Why the Astros Are Not Likely to Re-Sign BOTH Altuve and Bregman to Contract Extensions
It's likely one or the other, unless Jim Crane decides to spend in a way that he has not done so before.
The Astros entered the 2023-24 offseason with a roster that was mostly set for 2024. Their shopping list was modest—backup catcher and bullpen help. They addressed backup catcher with the signing of Victor Caratini, and have been linked to several middle relievers—Robert Stephenson, Jordan Hicks, and Hector Neris. In short, the offseason has and will continue to be boring…for the most part.
There is one exception and it is in the background and the foreground of most every conversation about the team’s offseason plans this year. Jose Altuve and Alex Bregman’s contracts expire after the 2024 season and they will become free agents if they do not sign an extension.
It is an important conversation for an obvious reasons; these are two star players on the current Astros team and these are the team’s two stars who have been anchors throughout the team’s Golden Age. And yet, it is likely to come to an end.
The Astros are likely to sign only one of these two stars to a contact extension over the next 10 months. And reason for that is clear—signing both will push the Astros to a payroll level that they have not gone during Jim Crane’s ownership.1
Could Jim Crane change and run a higher payroll? Absolutely. Holding payroll to a specific budget is a choice and one that he could override. There is also another alternative—trading Framber Valdez, which would clear out enough payroll space to allow for extension to both Altuve and Bregman, but at the cost of another of the team’s star players.
In this article, I’ll sketch out the reasons why the team does not have the space to sign both players unless Crane ups his budget past what he has done in the past. I’ll discuss that historic pattern and then discuss the team’s payroll room in 2025 based on expectations set by the these historic patterns. Then I’ll look at some comparable free agent contract signed in recent years, which show that the franchise does not have enough space to sign both players.
The Historic Pattern of Jim Crane’s Payrolls
How much money has Jim Crane spent on player salaries in his time as owner of the Astros? The charts below show the team’s payroll since 2012 (left) and the team’s rank among MLB payrolls (right).
The decade plus where Jim Crane has owned the Astros can be divided up into to two periods from a payroll standpoint. The first period is the building. The team started with the lowest payroll in the game and then increased it steadily as it got better players throughout the mid-2010s and the team dipped into the free agent pool (Charlie Morton, Carlos Beltran, Brian McCann2) to supplement it's young core.
By 2019, the team’s payroll had caught up to its level of play on the field, and since then, the team has run a payroll right around MLB’s first threshold for the luxury tax. They went over in 20203 but have remained below it since. You can see from the table on the right that even as payroll has gone up in recent years, the Astros have declined in comparison to other teams. In short, spending among the top teams has increased since 2021.
This examination of Jim Crane’s previous payrolls tells us a couple of things. First of all, his spending tends to track with the quality of his team. It was low in the rebuilding stage and much higher as the team’s on field play improved over the last seven seasons. Second, he seems to set budgets at or near the luxury tax threshold, but does not like to go over.
We can thus expect a relatively high payroll next year, but one that does not exceed the luxury tax threshold, which will be at $241 million in 2025. I expect the Astros to pay the luxury tax in 2024, and there are extra penalties for going over multiple years in a row. So there will be extra financial incentives for Crane to keep the payroll under the tax threshold in 2025.
What is the Expected Payroll for 2025?
The good news from a payroll standpoint for 2025 is that the team will drop $51.4 million in 2025 off of its payroll. The bad news is that most of that will come from the expiration of Altuve and Bregman’s contracts. They will also drop Kendall Graveman’s $8 million salary.
Ryan Pressly has a mutual option for $14.5 million in 2025. It is rare for mutual options to be picked up, as both the player and team need to agree on that salary. So that pushes the payroll drop to just about $66 million.
Much of that $66 million that comes off of the payroll will be taken up by raises that will go to key contributors who are in the salary arbitration process. Kyle Tucker and Framber Valdez are the biggest names here, but Jeremy Pena will enter the arbitration process for the first time joining other key contributors such as Luis Garcia, Bryan Abreu, and Chas McCormick.
This season, MLBTradeRumors.com estimates they Astros will spend $38.5 million on players eligible for arbitration. That number will go up in 2025, even if it is hard to estimate by how much at this point. My early estimate is that it will go up by $20 to $30 million. That takes up much of the savings from the expiration of free agent contracts.
