NEWSLETTER
With the Chicago Cubs having made a significant trade last week with – among other considerations – substantial payroll implications, with the tender deadline having long passed, and with free agency still largely ahead, I figured it was high time we took a look at the Cubs payroll situation.
The Cubs’ payroll last year is kind of a weird thing to pin down, because there are three numbers to consider: what the payroll paid out would have been in a normal year, what was actually paid out in the shortened season, and what the number was for luxury tax purposes.
While the payroll actually paid out is probably the most important one to the Cubs, it doesn’t really mean a whole lot for our purposes. When we think about payroll, we’re basically asking how much a team spent on players relative to what they normally spend, or relative to the rest of the league in a normal year. So, for example, if we want to talk about where the Cubs’ payroll stands right now heading into what is expected to be a normal-length season, then what we really care about from last year is what the full-season payroll WOULD have been in a normal year. That’s what will tell us more about how things are going at the moment.
So, then, let’s do a quick bit of math. In 2020, the Cubs actually paid out about $80.5 million in on-field payroll. That was the prorated pay on the 60-game season, so over a full 162-game season, that on-field payroll WOULD have been about $217.4 million. For luxury tax purposes, it was basically the same, at $216.3 million. That was third highest in baseball, and put the Cubs over the tax for the second straight year.
In short, the Cubs kept up their recent trend of very high – but appropriate, given their market – payrolls.
But oh my lord how things have changed so far this offseason.
Here’s where things stand right now with the Cubs’ projected 2021 payroll (with arbitration numbers via MLBTR’s average):
Yo.
After free agents walked, after non-tenders, and after the Yu Darvish trade, the Cubs’ on-field payroll is down $75(!) million from last year. Let that drop wash over you. When I say this offseason has been subtraction by subtraction, that’s a part of what I’m talking about. The Cubs also won’t pay Theo Epstein the final $10 million on his deal next year. The Cubs also won’t be hiring a new General Manager this offseason. The Cubs also no longer have an extremely expensive manager. The Cubs also cut staff significantly.
Spending in 2021 figures to be almost eye-poppingly down from recent years past. But no, that doesn’t necessarily mean newfound money is just going into ownerships pockets. Remember, the Cubs’ baseball operations budget is supposed to be a product of organization revenues minus the non-baseball expenses. From there, Tom Ricketts has said repeatedly, everything else goes back to baseball operations for their budget. We try to hold the Ricketts to that.
But it’s more challenging at the moment to do it.
The issue going into 2021 is that predicting Cubs revenues is much, much harder than your typical year given the pandemic, the lack of fans, the coming vaccine, etc. Moreover, the significant losses from 2020 are … factored in as part of the 2021 budget? Totally ignored? Covered by loans and treated as wholly unrelated to baseball? We don’t really know. If “baseball ops” took a big loss last year, I suppose you could convince me it’s fair for baseball ops to “pay back” some of it this year (I’m playing with the language there, but I think you get what I’m saying).
That is all to say, without knowing how 2020 losses are being treated, and without knowing how the Cubs are projecting revenues for 2021, it’s hard for me to say the bloodletting is over. Or that there’s X amount of space now available for the Cubs to sign players. In a normal world, you’d look at the on-paper payroll right now and say holy smokes, the Cubs can making some SERIOUS signings, because you’d generally expect them to have the ability to spend into that $200 to $220 million range. No one expects that this year. And I don’t really have any idea what to expect.
I did some back-of-the-napkin’ing a long time ago and came up with maybe $150 to $160 million available for payroll, but to be honest, there’s just way too much uncertainty (in both the world and in the Cubs’ books) for me to act like I could realistically tell you what a payroll range could be. So I won’t do that anymore this offseason unless we get some definitive financial word off of which to work.
Instead, I’ll just point out where things stand right now, note that payroll has dropped $75 million so far this offseason, and then I’ll hope that the Cubs front office at least has enough flexibility from here to target some of the many interesting buy-low options in a depressed free agent market. It’s not like the Cubs need a HUGE boost from here in order to make some compelling moves this offseason, and even adding $10 to $20 million to the 2021 payroll would have things still waaaaaaay down from last year.
Oh, also: the Cubs have just $39 million on the books for 2022 right now. You read that right. A few arb raises will take that number over $50 million, but, uh, yeah. There’s a lot to work with, folks, especially if the world rights itself this year, and the CBA negotiations don’t crush the sport …
