Let's Check in on the Chicago Cubs' Payroll Situation, Shall We?

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Let’s Check in on the Chicago Cubs’ Payroll Situation, Shall We?

Chicago Cubs

The Cubs haven’t exactly had the MONSTER offseason we were hoping to see this winter, whiffing on a few of their top targets like Christian Vázquez, Jose Abreu, and maybe one of the other free agent shortstops. There is still time, of course, to make meaningful additions, but in some areas, the pickins are slim.

But they have done rather well overall so far:

Cubs 2022-2023 Free Agents

– Dansby Swanson: 7-years, $177M
– Cody Bellinger: 1-year, $17.5M
– Jameson Taillon: 4-years, $68M
– Drew Smyly: 2-years, $19M
– Tucker Barnhart: 2 years, $6.5M
– Brad Boxberger: 1 year, $2.8M

The offseason isn’t over yet, but so far the Cubs have signed two starting pitchers (Taillon, Smyly), two starting position players (Swanson, Bellinger), a part-time catcher (Barnhart), and a pretty solid reliever (Boxberger), laying out $290.8M in future commitments.

So where does that leave their 2023 payroll, both in terms of actual dollars and the luxury tax (CBT payroll)? Let’s take a look with a little help from Roster Resource, Cot’s Contracts, and MLB Trade Rumors (arbitration estimates).

2023 Cubs Actual Payroll

As a reminder, the Cubs *actual* payroll in 2023 is different than their expected CBT (“luxury tax”) payroll. The former is the actual money they’ll pay out to players this season, while the latter is a calculation based on the average annual value of contracts, as well as some other non-salary payments like player benefits and the pre-arbitration bonus pool, for two examples. Each matters in its own way, one for the Cubs’ internal budgeting purposes, and the other for luxury tax calculations.

We’ll start with the actual payroll.

According to Roster Resource, the Cubs’ actual payroll for 2023 amounts to $179,640,000, breaking down like this…

– Guaranteed Contracts: $119,750,000
– Arbitration Estimates: $18,150,000
– Pre-Arbitration Players: $12,240,000
– “Dead” Money: $29,510,000

The “dead” money there includes Jason Heyward’s $22M, David Bote’s ~$4M, and buyouts for Jonathan Villar ($1.5M) and Drew Smyly ($1M), as well as $1M still owed to San Diego for Yu Darvish. By contrast, this roundup does not include the potential 2024 buyouts of Kyle Hendricks ($1.5M), Cody Bellinger ($5M), Yan Gomes ($1M), or Brad Boxberger ($800K), which Roster Resource is putting on the 2024 books.

Note, however, that the timing of those payouts can change the final accounting. We’re just trying to get a sense of how much cash the Cubs are actually putting out on the field, so to speak.

2023 Cubs CBT Payroll

As you can see, the Cubs actual payroll figure isn’t all that significant, at least relative to most teams around the league, but that’s not necessarily the number that matters most. Especially because, for luxury tax purposes, the Cubs’ number is quite a bit higher: $214,434,048.

Here’s how that breaks down, again via Roster Resource:

– Guaranteed, on 40-Man: $136,377,381
– Guaranteed, off 40-Man: $26,000,000
– Arbitration Estimates: $18,150,000
– Player Benefits: $16,500,000
– Pre-Arb/non-guaranteed: $12,240,000
– 40-Man Players in Minors: $2,500,000
– Pre-Arb Bonus Pool: $1,666,667
– Sum of Other Payments: $1,000,000

The first tier of the luxury tax in 2023 is $233 million, which means the Cubs have about $19,000,000 more to work with if they want to stay underneath that number. However, in the past, they have aimed to reserve about $8-$10M for in-season additions, so it’s possible their “still available to spend” number this offseason is closer to $9-$10M.

That is, if they want to stay under the luxury tax. And I think they might, whatever our opinions might be on the wisdom of that matter.

Remember, exceeding the CBT threshold multiple years in a row results in increasing tax rates.

First year: 20 percent tax on all overages
Second consecutive year: 30 percent
Third consecutive year or more: 50 percent

So hypothetically, it might behoove the Cubs to stay under the tax this season, presuming they plan to spend big again next winter and the winter after that (when they would then definitely be over the tax two years in a row). Which, well, we certainly hope they do. Strategically, there is some logic there.

HOWEVER, there’s no guarantee the Cubs will spend big again next winter, so let’s maybe not count our chickens before they hatch?

And perhaps even more importantly, the Cubs do have a ton of money coming off the books next year, compared to 2023. Two outgoing free agents, Heyward ($22M) and Happ ($10.6M), account for $32.6M in year-over-year “savings.” And if all the buyouts happen with respect to Bellinger, Hendricks, Gomes, and Boxberger, the Cubs 2024 payroll will drop by another $36.2M compared to 2023 (that’s factoring in the cost of the buyouts to next year’s payroll). That’s ~$68.8 million potentially coming off the books. And I didn’t even mention Marcus Stroman, who could opt-out of his remaining one-year, $21M.

In other words, the Cubs could be dropping somewhere between $60-$90 million in payroll after the season. And there is NOTHING in the arbitration estimates that will come close to gobbling that back up.

All of this is a little moot, seeing as there’s not many big-ticket free agents left out there, but should some deal present itself, the Cubs still have PLENTY of space to spend. And that’s in terms of payrolls for both 2023 and 2024.


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Author: Michael Cerami

Michael Cerami covers the Chicago Cubs, Bears, and Bulls at Bleacher Nation. You can find him on Twitter @Michael_Cerami