Budgeting

So one of the most important days of the season happens to be the first one out of the gate: Budgeting. This is where all $185 million your team gets this season is allocated. Do you invest heavily in scouting for the draft in the hopes of finding that gem no one else does, or do you forsake the draft and budget heavily for some prime free agents, like Malcolm McCartin, in an attempt to win it all? Only your prospect, coaches and payroll budget can be increased/decreased at will. All other categories can only be moved in $4 million increments. WIS’s logic behind that is that it takes years to develop a scouting, or training department that is one of the best in the league. So if you drop your international scouting down to $0, it’ll take five years to get it up to $20 million.

I approach budget day with a fairly methodical system in place. I’m not a big trader, and WIS’s development system is fairly simple and easy to read without projections, which makes advanced scouting useless if you know what to look for. I’m also not a fan of the international market, nor do I want to drop $30 million on a single prospect. Therefore both advanced and international budgets are set at $0 as fast as possible.

Take a look at what coaches want to return, and calculate their salary costs. The determine what holes you have to fill. For minor league, bullpen, and base coaches I just budget the minimum. All other major league coaches I look at what last year’s coaches made for the position, and rating I’m going to shoot for. I usually budget about $12 million for coaches, and this year is going to be no different.

I max out training to prevent injuries, and maximize player development. Medical is kept around $14 million to make sure those injuries I do get aren’t super serious. Some max this out at $20 million, but I see that as a waste because you’ve already maximized injury prevention; if an injury is serious it’s going to take a while to recover regardless if you’re at $20 mil or $14 mil. A player might gain a point or two extra during recovery, but I’m fine with that trade-off.

The next step is looking at your departing free-agents. Will any of them negotiate with you? If so, do you even want to bring them back? I’ve decided to let my five FA’s test the market, so I can put that category at zero in terms of contributing to my payroll for the season. I then look at my arbitration players. During the player’s second arbitration year I’ll look at singing them long-term as it usually costs only about an extra $1 million than their arb demands. I’ve got one, Carl Parrish this year that I’ll do that to. I’m going to release Bob Stroud as he sat in AA last year and was primarily an insurance policy in case Jimmie Velazquez went down for an extended period of time. The other three players I’ll calculate losing all of their arbitration hearings into my budget.

After that process I’ve locked in about $80 million in total payroll for the coming season.

I’ll usually budget around $14-$16 million for both college and high school scouting because I’m not a huge fan of having $120 million + player payroll, and you can usually find serviceable players in the 2nd through 4th rounds with that much.

I’ve got the 33rd pick in the draft, so if I decide to sign a Type A I’ll forfeit that pick, which means my first pick could potentially be around number 100 after all compensation picks are doled out.  Most draft picks signed for around $550,000 at that pick. So I’m going to budget $6 million for prospects this year, with the ability to transfer money over if I don’t end up signing a type A free agent if the bidding gets out of control.

That leaves me with a player payroll budget of $99 million for the year, and $19 million for free agents, which is more than enough to compete for the pennant.

If you have questions about budgeting, shoot me a trade chat.

 

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