NEWSLETTER
I suppose none of this is unexpected news, but I also know that none of it is good.
Per multiple reports (ESPN, Tribune), the Chicago Cubs this week laid off about 60 people on the business side this week, upwards of 25% of their staff. The organization has lost significant revenue this year, which will in turn become absolute losses before the year is up. At that level, I understand the layoffs, but at a human level, it’s really hard to accept such a successful organization unloading so many people at a time like this. It stings, and I feel for those people and their families.
At the same time, the Cubs are also already anticipating significant revenue shortfalls for the 2021 calendar year, thanks to continuing COVID-19 fallout and attendance issues.
To that end, the Cubs are reportedly preparing for limited capacity at Wrigley Field next season, which might amount to only about 20,000 tickets out of the nearly 42,000 seats at capacity. Season ticket holders – which account for about half the stadium’s tickets – will presumably get priority. This assumes the city and state will permit attendance at all come April.
With that in mind, you can be assured that the Cubs’ budget for 2021 in baseball operations will be crafted with reduced revenues in mind. Although it’s likely that TV-related revenues will be up next year with Marquee fully operational from the get-go and a much larger slate of games, it’s not at all certain that (1) capacity at Wrigley Field will be able to increase later in 2021, (2) associated game-day revenues in the Wrigleyville area will recover, and (3) 20,000+ fans will be eager to return to games immediately at a full price tag.
The reality of 2021, at least as we can reasonably anticipate it at the moment, is that fans will return to sports stadiums in a measured way. That’s going to be true, in my opinion, even if a vaccine is being distributed as of April 2021. It’s just going to take time for large crowds of people to be comfortable doing that whole thing again, and operations like the Cubs have to anticipate that. Cutting costs now is part of that process, yes, but budging much lower costs for next year is also part of it.
So, like we’ve been saying for months now: this is yet another reminder of, and factor in, dramatic cuts to baseball spending that are on the way. The Cubs will not be spending aggressively this offseason up toward the luxury tax again – and not because they want to stay under the tax, but because they just flat out aren’t going to spend a huge amount in player salary next year period.
The only thing working in the Cubs’ favor is going to be that this reality will be true for virtually every organization in MLB. A small handful of teams will be willing to play at the top of the free agent market with traditional price tags (see the Mookie Betts extension from the Dodgers – some teams, for some players, are still going to do it). But the vast majority of teams and the vast majority of players will be doing a serious dance at a lower price point. There will be opportunities for the Cubs to add real talent this offseason, even if the budget is very tight.
Where things will get dicey is what happens with the tender decisions on contracts to guys like Kris Bryant, Javy Báez, and Kyle Schwarber, and the option on Anthony Rizzo. In a normal world, it’d be crazy to even have a conversation about a $21ish million tender to Bryant or a $12ish million tender to Báez or a $9ish million tender to Schwarber or a $14.5 million option decision ($16.5 million salary, $2 million buyout) on Rizzo. But every organization is going to be having crazy conversations this fall. It doesn’t mean the Cubs – or other teams – will non-tender players of this caliber, but the fact that it’s even going to be a conversation is what’s nuts.
Here’s hoping some medium-term extensions can be put together that protect the players against what could be a massively changed market, and also provide the Cubs some stability through this period.
Anyway, I’ve gotten ahead of myself. For now, the story is this: the Cubs are justifiably anticipating another year with a very tough revenue picture, are already making organizational cost cuts, and this is going to be a serious issue in the offseason.
