The Cubs signed Brad Brach last week. It hasn’t yet been officially announced by the team, but the signing prompts another look at the Cubs’ payroll and luxury tax figures for 2019. Here are the numbers:
Cubs payroll and luxury tax hits for 2019
|Carl Edwards Jr.||$1,500,000||$1,500,000|
|Albert Almora Jr.||$620,000||$620,000|
|40-man minor leaguers (estimate)||$2,250,000|
|Player benefits & misc (estimate)||$14,500,000|
|LUXURY TAX THRESHOLD 1||$206,000,000|
|LUXURY TAX THRESHOLD 2||$226,000,000|
|LUXURY TAX THRESHOLD 3||$246,000,000|
As you can see, the addition of Brach puts the Cubs over Luxury Tax Level 2. It’s been widely assumed that the payroll budget this year is designed to stay under Luxury Tax Level 3, where the penalties get much more severe. There’s still room under that level for a mid-season acquisition, based on these estimates.
Brach’s contract is a bit complicated. Here’s how our friends at Chicago Cubs Online summed it up:
Brach will be paid a guaranteed $4.35 million according to Ken Rosenthal. Brach has a base salary of $3 million for the upcoming season. The contract reportedly includes a $1.35 million buyout on the mutual option for the 2020 season. If the Cubs exercise the team’s option for the second year, Rosenthal explained the total value of the contract could reach $9.5 million. If Brach exercises his option and the Cubs decline to pick up their end, he will be paid less than $9.5 million for the next two years.
I asked BCBer The Deputy Mayor of Rush Street, our resident expert on these sorts of things, for more details. I received 900 words worth of details. Here’s the gist:
Cot’s is showing it as a $4.35 million cap hit for 2019, and if you want a number to go with, that’s fine based on what’s come out, at least for the time being. But from how I understand this to work, the final answer depends on what Brach’s side of the mutual option is. I’ll try to lay out my logic for you:
$3 million in 2019 with a $1.35 million buyout in 2020 is one year, $4.35 million guaranteed. Only with Brach having an option, I’d argue that he has a larger guarantee (even if he doesn’t use the option in the end).
We’ll pick up the story at the end of the 2019 season.
First off, the Cubs are required to decide on the team portion of the option. If they want Brach back, he gets $6.5 million in 2020 ($9.5 million - $3 million). His 2020 cap hit would then be $6.5 million, adjusted to some degree that I can’t quantify yet.
The second step would be if the Cubs turn down the team option, Rosenthal says that Brach has a player option for ‘less than $6.5 million’ (and obviously for more than the $1.35 million buyout).
I need to skip this player option part for a second. If Brach then turns down the player option, he gets a $1.35 million buyout, and his 2019 cap hit would need to be “trued up” with a 2020 adjustment between the $4.35 million actually paid, and what I’m arguing will turn out to be Brach’s actual 2019 cap number. Which again, we don’t know that number yet.
Deputy and I agreed that it seems about “90 percent certain” that Brach’s tax hit for 2019 is $4.35 million. What happens in the future, we can’t predict with any certainty now. If Brach has a 2019 season more like his pre-2018 years in Baltimore, the Cubs are likely to exercise the team option for 2020, which, as noted, could increase the tax hit for 2019, something Theo & Co. will have to keep in mind if they want to acquire someone mid-season this year.
Beyond all that, you will note that there are 28 players listed above. Obviously the Cubs cannot keep a 28-man roster, so some of these players will not get all the money as listed above. David Bote, for example, will likely spend some time in Triple-A this year, during which time he won’t be making a big-league salary.
Further, the figures for five of the six players listed under $1 million are still estimates — those pre-arb renewal figures are not yet public. (The Cubs don’t reveal these figures but they are often reported via Twitter.) Kendall Graveman, who likely won’t pitch this year, is the exception: He’ll get $575,000 for this season — unless he throws a pitch for the big-league Cubs this year, in which case his salary bumps up to $2 million, another potential factor limiting what the Cubs can spend on a mid-season acquisition.
I swear. Tell your kids that if they want a future in baseball, go get a degree in accounting.
Lastly, you can be certain that the Cubs are going to give Tyler Chatwood quite a bit of mound time in spring training. If he throws well, perhaps they can offload half his contract somewhere. With the signing of Brach, there doesn’t appear to be any space anywhere for Chatwood to throw meaningful innings for the Cubs this year.
We’re now just two weeks away from pitchers and catchers reporting to Mesa and we can talk real baseball instead of finance.