The Quiet Importance of Rolled-Over Funds - How Much Could the Rebuild Be Impacted?

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The Quiet Importance of Rolled-Over Funds – How Much Could the Rebuild Be Impacted?

Chicago Cubs

theo epstein and jed hoyerIn last week’s financial piece, among many other things, I described how the Chicago Cubs could be satisfying certain externally-imposed financial conditions by saving up some “earnings” for use on necessary one-time expenditures or for use in future baseball operations spending. In other words, although the Cubs didn’t or couldn’t spend everything they may have wanted to on payroll for 2014 (or even if they didn’t want to), they could seek to use some of those unspent mostly-Tanaka-related funds next offseason.

That could significantly impact the pace of the current rebuild as we look ahead to 2015.

Take that not just from me, of course. Team President of Baseball Operations Theo Epstein has, himself, confirmed this possibility, saying before Spring Training:

This is the first winter where we ended up keeping some [money] in reserve to be used on players [that are] hopefully prime age, impact-type players down the road. It gives us a bit of a leg-up as we look toward next winter or an in-season move that might make the present and the future better …. Rather than just spend the money to spend it, if we can book that and have it available to us to sign that international free agent who comes along in the Summer, or to acquire a player in a trade who carries a significant salary but fits for the long term, or to just start out next offseason knowing we can be a little more aggressive on the guys we really want early because the money will be available to us.

And now, even Gordon Wittenmyer is hearing positive things in this area. A snippet of Wittenmyer’s latest take (which also includes thoughts from Epstein, and it’s worth a read):

An evolving understanding of the team’s resources in relation to capital projects, rooftop politics and other factors delaying and squeezing the money flow to baseball led to a new tack for the baseball department: carrying some of one year’s payroll budget into the next, or two years of savings into a third.

It’s the first time the Cubs have allowed their front office to do that.

It won’t do much to bolster the chances for this season, but if the $15 million to $20 million saved this year leads to, say, Max Scherzer (not likely) or another big name next year — or two big guys the year after — then the rebuild has a chance to take tangible shape.

While I don’t mean this in a critical way, I think it’s worth noting that, with respect to the financial issues, Wittenmyer has usually taken to a particular tone. So, when even he offers a hint of positivity with respect to a particular issue, it stands out.

That doesn’t mean, of course, that Wittenmyer is (or I am) right about the importance of rolled-over funds next offseason, but, as I’ve mentioned before, it’s going to be something to watch. As it was with the money leftover after missing out on Tanaka, the Cubs aren’t going to spend next offseason just because they’ve got money available.

But, if declining revenues stabilize this year (attendance losses perhaps partly offset by new advertising/partnership relationships), we could see the Cubs with a healthy amount available to spend next offseason – and that’s long before the major revenue increases (and expense reductions) hit the books over the course of the next five years. Also, as we’ve discussed before, some of the best free agents next year project to be upper tier starting pitchers, something the Cubs will likely need. Double also, if the Cubs finish in the bottom ten this year (likely), they’ll have a protected first round draft pick going into the offseason, further increasing the attractiveness of those upper tier free agents (especially if you stack multiple such signings in one offseason).

Putting it this way: imagine that the Cubs’ current revenue level would sustain a payroll in the $110 million range, and imagine that holds true for 2015. Let’s also imagine that the Cubs spend about $90 million this year on payroll (currently projects to be about $89 million, but there will be call-ups and waiver additions that bump that figure up, and then sell-off moves that bump it back down). That means the front office could roll as much as $20 million over into the 2015 payroll level. That means, it is conceivable that a $130 million payroll in 2015 is realistic (and then probably sustainable and growing thereafter, given certain projected financial improvements).

What would a $130 million payroll mean for the Cubs in 2015? Consider this: the Cubs have just about $55 million committed for 2015, including presumed arbitration raises. They’d have quite a few holes to fill at that point, but how much hay do you think they could make with $75 million in funds to spend?

To be quite clear, I’m not saying that’s how things will actually play out. The spending will depend on the progress of the in-house pieces between now and next offseason, and on the players available in free agency. The point here is only that, when considering what is coming off of the books after this year, and considering the healthy potential for a rollover of funds, the Cubs could be extremely active next Winter if they wanted to be.

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Author: Brett Taylor

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