The deep freeze of the offseason remains. The Gerrit Cole trade was the latest move that was going to break the impressive logjam in the starting pitching market. But we are less than a month before pitchers and catchers reporting with the four best free agent starting pitchers still unsure whether they are headed to Arizona or Florida. The only thawing of the frozen hot stove were deals signed by bench pieces Howie Kendrick (Washington) and Ji-man Choi (Milwaukee) on a minor league deal.
A looming and unsettled issue for this offseason remains the free agent bonzanza next year. A lot of baseball teams have spent years positioning themselves for this upcoming class headlined by two 26 year olds superstars. Throw in a few more elite to good position players and relievers, and it is understandable that teams have been reluctant to make moves this year to hurt their chances next year. The Cubs are no different as they appear to be waiting out this offseason market like the rest of baseball. There is little definitive news to discuss as the 2018 picture remains out of focus. This affords the opportunity to look back to the offseason of 2015-2016 to see how Theo Epstein has been laying the groundwork for 2018-2019.
The Cubs made a huge push in free agency in 2015-2016. The Cubs spent the most of any team that year in free agency. It was highlighted by the key additions of Jason Heyward and Ben Zobrist. Those were the only two deals signed that extended into this year and beyond. The deals were notable for their size, but each had a few unique features that highlight preparing for 2018-2019. They also suggest that this front office might have been ahead of the curve yet again.
Jason Heyward’s deal received the most headlines at the time. Opinions have shifted quite a bit since then as a very good offensive player from age 20 to age 26 suddenly became a well below average hitter at age 27, but the contract had all sorts of unique provisions in it. The deal has two opt outs with the first coming ahead of 2018-2019 and the second in the immediately following offseason. The contract structure was clearly setup to encourage Heyward to opt out ahead of next year’s free agent class. $78 million of the contracts $184 million came in those three years, and Heyward would also be reentering the market at age 29. Heyward would be entering a very crowded market, but the opportunity to buy seasons before age 30 have been highly valued in the free agent market for years now.
The fact that the Cubs essentially “front-loaded” the deal in this case makes perfect sense. That goes against the trend as teams have long tried to backload deals as much as possible. The infamous Bobby Bonilla contract was the most extreme example, but it makes financial sense for billionaries and corporations to hold off paying money up front. That is factored into the value of deals with deferrals, Jason Heyward’s deal has some as well so the actual total value of his deal was estimated at $177,633,616 (MLB calculation) or $179,885,452 (MLBPA calculation). Not every deal is structured in such a way to defer money, but looking around baseball this pattern of “back-loading” deals is far more common.
The Cubs have been employing this startegy often in their largest free agent signings. Jon Lester’s deal pays him a “mere” $20 million in 2020 (the final guaranteed year). Ben Zobrist’s contract is interesting though. It is obvious that there was some creative accounting to allow Zobrist to fit into the 2016 payroll. The Cubs paid him “only” $10 million that year, but the salary ballooned to $16 million last year and this year before dropping to $12.5 million in 2019. This has been a clear philosophy running counter to a well established league wide trend. For example here is the Dodgers payroll figures from Cot’s Baseball Contracts:
These include deals made by two different front office regimes in Los Angeles, but shows that traditional escalating contract structure (or at minimum flat payouts) through the life of the deal. This is only one example, but it is difficult to find many deals that follow these front-loaded structures utilized by the Cubs. It could simply be about internal accounting and the need for financial flexibility as the salaries of the Cubs position player core continues to grow. The Cubs desire seems clear that it would just be a 3 year pact with Jason Heyward, and then they attempt to swap right fielders through free agency. Another feature in Heyward’s and Zobrist’s deal suggest that there is something more involved than just accounting though.
Jason Heyward and Ben Zobrist were the second and third Cubs to be given no trade clauses by Theo Epstein. The front office has historically been loathed to hand those out (one of many departures from the previous regime), but like opt outs they are the price of doing business at the top of the free agent market sometimes. The Cubs gave Jason Heyward and Ben Zobrist full no trade clauses in the first three years of the deal, and partial no trade clauses through the remainder of the deal (Heyward regains full no trade clause protection after five years as a 10-5 player). Heyward may block deals to 12 clubs and Zobrist may block to 8 clubs next offseason.
Now neither is likely to be a terrible attractive trade target unless Chili Davis truly is a bat whisper or Ben Zobrist finds the fountain of youth this offseason. However, the Cubs have the flexibility of moving them for luxury tax purposes solely. This is where the front office may have been preparing to leverage the Cubs currently most abundant resource, cash. Zobrist is scheduled to make $12.5 million, but his luxury tax salary is calculated at $14 million due to the AAV (average annual value of the deal). Heyward will make $108 million over the next five seasons, but his luxury tax calculation is $115 million. The Cubs could pay the entire salaries of Zobrist and Heyward and save $10.5 million towards the luxury tax threshold. Teams willing to take on any salary for these still potentially useful pieces in 2019 and suddenly the Cubs have even more flexibility in the upcoming offseason.
These “basketball trades” where teams are mostly interested in moving salary around far more than production on the field has been one of the few sparks of activity this offseason. Some are rightfully bemoaning what it means to the usual flair of the baseball offseason, but they are unlikely to disappear though with the draconian financial and talent acquisition penalties for violation of the “competitive balance” tax threshold . Instead it appears like this front office was ahead of the curve once again.