A $33 Million Hole They Can't Fill: Justin Verlander's Contract Constrains the Astros at the Trade Deadline

As the calendar turns to July, the focus of the baseball world turns toward the trade deadline.  Contenders  are assessing their team weaknesses and potential fits that struggling teams might be willing to deal. For the Astros, most of that focus has been on potential additions to the struggling bullpen. 

The Astros ability to acquire help at the trading deadline is heavily constrained by previous choices the front office made. The first is that they seem to consider the luxury tax threshold of $210 million as their salary cap.  And the second, is that they chose to give more 2021 salary to Justin Verlander than any other player, making it much more difficult for the Astros to acquire a reliever and stay under their self-imposed salary cap. 

A sight for sore eyes. Verlander in an Astros uniform.

The Astros signed Verlander to a two year, $66 million contract extension in Spring Training 2019. The $33 million average annual value was at the time a record for pitchers. But the record breaking nature of the contract seems reasonable. Verlander was coming off a 2nd place finish in Cy Young voting in 2018 and his legendary run through the 2017 playoffs when the Astros signed him to the extension. He pitched great after signing the extension, winning the 2019 AL Cy Young Award, and throwing a quality start on Opening Day 2020.

But an elbow injury limited him to just 6 innings in 1 start in 2020 before Verlander went on the IL, eventually leading to Tommy John surgery in October 2020, which has kept Verlander on the IL all of 2021.

The Astros have played very well in 2021 without Verlander, but come on, who wouldn't want to see the future Hall of Famer take the ball every 5th day. 

The Verlander contract puts $33 million--which is about 1/6th of the Astros payroll--out of use for the front office. They have to pay it and they cannot do anything to ameliorate the costs or to receive any benefits from it (Verlander has a goal of pitching in the bullpen in the playoffs; I'm skeptical).  It is also worth noting that if Verlander were healthy, it is much less likely that the front office would have signed Jake Odorizzi and his $7.8 million luxury tax hit after Framber Valdez broke a finger in Spring Training.

The upshot of the Astros payroll situation is that they have very little room to maneuver at the trade deadline without going over the $210 million threshold for the luxury tax. There are relievers on the market who could keep the Astros under that threshold (e.g. Richard Rodriguez of the Pirates; Ian Kennedy of the Rangers, and Kendall Graveman of the Mariners). The Astros could also send out salary in a deadline deal, but options for that are limited (Joe Smith would be the most likely candidate), and may require the Astros to give up other assets.

It is also worth noting that the desire to stay under the luxury tax threshold is self-imposed. The Astros could choose to exceed the threshold if they chose. The penalties include being given lower draft picks and reduced compensation if free agents sign elsewhere. But it mostly would cost Jim Crane money. 

Regardless, the Verlander injury costs the Astros not only on the field, where they are denied the services of one of the best pitchers in baseball, but also financially. It creates a $33 million hole that they cannot fill.