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How high can the Orioles payroll go in the future?

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The Orioles are about to have a 2017 payroll that’s higher than any one they’ve had before. How long can they keep that going?

Arizona Diamondbacks v Baltimore Orioles
The Orioles having more and more money to spend is a good sign for their chances of keeping Manny Machado around.
Photo by Matt Hazlett/Getty Images

The Orioles 2017 payroll is just about settled, barring three arbitration cases. Whatever happens with those cases, the team will be spending more money than it has ever spent on the MLB roster this year. A big question for the long-term fate of the team remains: How high can they go?

According to Cot’s Contracts, the Orioles are currently committed to about $151 million in player salaries for the season. That doesn’t count the unsettled salaries of Kevin Gausman, Brad Brach, or Caleb Joseph, which can add at most $7.6 million to the payroll.

The number also doesn’t count $4.5-5 million to fill out the 25-man roster with pre-arbitration players like Mychal Givens, who will be making near the MLB minimum salary of $535,000. When all is said and done, the 2017 Orioles will be very close to double the payroll of $84.1 million they had in 2012, the first year of Dan Duquette’s tenure as GM of the team.

The dramatic payroll expansion may come as a surprise to those people who continue, against all evidence to the contrary, to view owner Peter Angelos as some kind of tight-fisted meddler.

To be sure, the Orioles have made their share of frustrating, short-sighted cost-cutting moves over the past couple of seasons, like dumping draft picks to get out from under salary obligations to Ryan Webb and Brian Matusz, and unnecessarily cutting Miguel Gonzalez at the end of last year’s spring training.

However, the overall upward arc cannot be denied. Angelos is spending more and more money on the team. The Orioles chose to spend big to retain Chris Davis. They aren’t in a position where they have to deal Chris Tillman, Manny Machado, or Zach Britton as their arbitration salaries kick up over $10 million apiece.

Even when you count deferred money, the Orioles spent more than ever last year and they’ll spend more than ever before this year once again. There is deferred money to Davis ($6 million), Ubaldo Jimenez ($2.25 million), Mark Trumbo ($1.5 million), and J.J. Hardy (unknown).

For simplicity’s sake, let’s assume Hardy has $1.5 million deferred, because his contract is the closest to Trumbo’s in total years and dollars. Now, a $162 million payroll number is more like $151 million paid out this year - yet that’s still about $15 million more than what they paid out last year, when a similar amount of money was deferred off of what was, on paper, a $147.5 million payroll.

The Orioles won’t be able to keep all of their key players forever, but there is, at least, some hope that the team might be able to retain Machado and have the resources to keep quality players around him. That’s the core of a team that should be able to keep competing for several years into the future, if they can pull it off with the right complementary signings and trades.

As long as baseball in general and the Orioles in particular keep making more money, they can keep increasing the payroll. We can assume this, although we can’t take it completely for granted.

The 2016 Orioles, for instance, drew about 300,000 fewer fans than the division-winning 2014 Orioles, though the Orioles probably made more money from regular season tickets than they did in 2014, thanks to the 25% price increase between 2015 and 2016.

There’s also the gigantic wild card of the ongoing MASN court case, which has now been in limbo for five years, half of which have involved open legal proceedings that continue on with no end in sight.

It’s not an exaggeration to say that the resolution of this case could have huge ramifications for the Orioles payroll. If they have been spending on payroll assuming that their means may be limited by MLB and the Nationals achieving victory in their quest to renege on the agreement reached when the Expos moved to Washington, the Orioles could be in for a big payroll expansion - if they win the case.

On the other hand, if the Orioles have been going on spending assuming that they will ultimately prevail in the MASN case and its result is that MASN will be ordered to pay the Nationals what MLB says it should pay the Nationals, that will have immediate and drastic negative implications for the payroll.

Other possible outcomes - the Orioles win after spending like they expect to win, or the Orioles lose after spending like they expect to lose - would not be noticeable to fans since they would just mean the status quo, either way.

That whole saga is complicated enough for legal professionals because it’s such uncharted territory. It’s almost completely opaque to the average fan. There’s simply no way to know when or how it will end. Just for today, let’s go with a guess of the status quo prevailing when the case finally resolves. That is, the Orioles neither have more nor less money available to them relative to what they have been anticipating all along.

The question is not so much whether the payroll can keep growing as whether it can keep growing as much as it has. The 2016 payroll was nearly $30 million more than the 2015 payroll, and salaries for 2017 seem like they will increase by another $15 million.

Can the Orioles payroll keep growing at $15 million per year? If they can, they’ll be over $200 million by 2019, which just so happens to be the season after Machado becomes a free agent. Absorbing a $30+ million per year contract for Machado seems less outlandish with that kind of payroll.

A less ambitious $10 million increase per year - which was the standard for Duquette’s first several years - would still see them cross $200 million by 2020. That’s a lot of money, one that only four teams crossed in the 2016 season.

Darker scenarios are also possible. Perhaps the Orioles are approaching the limit of what the Baltimore market can support. We saw a taste of this in the past season, when attendance shrank after a ticket price hike, despite the team improving from 81-81 to 89 wins and a playoff berth. And we haven’t even talked about whether there is a sports cable bubble, or if that bubble is near the point where it bursts.

The Orioles could reach a point where the payroll will be, if stagnant or shrinking, limited to meager growth of a couple million bucks per year. Arbitration raises would lead to hard choices - and you can probably forget about keeping Machado or Britton or Adam Jones or any other free agent-to-be over the next couple of years.

For this year and probably next year, at least, there’s nothing for fans to worry about. The Orioles have the players they have and Angelos is spending to keep those players as long as the team is good. If there are problems in 2019 and beyond, we can confront them then. For now, let’s hope there’s a lot of good Orioles baseball left to be played between now and when the money situation changes.