NEWSLETTER
Options decisions around are due this week by Friday at 4pm CT, though some players have individual contract quirks that call for a sooner decision.
The biggest option decision for the Cubs this week is whether to pick up a $20 million 2019 option on soon-to-be 35-year-old lefty Cole Hamels, who saw his performance in Texas decline along with his velocity over the past two years, only for both performance and velocity to spike after a midseason trade to the Cubs. Complicating the decision is that, per the trade, the Rangers will be on the hook for the $6 million buyout if Hamels’ option is declined, meaning that the choice for the Cubs is full freight: either than want Hamels for next season at $20 million in AAV,* or they pass, and the buyout is paid by the Rangers. Per Bruce Levine, this decision is due by Thursday.
As we discussed at length earlier this offseason, the option call is not at all an easy decision for the Cubs. Although it was very clear that Hamels was reinvigorated by his trade to a contender, and a mechanical adjustment brought back some of his velocity, time gets everyone, and there’s no guarantee that 2019 Hamels will be the same guy as the Cubs had in the second half of 2018. There remains the risk that he’ll be the guy he was in 2017-18 with the Rangers (ERA approaching 4.50, terrifying peripherals), and that’s a guy you may not even want in the rotation, let alone be paying $20 million.
But Hamels *was* very good with the Cubs (2.36 ERA, good peripherals, good velocity, 76.1 innings), and given the questions throughout the Cubs rotation, it sure would be comforting to have Hamels guaranteed to be in the fold before going into free agency. Of course, as we explored in the Cubs’ payroll post, adding Hamels at $20 million would really force the Cubs up into the upper bounds of luxury tax penalties if they wanted to make any other significant additions this offseason.
To that end, I still tend to think the Cubs are going to try, try, try to get Hamels locked down on a multi-year deal with a lower AAV this week, if at all possible.
Hamels’ agent told The Score that his side is not opposed to such a deal, but it also sounds like they are content to first wait for the option decision to be made. Understandable, as Hamels has little to gain by negotiating a favorable deal with the Cubs right now, on the eve of his very first foray into free agency. You could totally get why a guy might want a chance to see what’s out there for himself and his family – it may not be all about money at this point in his career.
My tentative guess as we sit here today is that no multi-year deal will be reached before Friday, the option will be declined, and the Cubs and Hamels will both say they’re open to negotiating a free agent contract. They’ll stay in touch. Maybe something will get worked out later in the offseason.
But, even as that’s my best guess based on the currently-available information, I still will hope that something gets done before Hamels actually reaches full-on free agency. While I don’t think there’s a monster contract out there for him, and while I don’t think the Cubs are totally screwed without him, it would still make me feel quite comforted on the starting pitching side of things if the Cubs had him locked down this week and could proceed with the rest of their offseason from there.
*While the luxury tax implications of the buyout situation remains something of a tricky business, I’m pretty sure a close read of the CBA gives the answer.
On pages 119-123, Article XXIII, Section (E)(5) describes how luxury tax calculations are made with respect to options contracts. The language is not exactly conversational English, but the gist is that it says when a player receives the buyout on a club option, that buyout does not count toward any luxury tax calculation – and that’s because the buyout was already considered guaranteed money back when the deal was signed, and the AAV was established for the years the deal covered. In other words, the team with the contract was already “paying” the buyout for luxury tax purposes. However, if the buyout *isn’t* actually ultimately paid out – i.e., the option is picked up – then two things happen: (1) the option is basically a whole new contract for that team, and the full AAV of that option counts for luxury tax purposes ($20 million for 2019, in the Hamels example); (2) the team(s) that “paid” the AAV of the buyout in previous years in their own luxury tax calculations get the amount that they paid taken OUT of their payroll for luxury tax purposes in that following year (Section (E)(5)(b)(ii)).Â
In other words, if the Cubs pick up the option on Hamels, they will be on the hook for a full $20 million AAV hit in 2019, while the Rangers and Phillies will get a portion of their 2019 luxury tax payroll deducted (the total deduction between the two teams would be $6 million). And, of course, the Rangers will not have to pay out the actual $6 million to Hamels. So the Rangers have two reasons to really hope the Cubs pick up the option.
