Looking at the Chicago Cubs Payroll Situation Entering the 2020-21 Offseason

It’s annually one of the biggest questions entering the offseason: what does the Chicago Cubs’ payroll look like heading into the offseason?

Answering that question is relatively easy, as we’ve done with the chart below. What’s much tougher is answering the question you ACTUALLY want to ask: how much are the Cubs going to spend this offseason? Well, not only is that a closely guarded secret every year, but it’s all the more difficult to come up with a cogent answer in a world where no one knows what player costs are going to be, what the free agent market will look like, and what revenues will be next year. I do have some rough, rough thoughts on what kind of financial offseason we’re looking at, so I’ll do my best to open up that conversation with this post.

But first, we need to look at where Cubs payroll stands as the offseason begins:

Thanks to Michael for helping me pull together the chart. See notes at the bottom of this post for additional info on the chart.

As you can see, the payroll number figures to be pretty darn healthy even before a single addition. Although the Cubs were up over $210 million this past year, it is a very safe assumption that payroll will fall dramatically for 2021. Revenue losses in 2020 are substantial, and the front office has already indicated that the projected revenues for 2021 are going to be seriously impacted by the pandemic if fans are not back in full force for Opening Day. And, since that information is probably not going to be known before the offseason plays out, the Cubs will have to budget for a most likely scenario.

To that end, you’re wondering, OK, so what’s the projected payroll number? Well, sir, I’m not even sure the Cubs could give you a firm and final answer just yet, much less some random dude writing about the Cubs. I don’t know for sure.

I think the best we could try to do is fudge around with the back of the napkin, and say things like 50% capacity attendance will mean a 25% hit to revenue for the year (given the relative chunk of revenue that attendance and related activities brings in), so maybe payroll drops by 25%? But the optimistic case is probably more like 50% capacity at first, and then higher capacity later in the season. So maybe you’re talking about a total capacity for the year something closer to like 70%? So maybe you see only a 15% hit to revenue?

For what it’s worth, the Cubs’ 2020 on-paper payroll was about $210 million, though because of the pandemic they didn’t actually pay out that much. If you chopped off 25% from that number, you get $157.5 million. If you instead chop of 15%, you get $178.5 million. I’m not saying that’s definitively the range of projected payroll – I’m just playing with numbers here! – but you might start wrapping your head around $180 million as something of a realistic ceiling for 2021 payroll until and unless you hear otherwise.

And if that’s the case, then without moving serious money off the books by way of trades or surprising non-tenders, the Cubs have very little projected flexibility. No monster contracts should be expected.

THAT SAID, the market this offseason figures to be ravaged by all teams being in this situation. So it’s possible that $10+ million in flexibility might wind up going a really long way, at least compared to our “normal” expectations. That part very much remains to be seen.

In the meantime, I do think you’re going to see the Cubs try very hard to move guys like Kris Bryant or Kyle Schwarber, as much as you might hate it. It wouldn’t solely be about the money – they could be non-tendered if it were just about the money – but if you can save the money and get a modest trade return, while trying to reshape the roster a bit for 2021 and beyond? It’s something the Cubs will try to do. Heck, we know that they were interested in doing it last year, and were unable to do so.

Another possibility is that if the Cubs can sign an extension or two, that might shift some money off the 2021 ledger (either by way of getting a deal done that is at an annual rate lower than the expected arb price, or simply by back-loading to brighter days). That’s an obvious way to lower your 2021 payroll without simply having to dump players.

One other thing: Although the Cubs’ budget is an annual process, they do look at longer horizons when it comes to spending. It’s not hard to notice that $80+ million is expected to come off the books after 2021. Could that mean the Cubs stretch a little more this year? Sure. It’s possible. Anything is possible! Have I mentioned yet that this is all so much guesswork!

Notes:

⇒ For the arbitration-eligible group, we had to make some assumptions that’ll either prove true or not in time. For one thing, we assume that the Cubs do not intend to tender contracts to Jose Martinez, Albert Almora, Jr., or Rex Brothers. For another thing, projecting salary increases after this past year is a dang near impossible endeavor, so we gave 20% raises across the board with the exceptions of Ian Happ (first time eligible) and Willson Contreras (20% was clearly too low). On those two, we just took our best historical guess.

⇒ It’d be a decent guess that some of the fringe relievers like Kyle Ryan and Ryan Tepera could be non-tendered as well, so you can chop off a couple million if you like. We thought they were close enough calls for now to leave them, since it’s not too hard to just imagine the number being $2 million lower if you prefer.

⇒ The listed pre-arbitration players are simply the guys on the 40-man roster. Those names will change, and the amount they earn will depend on how much time they’re actually up in the big leagues. You can roughly estimate the group’s total cost over the course of a typical season, though, which is what we’ve done.

⇒ Contract buyouts – Jon Lester ($10 million) and Daniel Descalso ($1 million) – were not included for 2021, because those numbers were baked into the guarantee when the deals were signed through the 2020 season (both for luxury tax purposes, by rule, and for internal accounting purposes).

⇒ We included the luxury tax payroll, too, which is calculated slightly differently than the what-you-actually-paid payroll, but I’m here to tell you: in 2021, the Cubs will not come anywhere close to the $210 million luxury tax level. I expect we will never really discuss it this offseason, because the Cubs are gonna be waaaay under it in 2021.

⇒ We included the player benefits and insurance figure (roughly $15 million) in both the actual salary and the luxury tax salary, even though you typically see it discussed only in reference to the latter (since, by rule, you have to count it). We did the same thing last year in the calculation of that $210 payroll figure (back when knowing where the Cubs stood relative to the luxury tax was really important), so we wanted to keep things apples-to-apples, as the primary purpose of this post is to check on how much “space” the Cubs have to spend this offseason. If you prefer, you could lop off the $15 million from last year and this year, but you’re gonna wind up with the same answer on the “space” question.