John Fay

jfay@enquirer.com

Reports that the Reds have started rebuilding and are looking to slash payroll are not true owner Bob Castellini says.

"We're not rebuilding. If we were Johnny Cueto'd be gone," he says. "Mike Leake'd be gone. The payroll is up."

But the Reds are never going to have a payroll that matches the big market clubs. So while the rest of baseball has been wheeling, dealing and signing players this offseason, the Reds have been making moves to meet the "payroll challenges" they face.

Reds general manager Walt Jocketty clarified things last week.

"Our payroll has increased every year, despite what some people are writing or thinking, our payroll is increasing again this year," Jocketty said. "It's not increasing to the level it would need to have been able to keep the guys we traded. It's still increasing quite a bit over last year, but everyone's salaries are jumping up. We knew that going into last year."

But Castellini continues to operate the club like he has since he took over, i.e, spend as much as possible without taking a huge loss.

The Reds were 12th among the 30 teams in Major League Baseball in as far as payroll for 2014 at a record $114 million, despite being 19th in overall revenue. The club spent 56 percent of its total revenue on player payroll. The MLB average is 48 percent.

You may argue the merits of moves the Reds have made under Castellini. They gave those huge contracts to Joey Votto, Brandon Phillips and Homer Bailey. They've let the recent July 31 trade deadlines pass without making major moves. They did virtually nothing as far as adding players before the 2014 season. And by going for it in 2012, they gave $6.5 million in deferred money ($4.5 million to Ryan Ludwick and $2 million to Jack Hannahan).

But Castellini has put money back into the club as revenues have risen. The payroll have gone up significantly each of the last six years. It went from $73.3 million in 2009 to $76.1 million in 2010 to $80.1 million in 2011 to $87.8 million in 2012 to $106.8 million in 2013 to $114.1 million this year.

Again, Castellini says the payroll will be higher in 2015. The club is in the running for free agent outfielder Nori Aoki. If the Reds land him, the payroll will be substantially higher -- upwards of $120 million.

Castellini has maintained since he brought the Reds in 2005 that they budget to break even. If attendance is flat again this year -- the Reds drew 2,476,664 this year, down from 2,492,09 in 2013 -- they will operate at loss.

Castellini says neither he nor any of other investors has ever taken any money out of the club.

But the fact is in modern baseball economics it is hard for a franchise in a market like the Reds are in to compete on a yearly basis. The Reds get somewhere around $30 million on local television revenue.

The Los Angeles Dodgers, who had this year's highest payroll at $257 million, signed 25-year, $8.3 billion deal. That's $320 million year. The Texas Rangers get $150 million a year. The Houston Astros get $80 million.

With the limited TV revenues - the deal with Fox Sports Ohio runs through 2017 - the Reds are never going to be a $200 million payroll club. That means making hard decisions on your players as they reach free agency. Castellini grows attached to his players. That had a lot to do with the Votto, Phillips and Bailey signings.

This offseason, the Reds moved starting pitchers Mat Latos and Alfredo Simon for four prospects.

Latos and Simon were both third-time arbitration-eligible, thus free agents after the season if the Reds chose not to go arbitration or sign them long term. Mike Leake is in the same situation. Cueto is in the last year of his contract.

The Reds knew they had no chance of signing all four. It will be difficult to sign Cueto or Leake. If Cueto has another year in 2015 like he had this year, he's going to be in line for a contract like the $155 million deal Jon Lester got from the Chicago Cubs. Leake will not be cheap either.

Closer Aroldis Chapman is second-time arbitration-eligible, so he'll likely be in the same situation after the 2016 season that Leake and Cueto will be in after in '15 season.

The cycle never ends. Todd Frazier, Devin Mesoraco and Zack Cozart made a total of $1.75 million this year. All are first-time arb-eligible. MLBTraderumors.com projects Frazier to make $4.6 million, Mesoraco to make $2.8 million and Cozart $2.3 million.