PROBABLY WRONG REPORT: Cubs Topped the Luxury Tax Limit Again, Which Would Have Offseason Consequences (UPDATE: Doubt It)

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PROBABLY WRONG REPORT: Cubs Topped the Luxury Tax Limit Again, Which Would Have Offseason Consequences (UPDATE: Doubt It)

Chicago Cubs News, Chicago Cubs Rumors

[UPDATE: Jesse Rogers and Patrick Mooney (and the math in this post) cast serious doubt on the accuracy of the USA Today report. You can probably toss it. The original post remains below.]

At every transactional turn this season, there was a sense that the Cubs were staying cognizant of the luxury tax cap for 2017, set at $195 million. It may not have been STRICTLY necessary to stay under that cap, but, in the new CBA, there are baseball-operations penalties associated with going over the cap, and with so much movement on deck for the offseason, I think everyone would agree staying under the limit was preferable.

According to USA Today, the Cubs weren’t able to do it. The report indicates six teams, including the Cubs (at about $199.5 million), exceeded the threshold in 2017. The calculations of payroll for luxury tax purposes is complicated (it involves the average annual value of contracts on the roster, as well as partial payments made to players throughout the year, plus bonuses earned, insurance coverage, and payments to players on the 40-man, but not 25-man, roster), and it can be all but impossible for outsiders to track throughout the year.

The USA Today report does not indicate that its source is its own calculations, however, and instead indicates it got the figures from the “year-end payroll reports submitted to MLB.”

(I will point out that the article is written in a weird way, though, listing the payrolls – $186.5 million for the Cubs – and then later adding a paragraph that notes that teams also have to add in $13 million in player benefits, which would push the Cubs over the luxury tax limit … but the $199.5 million is never actually written in the article. It’s just an odd way to lay out the information, and does leave you at least to wonder if the $13 million is accidentally being counted twice, or if paid-out-payroll is being used instead of luxury tax payroll. Cot’s Contracts, which doesn’t have all the in-season moves and bonuses, had the Cubs at $177.6 million (including benefits), leaving nearly $20 million in room to work with for in-season moves and benefits. Back-of-the-napkin, very quick addition: Cubs took on about $3.5 million in salary for Jose Quintana, and about $2 million for Justin Wilson and Alex Avila. I have trouble getting another $10+ million from other minor additions and bonuses.)

So then, *if this is official and accurate*, there are a couple serious implications for the Cubs this offseason, as previously laid out when we dug into draft pick compensation and qualifying offers.

Had the Cubs stayed under the luxury tax threshold, the draft picks they would receive if and when qualified free agents Jake Arrieta and Wade Davis sign with a new team would have come after the second round. Over the tax? The picks don’t come until after the *fourth* round.

Moreover, had the Cubs stayed under the luxury tax threshold, the draft pick they would lose for signing a qualified free agent (like Alex Cobb, for example) would have been their second-highest pick. They would also lose $500,000 in IFA pool space. If they’re over the luxury tax cap, though? They lose their second-highest pick AND their fifth-highest pick AND $1 million in IFA pool space. All because, reportedly, the Cubs exceeded the cap by about $4 million. Ouch, ouch, ouch.

So, yeah, this report is something of a really significant news drop. I’m going to start poking around to see if I can confirm that this is accurate. Until then, hold off on freaking.


Author: Brett Taylor

Brett Taylor is the Editor and Lead Writer at Bleacher Nation, and you can find him on Twitter at @BleacherNation and @Brett_A_Taylor.