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Cubs aren't cheap

I am tired of people complaining about the Cubs financial picture. #CheapRicketts should not be a thing, let alone for an owner who's brought us a world championship, the best Cubs competitive window of our lifetimes, and kept the Cubs in Chicago despite being shook down by the city of Chicago on everything and at the cost of rehabbing Wrigley to the tune of an estimated $1 billion. Tom Ricketts has invested in the Chicago Cubs more than any previous owner of the franchise. I wouldn't call him perfect by any means, but much of the criticism he receives is asinine. People calling him cheap because he seemingly doesn't want to drop a few million this offseason is the insult of an ignorant person. Allow me to explain why.


Here's the present situation: MLB luxury tax threshold is $208 million. The Cubs are at $210. Right now, the tax bill is a meager $826, 432. That's chump change to a billionaire, right? You need to look closer to understand the problem.


2019: Cubs payroll wound up being $234 million, where the tax threshold was $206. The Cubs tried to stay under, but wound up blowing over it. This was largely due to a bullpen that while good on paper, completely fell apart. The Cubs were over the second tier of tax ($226), but did manage to avoid the top tier, which in addition to costing significantly more money has a draft hit as well. Overall, a luxury tax bill of $6.8M was due.


The issue is increased penalties for being over the luxury tax cap multiple years in a row. Brett Taylor from Bleacher Nation has a fantastic write up on the luxury tax. He estimates that being over the luxury tax in 2020 could cost $20-25 million, between tax cost and a lack of refunds. That's a Jon Lester, Yu Darvish, or Jason Heyward in free agency. Going over a third time in a row in 2021 could cost over $50 million. Then there are penalties in the draft order as well. And it'd all be caused by going just a handful of dollars over in the present.


Right now, the Cubs are $2.2M over the luxury tax limit. The Cubs are too close not to get it back under and reset. After a disappointing 2019, I don't blame Ricketts for pumping the breaks on spending. After a quick playoff exit in 2018, major spending was limited in order to maintain flexibility under the tax. The Cubs largely played okay, having a 3 game lead on the division in early August. When the Cubs pen began struggling in '19, Ricketts opened up to go over the limit to grab Craig Kimbrel in a winnable division. They appeared to be one player away. The team rewarded Tom's faith by choking in September and finishing well out of the playoffs.


Why should we have a repeat of 2019, when that greatly impacts the future of the financial picture? Is grabbing a couple of mediocre free agents going to put this team back on track for 2020? No. Is this team presently just one player away from contention (like Chapman in 2016, Darvish in 2018, or Kimbrel in 2019)? No. Adding in the offseason will not guarantee the Cubs much in 2020. At least on paper, right now in January.


The bottom line is, the Cubs have invested in a core of players who have disappointed in various ways over the last 3 seasons: Bryant, Baez, Willson, Almora, Schwarber, Quintana, Darvish, Lester, among others. That same core will largely be back again in 2020. If they don't play up to expectations, then the Cubs season is over before it starts. Adding a couple of overpriced bench or bullpen pieces won't fix currently existing problems. I'd also argue that adding a Gerrit Cole or Anthony Rendon wouldn't fix it either. The fix has to be internal, with the core of players they already have.


The front office is playing the long game here. As they should. In 2020 and 2021, many players from the above core will become free agents. There's also the expiring CBA, which will have great implications on team financials. It is just not worth it to mess up future iterations of this team betting big on a core group that has choked back to back seasons. As we saw with Addison Russell, the front office is already beginning to turn over the core rather than stubbornly ride or die with the group that won it all in 2016. As of right now, the team will be competitive in 2020, but there are holes.


There are three clear choices to remedy, 2 of which are short sighted:

• Try to fix the 2020 Cubs team be jamming square pegs (mismatched overpriced free agents) into round holes (bullpen, 2B, CF, leadoff). Go over the tax threshold, when it might not matter (because if KB is hurt and ineffective again, this team goes nowhere). So far, the Cubs have not gone this route.

• Fix the team by blowing up the core and signing the biggest free agents. Trade Bryant for a leadoff CF, then sign Rendon to take his place, etc. Still blow over the cap, and likely maintain an over-cap payroll for years to come. The Cubs have obviously not gone this route.

• Deal with it for a year, reset the penalties, see if some of these core players figure it out or not, and then restructure, give extensions for certain worthy players, and maintain year in, year out competitiveness.


What's done is done. The Cubs are at the limit. The front office hasn't made the best moves over the last few years. Some players have greatly fallen short of expectations. The Cubs didn't get stuck in this position because of one or two blunders. Ironically, they would have been better off financially throwing in the towel in 2019, rather than have wasted all those additions for a distant 3rd place finish. But at the time, the Cubs were coming off a 95 win 2018 in which a lot of key players should have been poised for a bounce back. Mid-July, they were up 3 games, and they seemed to be a player away from a deep playoff run. Hindsight is 2020. The front office bet big on the players, and it didn't work out. Now there are future implications that will cast a cloud over the team as they have to restructure.


What makes the most sense of those 3 options? Deal with it for a year. Restructure now. The original plan was for a 6 year competitive window from 2015-2021. Now it's shifted into maintaining an ongoing competitive window. I'd prefer this option. Before 2016, I would have rather gone all in to just win the one championship. Now that it's happened, I'd rather see a year in year out competitive Cubs team, that also has the ability to add the big piece when it's needed. There are no dynasties anymore, and the teams that win it all most often are the ones who are competitive year in and year out. On any given year, if a few players have career years, it propels the team into a special season. I am on board with the new Cubs plan.


