NEWSLETTER
It’s no secret that the Chicago Cubs are a touch more popular this year than last, and neither is it a secret that, perhaps more than any other team, the Cubs’ ability to spend freely in the next decade+ is intimately tied to that popularity. With a trio of TV deals that expire after the 2019 season and a long-term deal looming, showing positive ratings – as the Cubs have done in spades this year – could go a long way to determining just how lucrative that next big deal will be.
But in the even nearer term – like, 2016 – the Cubs will be more reliant on positive gains in a much more flexible revenue stream: attendance.
Thankfully, attendance this year has reflected the Cubs’ popularity, and a race for the playoffs has ensured the butts keep filling the seats long after school went back into session. Through yesterday’s near-sellout, the Cubs have drawn 2,688,859 fans, and they’ve got seven home dates remaining (including a weekend series against the Pirates and an interleague makeup on Monday against the Royals). All of 2014 – a year in which attendance was up for the first time in a long time – the Cubs drew 2,652,113.
That spike in attendance, possibly even above what the Cubs were projecting coming into the season, will generate additional revenues for the organization that, after expenses, will be repurposed right back into baseball operations. (This is setting aside, for now, additional revenue increases the Cubs should see from escalations in their present TV contracts, additional sponsorship revenue, and other ancillary increases in revenue tied to interest in the team.)
Indeed, GM Jed Hoyer recently stated his believe that the increase in attendance will likely translate to more for baseball operations to spend heading into next year (Tribune, CSN). That won’t necessarily mean only big league payroll, mind you – there are also amateur and international spending considerations – but that should be the biggest chunk of baseball ops expenditures next season.
How much will the Cubs have to spend next year?
Well, even if I could tell you exactly how much revenue will ultimately be budgeted for baseball operations, and even if I could tell you how much of that would be spent on non-payroll items, I couldn’t tell you how much the front office will actually spend on payroll in 2016. No one can. Not even they could tell you that right now.
Instead, the best we can do is ballpark the very, very rough range within which the front office should be able to work. And even that’s extremely difficult, because the baseline from which you start – in 2015 – is not easily calculated.
Determining a team’s payroll is actually more complicated than you might think, as it is dramatically by in-season roster moves, incentives, dead money, non-25-man players bouncing back and forth on the 40-man, and the distinction between actual paid-out payroll and payroll for luxury tax cap purposes. As we get into the offseason and start more specifically discussing roster moves, I’ll get into more detail on how the Cubs spent their money in 2015, and how that could rise or fall heading into 2016.
For now, I’ll ballpark it by saying that, in 2015, the Cubs have spent roughly $130 million. With only a handful of contracts coming off the books after the season, and with contract and arbitration escalations on the way, the Cubs will likely have to bump that figure a bit if they want to be aggressive in the upper end of free agency.
If I knew today that the Cubs were going to exceed $140 million in payroll on Opening Day 2016, I would be very surprised. Part of that figure is a matter of being realistic about the revenue growth and attendant spending (and the fact that some of the funds for the 2015 payroll may have been a one-time thing tied to the money saved by not signing Masahiro Tanaka (remember the “rollover” funds?; a quote from early 2014: “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).” Boom. Nailed it.)).
Part of that $140 million figure is simply the nature of not increasing spending too dramatically in a single offseason so that large contracts can be staggered over time.
That should leave the Cubs with plenty of flexibility to improve the roster after the season, and I very much look forward to the debates about whether spending huge on David Price makes more or less sense than spreading those dollars across two starters in the next tier down. But that’s a debate for another day.
The lesson today is simply: the Cubs are really popular this year, and that’s probably going to open up some additional payroll flexibility heading into 2016.
Neat.
(And, of course, it’s worth reminding folks that the Cubs’ ability to spend freely on payroll is also limited by the leveraged partnership arrangement at the core of the team’s ownership right now, and likely through 2019. If you don’t want to read 10,000 words, I can give you an easy short-hand there, too: the more the Cubs generate in revenue, the more baseball ops will have to spend.)
