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If there were any breadcrumbs for Mike Elias and the Orioles to follow along a path out of the dark days of a rebuild into the light of postseason relevance, they’d be his own, dropped in 2014 and beyond as the Houston Astros strode toward their first World Series championship.
Back then, Elias served as the Astros’ director of amateur scouting. He had a direct hand in building Houston’s core through player development. Now Baltimore’s executive vice president and general manager, who has followed a similar plan all along, aims to bring the Orioles toward the promised land.
But the question still remains: Will he be able to use the assets the Orioles have accumulated to make necessary trades, and will the franchise’s ownership empower him to spend on free agents needed to round out the roster?
He’ll likely need to if the Orioles are going to take the next step. An analysis of teams that have found success while eschewing a high payroll shows that drafting alone won’t be enough.
Elias need not only look to the Astros as a guide. The Cleveland Guardians, Tampa Bay Rays, Milwaukee Brewers and Kansas City Royals have also managed to compete at the top levels of baseball without being among the top spenders in baseball.
Compared to those clubs, though, it appears as though Elias may be holding off on a full ramp-up — the type that would require more significant offseason movement to truly mirror those that have come before.
Take the Astros, on the point of a breakthrough, in 2014. They boasted one of the best farm systems in baseball. And yet, hardly any of them actually made an impact for Houston. Of the Astros’ top 18-ranked prospects in 2014, 10 of them were traded over the next three seasons to supplement Houston’s 2017 World Series win. It was a necessary step to land players who can help an organization win now at a reasonable price point.
Some Orioles fans have been dismayed by this relatively quiet offseason, which featured neither splashy signings or big trades. They probably have a point. Our analysis shows that Baltimore may not need to resort to heavy spending in the free agent market, but recent history does display how trades for major-league-ready talent are an important part of the process when aiming to compete while keeping costs low.
To be clear, spending is the surest way to win: Since 2015, every team but two that have won the World Series held a payroll above league average. The 2016 Chicago Cubs, 2018 Boston Red Sox, 2019 Washington Nationals and 2020 Los Angeles Dodgers all sat within the top seven in spending — an example of how money can help lead to success.
But it’s not a guarantee.
The notable outliers are the 2015 Kansas City Royals (13th at $126,529,835, still below league average) and the 2017 Astros (17th with $138,344,211).
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And beyond them, there are other teams that have found ways to win without breaking the bank. In 2022, for instance, the Tampa Bay Rays and Cleveland Guardians were the only teams that spent less than $100 million to make the postseason. The 2018 Milwaukee Brewers reached the National League Championship Series with a payroll that ranked 22nd in the majors. The 2020 Rays reached the World Series with the third-lowest payroll in a pandemic-altered campaign.
It can work if done correctly.
“Baseball’s set up the way it is set up,” Elias said at the winter meetings last month. “There are teams and markets out there that are hard to keep up with. But there are other teams and markets that look the way Baltimore does that have really healthy and successful programs, and it might involve us looking a little bit more like those, at least in the short term.”
Perhaps in the future the Orioles will be in a better position to increase payroll closer to that of the top-spending teams. It’s not as if the Angelos family has always refrained from spending. In 1998, with Camden Yards averaging more than 45,000 fans per game, Baltimore became the first major league franchise to eclipse a $70 million payroll. Now, 25 years later and with the family feuding over control of the team, they’re projected to spend less than that for the fourth straight season.
When Elias joined in 2018, he found the club in an unenviable position — weighed down by heavy contracts, with a payroll in the top half of the league, all while losing 115 games.
Something had to change.
Elias implemented a system that has worked elsewhere, improving Baltimore’s international scouting abilities while adding an analytical focus to the draft and player development. The results have followed in line with some other clubs that have followed similar paths, such as the Astros, the Rays, the Brewers and the Guardians.
The two most recent iterations of the Rays and Guardians proved free agent spending isn’t necessarily the only path toward reaching the postseason.
Cleveland won 92 games, losing in the American League Division Series to the New York Yankees, all with a payroll that ranked 27th in the majors ($66,477,492). Tampa Bay lost to Cleveland in the wild card round but reached that point with the 23rd highest payroll in baseball at $98,342,073. The formulas for each centered around internal development and trades for players who could help win games yet were under team-friendly contracts.
Of the 28 Rays players who either threw 50 innings, made 20 pitching appearances or played 50 games in the field, only four were signed as major league free agents. Sixteen players came to Tampa Bay as part of trades, six were drafted and two were signed as international amateur free agents. That’s about 86% of the Rays’ major contributors arriving through avenues other than free agency.
