325,000.00 -1.1 $       (8,800,000.00) $  (10,125,000.00)
Jason Frasor $           717,000.00 0.2 $         1,600,000.00 $          883,000.00
Brett Hayes $           630,000.00 -0.6 $       (4,800,000.00) $    (5,430,000.00)
Emilio Bonifacio $           573,771.00 0 $                              - $        (573,771.00)
Mike Moustakas $           549,000.00 0.9 $         7,200,000.00 $      6,651,000.00
Lorenzo Cain $           546,000.00 4.9 $       39,200,000.00 $    38,654,000.00
Louis Coleman $           537,000.00 -0.5 $       (4,000,000.00) $    (4,537,000.00)
Danny Valencia $           532,500.00 0 $                              - $        (532,500.00)
Jarrod Dyson $           530,000.00 3.1 $       24,800,000.00 $    24,270,000.00
Kelvin Herrera $           522,500.00 1.4 $       11,200,000.00 $    10,677,500.00
Pedro Ciriaco $           513,500.00 0 $                              - $        (513,500.00)
Francisley Bueno $           504,500.00 0 $                              - $        (504,500.00)
Carlos Peguero $           504,250.00 0 $                              - $        (504,250.00)
Yordano Ventura $           500,500.00 2.8 $       22,400,000.00 $    21,899,500.00
Christian Colon $           500,000.00 0.7 $         5,600,000.00 $      5,100,000.00
Johnny Giavotella $           500,000.00 0.1 $             800,000.00 $          300,000.00
Danny Valencia $           500,000.00 0 $                              - $        (500,000.00)
Jimmy Paredes $           500,000.00 -0.2 $       (1,600,000.00) $    (2,100,000.00)
Raul Ibanez $           500,000.00 -0.5 $       (4,000,000.00) $    (4,500,000.00)
Danny Duffy $           500,000.00 2.2 $       17,600,000.00 $    17,100,000.00
Liam Hendriks $           500,000.00 0.6 $         4,800,000.00 $      4,300,000.00
Brandon Finnegan $           500,000.00 0.3 $         2,400,000.00 $      1,900,000.00
Michael Mariot $           500,000.00 0 $                              - $        (500,000.00)
Casey Coleman $           500,000.00 0 $                              - $        (500,000.00)
Wilking Rodriguez $           500,000.00 0 $                              - $        (500,000.00)
Justin Marks $           500,000.00 0 $                              - $        (500,000.00)
Donnie Joseph $           500,000.00 -0.1 $          (800,000.00) $    (1,300,000.00)
Scott Downs $           500,000.00 -0.1 $          (800,000.00) $    (1,300,000.00)
Aaron Brooks $           500,000.00 -0.2 $       (1,600,000.00) $    (2,100,000.00)
Jayson Nix $           500,000.00 -0.2 $       (1,600,000.00) $    (2,100,000.00)
Francisco Pena $           500,000.00 0.1 $             800,000.00 $          300,000.00
Lane Adams $           500,000.00 -0.1 $          (800,000.00) $    (1,300,000.00)
Erik Kratz $           255,100.00 0.2 $         1,600,000.00 $      1,344,900.00
Sum $  105,893,121.00 43.3 $    346,400,000.00 $  231,706,879.00

Kind of what I expected here. The addition of 10+ players, who I'm assuming get the full $500K, doesn't help the bottom line much. It does increase the net surplus by about $11M, but a good majority of them were negative returns. This is perhaps unavoidable because some of the above players only got a handful of games or so and it's really hard to accrue value over 15 games and 25 PA.

While it did increase the net surplus, the addition of the cost of the players actually decreased the net surplus ratio. Said differently, adding those players was actually less cost effective.

At this point I think I am going to try and run the numbers for all 30 teams. It'll take some time and multiple excel sheets, but I'd like to get a sense of where the Royals placed compared to the league. Now, come Saturday I could be laying on my couch sleeping instead of researching, but give me the benefit of the doubt will ya...