The Astros current payroll for 2024 is estimate at $237.4 million by Roster Resource. Next year’s luxury tax threshold is set at $241 million, so the team is currently $3.5 million under that number.
So if you start at $241 million, subtract out the $66 million in contracts coming off the book and add in a $30 million increase in salaries based on arbitration, you get $205 million. That’s $36 million under the luxury tax threshold. If the Astros can chew down their arbitration increases to only $20 million, they can get up to $46 million in money under the luxury tax.
Signing Altuve or Bregman
For the sake of this exercise, let’s say general manager Dana Brown has $41 million—in the middle of the $36 million to $46 million estimate from above—in the budget to add to the team’s payroll.
That’s not enough to sign both players to a extension at their market rate. One educated guess is that both players will fetch contracts that offer them between $25 and $30 million a year. That is the range for free agent contracts signed in recent years by players such as Nolan Arenado ($32.5M/8 years) Marcus Semien ($25M/ 7 years), Xander Bogaerts ($25.4M/11 years), Trea Turner ($27.2M/11 years), and Freddie Freeman ($27M/6 years).
One can quibble with whether those are the correct comparable players to Bregman and Altuve (especially Altuve, who at 33 is older than everyone on that list), but the general point is correct. It will take between $25 and $30 million a season, possibly more, to sign each player.
So if you double $25 million, that’s $50 million, and that is above the highest estimate of payroll room the Astros have left to sign players for 2025. In short, they only have room for one of the two players.
Are There Alternatives?
There seem to be to be two major alternatives to letting one of Jose Altuve and Alex Bregman walk after the 2024 season.
The first is simple—Jim Crane can spend more.
Should he? Sure, why not? It’s not like it’s my money. There is a long tradition of fans spending an owner’s money, so why not continue that tradition.
There is a more sophisticated argument for why Crane should go above the tax threshold consistently over the next few seasons. Unlike in the past, the Astros farm system seems unlikely to produce high quality players who will replace the stars the team has lost in free agency. If Crane wants the team to continue to win AL West titles, he needs to adjust his spending patterns.
Of course, my argument here is not about what should Jim Crane do, it is about what he is likely to do. As noted, Crane has tended to make the ceiling of his payroll the first luxury tax threshold. He has gone over that in efforts to get to the World Series.4
But it is not a consistent pattern, and he would have to break that in order to sign both Altuve and Bregman to extensions.
There is a second alternative—trade Framber Valdez. Valdez is estimated to make $12 million this year after arbitration and would make more next year. Trading Valdez for young players would provide the room under the luxury tax the front office needs to sign both Bregman and Altuve and stay under the budget imposed by Jim Crane.
The idea of trading Valdez deserves its own post, and will get it soon. The team could make the trade if their evaluation is that the Altuve and Bregman combination offer them more long term value than does one of those two and Valdez. The driving assumption behind a trade of Valdez would be that his value has peaked. The drawback of such a trade is that it would almost certainly hurt the team in 2024, which is a key year for the team.
But trading Valdez seems to be the best alternative available to the Astros rather than letting one of Altuve or Bregman go. With the difficulties such a trade would pose to the 2024 team, I do not expect one to happen. But it is worth monitoring for the rest of the offseason.
But the Astros are facing something they have faced several times in recent years. The team’s budget restrictions mean they cannot keep all of their players indefinitely. Without an unexpected increase in the budget from Jim Crane or an unexpected trade, they will lose one of Jose Altuve and Alex Bregman after the 2024 season.
It is hard for the Astros to construct a trade where they trade a star player and do not harm their chances of winning the World Series in 2024. As such, I do not expect them to make one.
Or frankly, any of the team’s owners. Crane has actually run the highest payroll of the franchise’s five owners.
Technically, McCann was acquired in a trade from the Yankees, but the deal was primarily a salary dump by the Yankees, who wanted to clear out catcher for Gary Sanchez. Having Sanchez behind the plate for the Yankees worked out for the Astros.
The threshold at that time was $210 million. The threshold was increased sharply in the previous Collective Bargaining Agreement, a victory for the players union, but also for upper-middle class teams like the Astros.
He did this in the 2020 season after having added Zach Greinke at the 2019 trade deadline and again this season (I’m assuming) after having added Justin Verlander at the 2023 trade deadline.
Good stuff, I especially enjoyed the graphs illustrating payroll totals and rank.