Cleveland had a similar build. Of their 28 most-used players, three were signed as free agents. Eleven were drafted, including the Guardians’ top two starting pitchers, Shane Bieber and Triston McKenzie, as well as Rookie of the Year candidate Steven Kwan. Two more players were developed as international amateur free agents, 10 were acquired via trade, one player was selected in the Rule 5 Draft and another came as a waiver claim. Again, that’s 89% of the main contributors acquired other ways than free agency.
And the 2018 Brewers — a team that won 96 games and advanced to the National League Championship Series — managed it with a payroll that ranked 22nd ($108,982,016). They had more free agent activity, nabbing eight of their 32 main contributors that way, including Lorenzo Cain. But still, three quarters of Milwaukee’s main roster for its postseason run came via alternate avenues.
That model is often dismissed as frugal — and often results in losing. But it can work.
The most successful teams in recent years to follow this model were the 2015 Royals and the 2017 Astros. The variation from those teams included more free agent spending than the others — although they remained below league average in total payroll — and resulted in World Series titles.
The Royals supplemented their roster with nine free agent additions (or nearly 35% of their top contributors). They included Alex Rios, Kendrys Morales, Omar Infante, Edinson Volquez and Jeremy Guthrie.
The 2017 Astros, by contrast, needed six well-placed free agents to make a difference to a squad made mostly though trades, the draft (Alex Bregman and Carlos Correa) and international development (Jose Altuve). Houston went from being the worst team in baseball four years prior to a champion that way, with key trades also unlocking the potential for a breakout.
Over the course of three years, the Astros used 10 of their top 18-ranked 2014 prospects as trade chips. There was the deal for closer Ken Giles, who saved 34 games in 2017. The Phillies required five players in that package, including Houston’s third- and eighth-ranked prospects. To get catcher Evan Gattis and right-hander James Hoyt from the Braves, the Astros sent their fifth, 10th and 13th-ranked prospects to Atlanta.
Having prospect depth could lead to homegrown talents; Baltimore is enjoying the benefits of Adley Rutschman, Gunnar Henderson and more. But it also offers a way to acquire talent without going through free agency.
By comparison, of the top five teams in projected payroll for 2023 — the Mets, Yankees, Padres, Phillies and Dodgers — the Yankees and Dodgers are the only two with fewer than 10 free agent acquisitions on their 40-man rosters. The Mets and Padres each have 13, and the Padres have just nine internally developed players.
The Yankees and Dodgers have kept their best homegrown talents with lofty contracts.
Perhaps the Orioles will follow a similar path in the future, tying down the top prospects who become true stars for the long term. But those big-market teams have an easier time locking in internal talent while paying for external support in free agency. The balance will be more difficult in Baltimore — an organization that has yet to sign a free agent for longer than one guaranteed year since Elias has arrived in 2018.
At some point, even with a roster stacked with homegrown talent, history shows the teams that have managed to reach the postseason — and find success in October — have done so with more spending.
Baltimore has added three major league free agents this offseason: Right-hander Kyle Gibson, right-hander Mychal Givens and infielder Adam Frazier. They’ve combined for a total of $21 million for the 2023 season. Elias also traded for catcher James McCann to serve as Rutschman’s backup and selected right-hander Andrew Politi in the Rule 5 Draft.
Those additions give the Orioles a projected Opening Day payroll of $63 million, per FanGraphs — ahead of only the Oakland Athletics. Baltimore could double its payroll and barely exceed Spotrac’s projection of about $116 million being the league average payroll in 2023.
Of the 28 players most likely to break spring training as members of the Orioles, 10 were draft picks, including Rutschman and right-hander Grayson Rodriguez. Six were claimed off waivers, three were Rule 5 Draft selections and five came in via trades. That leaves four free agents, including right-hander Félix Bautista, who joined in 2016 as a minor leaguer.
The roster construction is nearing what the 2017 Astros had — with a focus on internal development — but lacks the marquee free agent signings and aggressive trades that launched Houston to the next level. The Astros signed Charlie Morton, Josh Reddick and Carlos Beltrán. They traded for Mike Fiers, Giles and Brian McCann. All six of them were integral parts of the championship.
Baltimore has yet to make a splash on that level.
So while the Orioles could ride this up-and-coming roster to the postseason, there remains an apparent gap that could be the difference between reaching October and going deep into October or early November.