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theo epstein and jed hoyerIn last week’s financial piece, among many other things, I described how the Chicago Cubs could be satisfying certain externally-imposed financial conditions by saving up some “earnings” for use on necessary one-time expenditures or for use in future baseball operations spending. In other words, although the Cubs didn’t or couldn’t spend everything they may have wanted to on payroll for 2014 (or even if they didn’t want to), they could seek to use some of those unspent mostly-Tanaka-related funds next offseason.

That could significantly impact the pace of the current rebuild as we look ahead to 2015.

Take that not just from me, of course. Team President of Baseball Operations Theo Epstein has, himself, confirmed this possibility, saying before Spring Training:

This is the first winter where we ended up keeping some [money] in reserve to be used on players [that are] hopefully prime age, impact-type players down the road. It gives us a bit of a leg-up as we look toward next winter or an in-season move that might make the present and the future better …. Rather than just spend the money to spend it, if we can book that and have it available to us to sign that international free agent who comes along in the Summer, or to acquire a player in a trade who carries a significant salary but fits for the long term, or to just start out next offseason knowing we can be a little more aggressive on the guys we really want early because the money will be available to us.

And now, even Gordon Wittenmyer is hearing positive things in this area. A snippet of Wittenmyer’s latest take (which also includes thoughts from Epstein, and it’s worth a read):

An evolving understanding of the team’s resources in relation to capital projects, rooftop politics and other factors delaying and squeezing the money flow to baseball led to a new tack for the baseball department: carrying some of one year’s payroll budget into the next, or two years of savings into a third.

It’s the first time the Cubs have allowed their front office to do that.

It won’t do much to bolster the chances for this season, but if the $15 million to $20 million saved this year leads to, say, Max Scherzer (not likely) or another big name next year — or two big guys the year after — then the rebuild has a chance to take tangible shape.

While I don’t mean this in a critical way, I think it’s worth noting that, with respect to the financial issues, Wittenmyer has usually taken to a particular tone. So, when even he offers a hint of positivity with respect to a particular issue, it stands out.

That doesn’t mean, of course, that Wittenmyer is (or I am) right about the importance of rolled-over funds next offseason, but, as I’ve mentioned before, it’s going to be something to watch. As it was with the money leftover after missing out on Tanaka, the Cubs aren’t going to spend next offseason just because they’ve got money available.

But, if declining revenues stabilize this year (attendance losses perhaps partly offset by new advertising/partnership relationships), we could see the Cubs with a healthy amount available to spend next offseason – and that’s long before the major revenue increases (and expense reductions) hit the books over the course of the next five years. Also, as we’ve discussed before, some of the best free agents next year project to be upper tier starting pitchers, something the Cubs will likely need. Double also, if the Cubs finish in the bottom ten this year (likely), they’ll have a protected first round draft pick going into the offseason, further increasing the attractiveness of those upper tier free agents (especially if you stack multiple such signings in one offseason).

Putting it this way: imagine that the Cubs’ current revenue level would sustain a payroll in the $110 million range, and imagine that holds true for 2015. Let’s also imagine that the Cubs spend about $90 million this year on payroll (currently projects to be about $89 million, but there will be call-ups and waiver additions that bump that figure up, and then sell-off moves that bump it back down). That means the front office could roll as much as $20 million over into the 2015 payroll level. That means, it is conceivable that a $130 million payroll in 2015 is realistic (and then probably sustainable and growing thereafter, given certain projected financial improvements).

What would a $130 million payroll mean for the Cubs in 2015? Consider this: the Cubs have just about $55 million committed for 2015, including presumed arbitration raises. They’d have quite a few holes to fill at that point, but how much hay do you think they could make with $75 million in funds to spend?

To be quite clear, I’m not saying that’s how things will actually play out. The spending will depend on the progress of the in-house pieces between now and next offseason, and on the players available in free agency. The point here is only that, when considering what is coming off of the books after this year, and considering the healthy potential for a rollover of funds, the Cubs could be extremely active next Winter if they wanted to be.

