NEWSLETTER
With Jen-Ho Tseng’s signing officially official, the Chicago Cubs have nailed down what is not only the most impressive international haul in this year’s market, it’s probably one of the most impressive hauls in recent memory among all of baseball. In doing so, the Cubs spent nearly $8 million to bring in Eloy Jimenez, Gleyber Torres, Jefferson Mejia, Erling Moreno, and Yohan Matos, in addition to Tseng (and likely a number of other lower-profile, less-expensive guys).
That $8 million spending spree easily blew through the Cubs’ international spending allotment, even after the organization added some pool money in trades on July 2. Blowing the budget will subject the Cubs to a 100% tax on the overage (so the total payout is going to top $10 million), and will prohibit them from spending more than $250,000 on any one player in next year’s international class. When you consider how harsh the penalties are for blowing the budget in the Draft, the Cubs are getting off light.
And that was the plan all along, according to President of Baseball Operations Theo Epstein, who recently laid out the Cubs’ approach to international free agency this year. You can read Epstein’s explanation here, here, here and here, for example.
Epstein, who referred to the approach as “a loophole we could run through and exploit,” explained that the Cubs liked the big-time targets available in this year’s class, and felt the penalties for blowing the budget were minimal. The Cubs had an opportunity to use money to acquire young talent beyond what most other teams were going to be able to do, and the Cubs took advantage.
If that sounds familiar, it could be because Epstein’s explanation for the Cubs’ approach mirrors the one I hypothesized in early July when it started to become clear that the Cubs were targeting more big-dollar youngsters than their international spending pool would allow. That lengthy piece – which even includes “loophole” right there in the title – describes the Cubs’ probable approach, and explains why the Cubs (in particular) doing it this year (in particular) makes a lot of sense.*
Epstein echoed those sentiments, right down to the lack of an international draft in 2014 (and the “poison pill” of harsher penalties kicking in if you overspend next year) being a factor. Epstein even confirmed that the trade of Roni Torreyes for international pool space was not about staying under the cap, but was instead about saving some actual money (every dollar of pool space the Cubs acquired reduced their tax bill by a dollar).
So, the plan all along was as we suspected it was: blow the budget (acquiring pool space where possible to save a little money on superfluous pieces), target the biggest names, take your (minor) lumps next year. Now we’ll see if the other aspect of the theory – the ability to trade pool slots next year for additional young talent – will play out. Epstein says the Cubs will target lesser players (since they can’t spend more than $250,000 on any one player), and they very well might. But if they can use a big pool slot to acquire a stateside talent? They just might do that.
*All credit goes to the front office on discovering and taking advantage of the loophole. I merely deduced a possible explanation for what they were doing after they’d already started doing it. Yes, there’s a little bit of back-patting going on here, but mostly just to fully lay out the international approach to those who’d not yet seen it.
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Onto a related, but separate matter …
Overspending on international amateurs this year was at least partly tied to the organization’s present inability to spend huge dollars in free agency, according to Epstein (though I’m sure he’d be the first to say that they loved being able to freely spend internationally regardless). Here’s what Epstein told the media, the quotes being available at the links above (this particular version comes from Cubs.com):
“That [international] market, you’re talking $1 million here, $1 million there, and that’s the type of thing we can afford. Right now, we’re not in a position to throw around hundreds of millions of dollars in free agency, but we can do it in that [international] market and try to monopolize it as much as we can.”
That comment, designed to highlight the Cubs’ laudable international approach, is likely to set off some anger alarms among some of you who’ve meticulously documented the Cubs’ rapidly falling payroll over the last three years. For you folks, the “we can afford [$1 million here, $1 million there]” piece, and the “we’re not in a position to throw around hundreds of millions of dollars in free agency” piece will scream “cheap.”
And, since you’re already on that side of the fence, little I say here will change your mind, so you might consider checking out.
For those who like their language heavily-parsed, however, let me know a number of things that, to me, underscore that Epstein isn’t really saying much of anything here.
First, and most obviously, Epstein said “right now” the Cubs can’t be spending “hundreds of millions of dollars.” The international spending that predicated the entire discussion was for the 2013 budget year. So, when Epstein says the Cubs can’t be spending huge free agent sums “right now,” well, we already knew that. The current message has consistently been that the Cubs can’t/won’t spend big until the Wrigley Field renovation plan is fully in place (it’s not yet) and the new TV deal for the WGN portion of the games is negotiated (it hasn’t been). So, whether you think that financial approach is right or wrong, there is nothing new here.
Epstein, who chooses his public words carefully, also said hundreds (plural) of millions of dollars. On its face, that’s a, “well, I mean, yeah. I agree” kind of thing. The Cubs should almost never be throwing around hundreds of millions of dollars in a single year. Even if the Cubs were spending as robustly as some think their financial situation should allow them, I doubt they’d have enough to commit hundreds (plural) of millions of dollars – especially “right now.”
($100 million contracts are rarely a good investment anyway, especially in free agency. Epstein has always maintained that kind of an attitude since coming to the Cubs, so, once again, there’s nothing here to get too riled up about. The Cubs did try to drop $75 million on Anibal Sanchez this Winter, after all. For the right players and the right risks, the money is probably already there.)
You also always have to keep in mind that there is a layer of gamesmanship involved any time the Cubs publicly discuss spending on the organization. Not only does it impact their future free agent negotiations, but, we can’t forget: there’s still a stadium renovation to be finalized. Yes, City Council has approved the bulk of the renovation, but there are still kinks to be worked out. Kinks that could probably be addressed by the heavy hand of a motivated city. Reminding everyone that the Cubs can’t truly open up the checkbook until the renovation situation is squared away doesn’t hurt, and is very much “on message.”
I don’t think Epstein is going to be throwing ownership under the bus any time soon, so you have to read comments like this one through a lens that the baseball operations folks and the business operations folks are working together. “Right now” the large revenue streams that are expected to support a large market payroll are not in place. Coordinating with that message, the Cubs are in the middle of an organizational overhaul – the kind that necessarily lends itself to spending a lot less on the big league team.
When the time is right to spend big, and the right players are available, I still believe the front office will be given the resources it needs. It could come as soon as the next year or two – that marks the confluence of the revenue streams coming online, as well as the young core theoretically emerging into the building block of a competitive roster.
