Extensive Nico Hoerner Extension Notes: Why This Deal, Luxury Tax, Message to Other Players, More

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Extensive Nico Hoerner Extension Notes: Why This Deal, Luxury Tax, Message to Other Players, More

Chicago Cubs

In the follow-up to the Chicago Cubs and Nico Hoerner agreeing to a three-year, $35 million extension – or four years and $37.5 million if you want to mentally include this season – I’ve been doing a lot more thinking.

So, I wanted to share a lot more of my thoughts on the deal, which I’m just gonna do in a random, bullet point fashion. We haven’t had one of these in a long time to consider! The last major Cubs extension was four years ago with Kyle Hendricks (with David Bote’s following shortly thereafter). I’m just happy to have this to talk about, and also happy to know the Cubs have in place for four years a player I like watching play baseball.

Away we go …

  • There are so many ways to think about this deal, but one of the easiest is that the Cubs are simply transforming all expected payments in arbitration, and via the Qualifying Offer after 2025, to guaranteed money. That Qualifying Offer isn’t a guarantee that you retain a guy, of course, but it’s kind of a mental barometer of the dollar figure you’d have to be OK with offering a guy anyway (and the guy would have to be OK with his free agent market being damaged by turning it down). So the Cubs do the whole thing now instead, and they get the extra free agent year at a near-QO price, at the risk of Hoerner getting seriously injured or seriously underperforming at some point over the next three years.
  • In their early discussion of the deal, the folks at The Athletic remind us that, for all his excellence in 2022 (and potential), Hoerner has played just one big league season that topped 50 games. It wouldn’t be unusual for a guy in that situation to want that first real sense of security, especially when it doesn’t foreclose the possibility of a big free agent payday before age 30.
  • The deal hasn’t officially been announced, so I don’t want to make any firm and final proclamations on the financial particulars – we sometimes see these things shift slightly from the time of reporting to the announcement – but it is superficially unfortunate that the Cubs couldn’t do this as an actual four-year, $37.5 million extension. The AAV there would be just $9.4 million, and I’ve gotta believe/hope that would be of huge value to the Cubs’ front office in the years ahead as they navigate sometimes going over the luxury tax and working within whatever budget ownership gives them to work with.
  • … Of course, that would mean a much bigger luxury tax payroll number this year for Hoerner, and the Cubs don’t want to go over the tax in 2023 (a $7 million jump would’ve put them RIGHT at or above the threshold). So, it appears that this year’s pre-arb agreement ($2.5 million) stays in place for 2023 luxury tax purposes, which means the Cubs still have room to maneuver at midseason under the tax. And the AAV for the extension, for years 2024, 2025, and 2026 is about $11.7 million. Of course, if the Cubs can go over the tax multiple years during those three anyway (something I suspect they would not be permitted by ownership to do if they’d gone over this year – then you’d be talking about three straight years of escalating penalties), then hey, it’s just cash. No biggie. So maybe this winds up the better approach anyway.
  • Matt Trueblood notes the rarity of extensions of this length in precisely these circumstances. Usually, at three years out, you see very long-term, huge-money deals, or you see deals that solely cover the arb years or a portion of the arb years. One guaranteed year of free agency (with no options) is really atypical. It suggests the priority here was just to get a deal done (with a secondary purpose, of course, being that extra year of team control). He isn’t saying it cynically; instead writing, “The primary (purpose) was showing Hoerner (and other players to whom the front office might talk, either now or in the future) that they’re willing to try something creative, to bridge some gaps, and to pony up for great people and players. On Hoerner’s side, it’s an acknowledgment of that gesture, and an intimation that he trusts them.”
  • I might not frame it exactly the same way as Trueblood, but I would make a similar point: the priority here was about having Hoerner firmly in place for the next four years, which allows the Cubs – and internal/external other players – to see more pieces in place. There’s a comfort in knowing, if you’re going to consider an extension, there are respected guys in place with whom you’ll be playing, who were ALSO comfortable signing an extension. This deal can be used to send a message to other young players you want to extend: these are the great guys you’re going to be with for years to come.
  • To that point, I would add that providing the security of four CERTAIN years – as opposed to the uncertainty of arbitration (it’s not guaranteed if there is an injury or drastic change in performance) and even free agency – could be a value to Hoerner as a human being. There could be an exhale there that benefits Hoerner, and also maybe the Cubs by way of his performance.
  • Let me add one more thing I’ve been kicking around since last night, and I still don’t know if I have the best way to articulate it, but some version needs to be said: I think some of this deal is a make-good for the Cubs signing Dansby Swanson. And for Hoerner so willingly and gladly moving back to second base. It is an absolute fact that, had Hoerner gone through arbitration in the years ahead “as a second baseman,” his earnings would take a hit compared to what he’d have made if he stayed at shortstop and was as great there as he was in 2022. Ditto when he hit free agency – even if he marketed himself as a capable shortstop, maybe teams wouldn’t have seen him play there in three years. That created additional uncertainty that was completely out of Hoerner’s control, and completely unfair to him at a personal level (even if the Cubs did the right thing, and even Hoerner probably understands that). So the Cubs had to find a way to say, “We really appreciate what you’re doing, we really believe you COULD be a great shortstop, so the least we can do is give you this guaranteed chunk of money right now.” Again, I’m not QUITE there on putting this point exactly as I want, but there’s a kernel of an idea there that I think is correct.
  • I accidentally found this tweet last night when looking for something else on Hoerner, and I was reminded how awesome this was:

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.