  • joejoe234

    I know this isn’t the right spot for this, but I posted a message on the message board about tickets. I have season tickets but due to some issues I will be in Indianapolis most of the year and unfortunately not be able to go to a lot of games. I want to offer my tickets to bleacher nation fans first before stubhub, since they raise the prices by 20%. I have two tickets with a press box view, section 517 row 5. I’m selling most games for $12 first come first serve. If you are interested you can find the post in the message board. I attached a picture of the view as well.

  • Funn Dave

    “they could seek to use some of those unspent mostly-Tanaka-related funds next offseason.”

    I thought that went without saying. They had *better* spend some of those unspent Tanaka dollars next offseason.

    • C. Steadman

      Agreed, 2014/15 offseason is where you begin to add talent to surround the recently brought up Baez and Co. Maybe a couple of OF, but hopefully some SPs.

    • http://www.bleachernation.com Brett

      They better have it available. Whether it’s the right time to spend it (and whether the guys on the market are the right guys) is, technically, a separate question.

  • dwest9cubs

    Scherzer for 7 years (through age 37) for 160 million?

    • Norm

      Add about $40M more.

      • DarthHater

        Yea, 7/160 probably is no better than what Scherzer already rejected.

    • C. Steadman

      He already turned down 6/144(24M AAV)

    • half_full_beer_mug

      Am I the only one that thinks that last year may have been the outlier and not the norm? It wouldn’t surprise me at all if this time next year he’s wishing he’d have signed the extension.

      • terencemann

        Teams will have at least as much money next year as this year. The new MLBAM money is pouring into their coffers.

      • Cubbie in NC

        You are not the only one. I am glad that he has another year to prove if last year was who he developed into or an outlier.

  • CubFan Paul

    “the Cubs could be extremely active next Winter if they wanted to be”

    Or they might not have to be, if some of the unproven develop into core-pieces (Olt 3B, Kalish OF, Baez 2B, Lake OF, Castillo C (..& to a lesser extinct, but no pressure this year: Bryant OF, Soler, OF, & Alcantara 2B/CF) to join Rizzo and Castro

    So I guess they could be extremely active on pitching next Winter.

    • J Bounds

      Taking your logic a step further. If Olt plays well this year, Castro and Rizzo bounce back, Baez does well in Iowa and gets called up and Bryant continues to light the minors, Castillo continues to improve and Kalish and Lake perform at least like quality fourth outfielders…… man you’ve got some options. What do you think a package that includes Villanueva, Alcantara, and Vogelbach might get ya? I’m thinking a lot.

  • Tommy

    I like your positive vibe here. I can see you madly scrambling figures on a scratch piece of paper as you prepared this article, too! Love it!

  • http://bleachernation.com woody

    We also have Soriano’s contract off of the books after this season. That combined with the carry over should be plenty.

  • BenW

    Love to see Scherzer, but if repeats last year again, he will want close to Kershaw money. I’d rather focus on grabbing both Shields and Masterson (as teams will be less excited to give up picks for those guys). I would venture to say that combined their long-term commitment will be less than Scherzer. Add those two to Shark, Wood, and E-Jax, and now we are getting somewhere.

    If they could also grab Rasmus, I could see a very, very exciting 2015 team (with Baez and Bryant factored in as well).

    They can easily afford this, but is it possible to pull off? Most likely not, though signing everyone in one offseason would allow the draft pick loss to be less than over 2-3 offseasons.

    • gocatsgo2003

      I think this is about in line with my thinking as well. Instead of incrementally building up over a couple of offseasons, I expect that Theo and Company are holding the funds “in reserve” to go big in one offseason. In doing so, they would be able to maximize the draft pick/pool in one season while capitalizing on the marginal benefits thereof (protected pick(s), etc.).

      I could very well see 2014 being a throwaway/experimental year, 2015 as the year in which the bigger-name prospects get their feet wet in the Bigs (Bryant, Baez, etc.), and then 2016 as THE YEAR after spending significantly on a bunch of free agents. The problem is that there appear to be enough big-name free agent starters this coming offseason that the plan might have to be compressed somewhat — I can’t really imagine more than one or two of Price, Latos, etc. actually hitting the open market.

