NEWSLETTER
With all this talk of needing to move money around to sign even lesser relief types – let alone take a swing at Bryce Harper – Brett recently looked at where the Cubs stood for 2019 and whether they could realistically get under the luxury tax (they cannot), but I thought it was high time we also took a quick look into the Cubs’ finances over the next several years. After all, any limitations on the Cubs may not necessarily be strictly and exclusively about 2019.
So what does that look like for the Cubs over the next few years? Well, here you go:
A few logistical notes: Obviously, this is a quick and dirty estimate, so don’t take anything after 2019 as gospel. For example, we’ve used a 5% increase for the 40-man and benefits/pension increases, but it could be more or less than that. We’ve also had to estimate a fairly large number of arbitration cases far down the road (we used a 20% increase for each player), and had to make a few decisions on options, as well.
Speaking of which … For 2020: I assumed the Cubs would buy out Brandon Morrow for $3M in 2020, instead of paying him $12M. And assumed that they’d pick up the option on both Anthony Rizzo ($14.5M) and Jose Quintana ($11.5M), instead of using either of their opt outs ($2M and $1M, respectively). For 2021: I assumed the Cubs would buy out a 37-year-old Jon Lester for $10M instead of exercising his $25M mutual option. And once again assumed the Cubs would pick up Anthony Rizzo’s $14.5M option instead of paying his $2M buyout.
So, basically: if you think the Cubs are going to keep Morrow, add another $9M to the 2020 total and if you think they’ll keep Lester, add another $15M to the 2021 total. But remember, in either case, the arbitration raises have a pretty wide variance with such a rough estimate, so these are all just ball park figures.
As we’ve previously stated, the Cubs luxury tax (and actual) payroll sits right around $224.5M for 2019. In 2020, however, the Cubs’ payrolls sit in the $185M range, give or take. And in 2021, the actual payroll might is as low as $147M (though the luxury tax is roughly $20M higher. Again, the Cubs will acquire more players between now and then (though they could also shed some salary/sign extensions to strengthen the AAV for luxury tax purposes, etc.), but that’s where we’re at right now.
Just as a reminder, here’s where the lowest level of the luxury tax falls in each of the coming years:
2019: $206M
2020: $208M
2021: $210M
So, again, although the Cubs are slated to blow past that $206M threshold this season, they actually are positioned about $20M below the lowest threshold in 2020 and $40M in 2021. To be fair, that means adding a new $30M AAV contract right now would probably keep them over multiple years in a row – which compounds the cost penalties (20% overage your first year, 30% the second consecutive year, and 50% the third consecutive year), but getting under just once resets the penalty … and of course a re-negotiated CBA in 2022 can completely change everything (maybe they’ll raise the threshold, lower the penalties, or obliterate altogether – I wouldn’t bet on it getting worse, because that’s much worse for free agents/the players’ union).
But even if there were significant penalties to be wary of, the Cubs *actual* payroll – i.e. the money they’ll have to dish out of the budget – is pretty darn low. Obviously, $165M committed through 2021 seems like a lot, but the Cubs budget is up $55M more than that *today*, and that’s without a new TV deal, which, even if it isn’t as good as they thought, will still probably be considerably better than what they have now.
Moreover, 2021 is the last year there’s significant money committed *at all.* In 2022, the Cubs will have contracts committed only to Jason Heyward and Yu Darvish ($41M), but they’ll lose everyone else, including Kris Bryant, Anthony Rizzo, Javier Baez, Addison Russell, Kyle Schwarber, and Mike Montgomery. Several other guys will be in their final years of arbitration, but it’s hard to predict right now that any of those guys will be bank-breakers.
The Cubs’ payroll picture may be a *little* tight in the coming years, but it opens up quickly thereafter. Plus, expiring contracts and the new TV deal should help long-term actual dollar concerns, while the expanding luxury tax threshold and potential extensions could help out on the luxury tax side.
