Just as they did last year, the Cubs have made plenty of trades this year. And just like last year, the Cubs got a lot of prospects back in those deals... but they also were able to save a whole bunch of cash in the process.
That raises this question: What happens to that cash? This is just my opinion, but I think it almost has to stay within the baseball budget. I don't see Theo Epstein and Jed Hoyer making deals and having that money evaporate out of their budget. Instead, that money should be able used elsewhere. So, where does it go? There are a few places where it can go (international spending, draft budget, scouting/evaluation tools, rolled to next year's payroll). First, let's start with what happened last year to see if we might have some signs of how this year may play out.
Caveat: Many deals include an unspecified amount of cash. This was not taken into account below.
The following players were moved in 2012 (estimated savings listed):
Jeff Baker: approximately $500,000
Reed Johnson: approximately $460,000
Paul Maholm: $1.9 million in 2012, $6.5 million in 2013
Marlon Byrd: $400,000
Geovany Soto: $1.7 million
Ryan Dempster: $4.7 million
Estimated total savings from last year's payroll after trades: $9.7 million (not including Maholm's 2013 salary)
So... what did the Cubs do from June 2012 to March 2013 that could have accounted for that cash? They didn't exceed their international spending pool (or if they did it was a minor overage), so it's doubtful the money went there. They spent a bunch on Jorge Soler, but that money wasn't in the form of a bonus but rather a lengthy contract. They had a domestic draft budget of approximately $8 million and exceeded that total by about $375,000, triggering a penalty that moved their total overage to about $650,000. Let's assume that budget was planned, but the overage wasn't.
The Cubs were already in the process of developing their Dominican Republic complex, so it's unlikely they needed payroll savings from last year in order to fund the project. They did expand the front office, scouting department and evaluation tools, but like the complex, those moves were well underway before the player exodus of 2012. Is it possible they hired more people with those savings? Absolutely, but I have no idea who or in what job function.
So, what does that leave? It leaves the team on the field this year. We could break down the signings of Scott Feldman (signed with Maholm's money?), Nate Schierholtz, Dioner Navarro, Scott Hairston and Scott Baker. All were short term contracts and Baker's (1 year, $5.5 million) and Navarro's (1 year, $1.75 million) in particular stand out as possible reallocation of those savings.
But I want to focus on Edwin Jackson. And I don't want to focus on Edwin Jackson's contract length or overall money. I want to focus on Edwin Jackson's signing bonus. Signing bonus? That only happens in the NFL, you're thinking. Au contraire, dear reader. Edwin Jackson was signed to a four-year, $52 million deal that included an $8 million signing bonus. Meaning Edwin Jackson (brace yourself) has been paid a total of $19 million this year and will make $11 million in each subsequent year of his contract. Remember when Epstein and Hoyer talked about spending every dime in the baseball budget? They did... but $6 million of that payroll was used to give Jackson a lopsided contract (instead of $13 million/year over four seasons, they gave him the $19 million this year). That was $6 million that could have gone into the club this year that didn't.
Why would the Cubs give him that extra $6 million, rather than spend that on $6 million worth of players? They might have thought there wasn't much value out in the market place. It could be that money was required by Jackson upfront in order to get the deal done, in which case the Cubs front office had to structure the contract that way to get their guy. Or... it could have been done because the Cubs wanted to lessen their future financial burden. Essentially, the Cubs said that they want to pass on adding $6 million worth of players this year, in order to free up $2 million the next three years. Why would they do that? Well... if they thought spending $6 million on this year's team would be a waste and they thought saving that payroll for other expenses in years two, three and four of this deal could be more valuable.
Now, I know what you're saying. "It's not that simple." And it probably isn't. But I think it's very likely that savings from last year's budget are going to be spent in the short term (say, the next two years) and not the long term (the next six to seven years). Looking at the savings from 2012 and the outlays from 2013, I think it's most likely that money went to one-year contracts and/or Edwin Jackson's signing bonus.
In part two, I'll break down the savings from this year and throw out some wild speculation on where that cash could go. For now, what do you think about the way the Cubs used that money? How do you feel about them essentially leaving $6 million worth of players off of this year's team?