 

Now as for the "Ricketts is cheap crowd," I've had enough of you. So prepare to be smacked down.


Big Contracts:

Cubs fans have been spoiled by a glut of spending. Here are the Cubs' free agency moves from the last 5 years:

2015: Jon Lester signed a 6/$155 deal, the 2nd biggest deal of the offseason. He was one of two players to get over 100 million that offseason.

2016: Jason Heyward 6/$184: 3rd biggest deal of the offseason. he was 1 of 7 players to get a 100 mil deal, and was the highest paid position player of that offseason.

2017: No big free agents after winning it all. They dropped dropped 16 million on spare parts: Jay, Uehara and Duensing.

2018: Yu Darvish 6/$126. 2nd biggest deal, one of 3 players to get 100 million

2019: Craig Kimbrel, 7th biggest FA deal of the offseason (even though it was June).


3 Out of 5 years, they've splurged on a 100 million dollar player. 4/5 years they've gone in on a top 10 player. There is no debate--they've been very active in the free agent market. A big whoop has been made about them not spending this offseason. It makes sense, until you actually open your eyes and look at the financial picture of both the Cubs, as well as other MLB teams.


Overall Free Agency Spending:

Here's a chart of MLB FA spending by year. Just some of the more noteworthy teams.

Highlights:

• The Cubs have spent more on free agency than the Yankees, Red Sox, Dodgers and Giants.

• The Cubs have spent the most on free agents twice in the last six years.

• The Cubs have spent double what the Giants have on free agents the last six years.

• The Cubs and the Nationals have spent more than 150 million three times each, where the other six teams on my list have done it eight times combined.

• In terms of 20 million or less spent in the offseason, the Cubs have done that twice, Yankees twice, Red Sox three times, Dodgers twice.

When it comes to free agency, there is no argument that the Cubs have been clearly spent. Their FA spending has outpaced the other top 5 valuable teams, significantly.


Payroll:

Free agency is just one aspect, so let's look at overall spending. I have generated the a chart featuring the top payrolls in baseball from the last 6 years, or the competitive era of the Cubs. 2020 numbers are as of 1/11/20, and subject to change as the offseason moves along. If a team was in the top 10 in spending for any given year, it's up on this chart (except for the St. Louis Cardinals, because as well all know they are a SMALL market team who needs compensation picks to survive). Red cells indicates a tax overage.



Highlights:

• Cubs rank 4th in payroll during the competitive era. Their 187 million average is a farther cry from the other 3 who average $220 million.

• Very few teams stay in tax penalties for multiple years. Basically just 4 teams: Cubs, Red Sox, Yankees, and Dodgers.

• Teams like to reset their tax penalty bracket. Yankees did it in 2018, Dodgers last year, Cubs hopefully this year. And Boston is currently trying to do it.

• The Cubs are the only team besides the big 3 (LAD, NYY, BOS) to be in tax overage multiple years (2020 pending).

• Boston's similar 2020 offseason financial woes make a lot more sense now, as they've been taxed 5 years in a row. Incredible considering the previous chart showing how little they've dropped on free agents. (Bear in mind that the Red Sox are also just getting out from under a four-year $14.5 million AAV hit to pay the Panda to play for the Giants. That contract was... not good.--Staci)


The conclusions I'd like to draw: no team seems to want to deal with multiyear tax penalties. Especially when struggling to compete. Teams will allow spending to spike for a couple years, but can't (or maybe choose not to) maintain year in and year out spiked spending. Even certain smaller markets will spike spending while they have a competitive chance, but will not maintain it.


Tom Ricketts has spent money like a top 5 team. As the team has needed money to extend a competitive window, the cash has been there. Consistently too, and the Cubs financial picture hasn't mirrored teams who spike spending for a year or two to compete short term.


Value and Revenue:

The last point I'd like to bring up is for the people who claim that "Ricketts are billionaires, millions are just change to them." Yes, a team might have a certain amount of value, but that does not mean they just have that same amount of cash on hand. Just like I might have a paid off $200K home, it does not mean I can spend $100K on a car. A lot of these owners have value tied up in assets, properties, stocks, etc. They can't just up and sell all that stuff to maintain a baseball payroll, especially for multiple years.


Just for reference, here's the list of MLB value, revenue and % of payroll as it relates to revenue (Forbes 2019)

1. Yankees: $4.6B value, $668M revenue 33% Payroll

2. Dodgers $3.3B value, $549M revenue 36% Payroll

3. Red Sox $3.2B value, $ 516M revenue 44% Payroll

4. Cubs $3.1B value, $ 452M revenue 44% Payroll

5. Giants $3B value, $ 462M revenue 38% Payroll

6. Mets 2.3B value, $ 340M revenue 42% Payroll

7. Cardinals 2.1B value, $356M revenue 49% Payroll

8. Angels 1.9B value, $348M revenue 46% Payroll


So the Cubs are a top 5 team in overall value, clearly belonging in a similar bracket as The Dodgers and Red Sox. Yankees are in a league of their own, typical. I'm initially surprised to see the Giants at 5, but it makes sense. In terms of revenue spending, the Cubs dropped 44% of their revenue on their MLB payroll in 2019. MLB average is 41%. So they aren't hoarding away their income, pinching pennies on players while charging the fans exorbitant prices.


I'd like to conclude by making a simple statement. If you think the Ricketts' family is cheap when it comes to the MLB roster, you are wrong. Period.





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