  • candyland07

    LOL . I am hinting but I am not predicting. It might, it could ,or maybe its just a possibility Imagine its conceivable yet not actually reality, but its plausible. therefore its potentially it might be or might not.

    • http://www.bleachernation.com Brett

      You have a very low threshold for laughing out loud. Have you ever been recruited to sit in the audience for a ‘Two and a Half Men’ taping?

      • DarthHater

        I hear the inventors of the laugh-track machine are working on a machine that will automate the posting of smart-ass message board comments, so there’s hope for the future on both fronts.

        • Fishin Phil

          Parallel fronts?

          • DarthHater

            Every opportunity to rant is sacred.

        • https://twitter.com/dwoytek dw8

          To call these comments such as these as “smart-ass” is overly complimentary.

    • http://www.friendly-confines.com hansman

      You’re not as dumb as I thought you were.

      • DarthHater

        Most backhanded compliment since: “I don’t know half of you half as well as I should like; and I like less than half of you half as well as you deserve.”

        • Fishin Phil

          Or “You don’t sweat much for a fat girl”.

  • DarthHater

    Why is it that Theo seems to be shaking hands with somebody in every picture?

    • Justin

      Theo is a spokesmodel for hand sanitizer when he’s not looking for flip candidates;)

  • Transmogrified Tiger

    The thing that I’m most curious about is how exactly they would apply those rolled-over funds. Not spending ~20 million this year is no small chunk of change, but how they spend it depends on how fast the rest of the revenue gets here. If payroll is going to be (relatively) suppressed for several more years, then rolling that amount over is in the neighborhood of ~5-7 million per year. Not inconsequential(especially given a cursory sketch of the 2015 roster and how they might want to consolidate spending), but not necessarily the boon that other improvements may bring(e.g. TV deal, Renovations, etc.

  • Cubsin

    I very much like the idea of signing two or three free agents requiring draft pick compensation in one year to limit the long-term damage to the farm system. Since I believe that 2015 will be the last time in my lifetime that the Cubs will have a protected first-round pick, I would very much like the see that strategy employed next winter.

    • https://twitter.com/dwoytek dw8

      While I agree with your sentiments, and this strategy in particular for next off season, I don’t think this particular free agency compensation system will be around very much longer.

  • ssckelley

    Reggie Golden got cut, does not surprise me.

    • DarthHater

      The handwriting has been on the wall for him ever since he threw a baseball at a kid in the stands last summer… :-P **ducks**

  • E

    It’s probably just me but I feel like there is hints at a new narrative for next year. Something along the lines of, “more of the same.” In my mind, another off season like this one (which I was on board with) is simply unacceptable. We need pitching. What we have in the farm isn’t going to cut it. Go buy it.

    • Edwin

      If the new narrative is “more of the same”, is it really a new narrative?

      • mjhurdle

        maybe it is like the “new” textbooks that come out every year where the only thing that changed was the foreward?

    • brains

      agreed completely with your assessment and the probable outcome. i still think theo is biding his time until the end of his contract. he expected better from ownership, and he didn’t expect enough from himself in terms of managerial style. so now it’s a bad situation he’d be smart to leave, in as good condition as he can considering the circumstances and mistakes.

      • Voice of Reason

        You’re wrong. Theo is doing just what he said he would do, rebuild the farm.

        He knows the money will be there to fill holes with free agents and trades.

        There’s no disappointment from Theo towards owners. This is going as planned.

  • kashbunker

    Why not go after Mike Trout next year when he becomes a FA? will have to outbid Yankees

    • ssckelley

      Trout cannot be a free agent until 2018.

      • DocPeterWimsey

        Whew, for a moment I thought that it was 2017 already…..

  • Jr 25

    Time to start the Shark and Russell or other bullpen arm to AZ rumor mill again as one of AZ top bullpen arms is done for the year w/ TJ surgery!

  • brains

    THIS possibility i do like to hear. though in traditional theo talk it’s vague and non committal. i supposed it has to be that way for a multitude of reasons, but i just don’t see them signing any big market pitchers next year. perhaps two more #4 pitchers and a backup catcher that they’ll put on waivers in the preseason?

    real things aren’t going to happen until at least four of us have appendectomies over the next 5 years. so i do doubt the money will be utilized in this way unless there are exceptional circumstances, which there surely wont be.

