As the GM Meetings get underway, I thought it would be a good idea to reflect on the peculiar beginning to this offseason for our favorite franchise. Not all the particular moves and news (Michael has been Johnny-on-the-spot with that, thanks again!) but more of an overview of what it could foretell going forward.
We have seen many rumors and "reports" that seem to contradict what we thought as we head into this silly-season, and some lingering confusion surrounding details of the penalties involved in exceeding the Competitive Balance Tax (CBT). None of this is really breaking news, but rather than jumping all over the interwebs to see how it may intertwine, I'll try to condense the most useful information now that things are underway and a picture is beginning to emerge.
The GM Meetings Arrive
Top executives from around baseball have descended upon Carlsbad, CA to begin face-to-face discussions that will shape the future of their respective franchises. Historically this is a period of feeling each other out and laying the groundwork for the real fireworks that come later, notably during the Winter Meetings being held Dec. 10-13 in Vegas. But occasionally deals get done and other baseball-related business is attended to, like possibly changing the trade deadline rules for the 2019 season.
Payroll and the CBT
After a century of futility, the Cubs finally have competent ownership and management and can begin acting like the large-market team we have always been. But just as we fans began salivating over a gargantuan budget and the chance of landing monster FA's, reports began circulating that our financial might may not be so... mighty? I'll dive a bit more into that in a moment, but it seems most of this speculation was based on our swollen payroll and the penalties associated with exceeding the various CBT thresholds.
There are still lingering questions around this complicated subject, and I've seen plenty of incorrect information published over the last several days. There are financial penalties assessed in addition to draft pick and IFA money losses tied to signing future free agents attached to a Qualifying Offer (QO). Here's a table of the financial penalties included in the current Collective Bargaining Agreement (CBA) and an explanation posted on MLB.com.
As you can see, the monetary hits rise significantly as a team exceeds each level of the threshold. Additionally, a team going over Tier 3 ($40M+) has their top pick in the following Rule 4 (first-year amateur) draft knocked down 10 spots, unless that pick is in the top 6 (which would require cataclysmic events I don't wish to ponder).
Further penalties are assessed if a team over the CBT threshold signs a FA who has been offered a QO. Payrolls are assessed at the end of the season, and penalties apply to transactions after that assessment. The Cubs remained under the limit for the 2018 season, so if we sign a QO FA this offseason, it will cost us our 2nd-highest pick in the 2019 draft and $500K in IFA pool money. But if we go over the limit next year, which we seem sure to do, signing a QO FA will cost us our 2nd-highest and 5th-highest picks and the loss of $1M in IFA pool money. That's quite a hit.
Our current 2019 payroll is estimated to be around $226M. That figure includes options already picked up and projections for arbitration raises. Keep in mind these figures are based on the AAV for the length of a player's contract, so simply adding up the individual 2019 salaries will lead to a false result.
I suspect many of the reports of the Cubs limited payroll capabilities began when word leaked out that we were finalizing the Smyly deal to Texas before picking up Hamels' option. I think those two transactions were uniquely tied due to the buyout language in the initial July trade that brought Hamels here and not indicative of our overall spending ability. Pundits began repeating one another and a narrative was born. No one outside the organization is aware of our top salary limit, and I'm sure a plan is in place to do what we need to do. Theo insists there is no artificial cap limit set for the team, as many have suggested while pointing to the $246M Tier 3 penalties. That's not to say the sky's the limit or all is well among upper management and ownership, but that's a story for another day.
I've also seen comments here wondering about possible payroll restrictions that may still linger from the 2009 sale of the team from the Tribune Co. to the Ricketts family (technically a trust), and I wonder myself. Specific details are hard to come by, but those restrictions are tied to revenue and are set to expire entirely following the 2019 season, so I don't think they'll have much effect this offseason. This is a fascinating topic, and for anyone interested, Brett Taylor at Bleacher Nation wrote the most comprehensive legal explanation of the sale of the team I've found. It's truly impressive.
No Extension for Maddon
Theo announced Monday there will be no talks of a Maddon extension until late in the 2019 season or afterwards. His lame-duck status has now been confirmed. Theo also made statements hinting at 2019 being a year of accountability throughout the entire organization, and I can't help but think he's feeling some heat himself.
"We’re setting out to add to the personnel, so if we come back with the status quo, it means there were a couple things out there we would’ve loved to have done that we couldn’t,” Epstein said. “But that happens. Ultimately we should be held accountable for our performance, not for the amount of change in the names. And we will be, and this group will be.
“In order to keep this thing going with the reality of the business and what happens as players move through the service-time structure and escalating salaries and everything else, the time for that talent to translate into performance is now … or else we’re going to be looking at some hard realities and the need for a lot of change going forward.”
At first glance, that could be interpreted as lowering fans' expectations and a hint we may just lean mainly on existing talent, expecting better health and progression from talented young players. I actually think that isn't an unreasonable expectation. Or it could be media manipulation. We'll see.
Maddon has made some questionable moves, no doubt, but his record here is impressive. Theo has built a great organization from top to bottom, but history suggests maintaining one may be another story. The money doled out in free agency last year was a bust, largely due to injury, but some of that injury risk was well known. Even though I firmly believe a plan was and is in place that wouldn't allow the contracts signed last season to prevent us from chasing the big dogs this season, there is culpability and it is having some impact. He deserves blame and again I think is feeling some pressure from above to make things right.
So, Now What?
I guess we wait and see, opine and obsess, and continue reading reports and rumors, however legitimate they may be. My take on all of this is pretty simple. The Cubs have money, there are targets available on which to spend that money to improve the team, but it's entirely fair to expect the amount spent to be commensurable to the results achieved.
The Ricketts are not cheap, anyone who says so is badly mistaken, but they are also not foolish. Baseball is a finicky game, but we all have expectations. The expectation here on the North Side, given the time, energy, and resources put into the team along with the patience shown by an adoring fan base during a lengthy rebuild, is a deep postseason run each and every season. That didn't happen in 2018, but again, baseball.
We're seeing the pressure put on every level of the organization to respond, and I think we will. I have no idea what the particular moves will be or what the finished product will look like. No one does. But the pressure is on for everyone involved and this offseason already feels different than anything I've ever experienced. I think we'd better get used to it.