    • Abe Froman

      Where do you get your information? I imagine random magazine clippings all over your walls while you circle random words and connect them with yarn A Beautiful Mind style.

      “It’s your fault, Eeyore. You’ve never been to see any of us. You just stay here in this one corner of the Forest waiting for the others to come to you. Why don’t you go to THEM sometimes?” A.A. Milne, The House at Pooh Corner

      • brains

        just for the record i love that you called me eeyore.

        • DarthHater

          If you were really like Eeyore, you’d find something to dislike about it.

          • brains

            i like a lot of things about baseball – but we haven’t seen them in a long time with the team, and the way things are run now it’s tough to focus on the sport. so i focus on what they want us to focus on – ownership and middle management. they’ve made a concerted move to overtake their own players in terms of popularity and association, so they get it for better or worse.

            • Voice of Reason

              Brains you don’t know what you’re talking about.

              • brains

                touché

        • Abe Froman

          I’m sure you are a very pleasant fellow, it’s just the gloom and doom outlook on the Cubs constantly that drives me to good natured ribbing.

          • ssckelley

            Lmao, you must be new here.

          • brains

            tragedy is pretty close to farce, which is pretty much where we’re at here

  • cubfanincardinalland

    Each year is a separate accounting. They have to show a 35 million profit to meet the debt rules. You can’t just roll profit over to 2015, and call it additional revenue.

    • brains

      that and the 35m profit is paid in a debt to themselves instead of operations. brilliant, really.

    • http://www.friendly-confines.com hansman

      Eh, I’m sure MLB takes into account cash on hand.

    • http://www.bleachernation.com Brett

      You are mistaken.

      • http://www.friendly-confines.com hansman

        If they are supposed to show a $48M EBITDA and are typically only around $35M, isn’t MLB already allowing them to break the rules?

      • DarthHater

        [img]https://yahoov4s2-a.akamaihd.net/sk/3682/11986320713_1ba6c3a16f_m.jpg[/img]

        • http://www.friendly-confines.com hansman

          I AM NEVER INCORRECT

          (Brett wasn’t responding to me)

          • DarthHater

            Darth is incorrect :-D

  • Kyle

    “They’d have quite a few holes to fill at that point, but how much hay do you think they could make with $75 million in funds to spend?”

    Are free agents going to stop being 30+ for the most part? No?

    Then very little hay. They’ll sit on it before they spend it on suboptimal players.

    • Bigfoot

      Remember that FA’s are not the only source of established players. IFA’s and trades can also bring in a star player when other teams are looking for salary relief or have someone blocking a stud miner leaguer.

      There’s more than one way to skin a goat!

      • C. Steadman

        Kenta Maeda please

      • Kyle

        The IFAs next year don’t look too great, and nobody needs salary relief because revenue sharing has everybody rolling in money but us.

    • http://www.bleachernation.com Brett

      Feels like I said that …

      Also, 30 isn’t some bright line test.

      • Kyle

        Then I was agreeing with you.

  • Bigfoot

    Well, lets add it up. Payroll Savings 2014 $20mil
    Budweiser Sign in RF $14mil
    JumboTron Ad sales $20mil
    New TV deal from WGN games $25-40mil

    Not sure of other revenue streams in the works, but so far, next year looks pretty good for baseball operations.

    • Brocktoon

      I feel like I would’ve noticed the jumbotron going up when I walked by Wrigley last Friday.

      • gocatsgo2003

        It’s almost as if he’s projecting out the 2015 season…

        • Brocktoon

          doy

        • Brocktoon

          brainfart. That said, I’m not counting on any jumbotron in ’15 until I actually see it being built.

  • Big City Mick

    It’s starting to feel like maybe extending Shark might be the better play if we’re truly shooting for the miracle Back to the Future II Cubs winning the World Series in 2015 thingy. If we’re willing to pay $200 million for Scherzer, we should probably pay $100 million to keep Shark.

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