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Major League baseball recorded record revenue in 2019

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So how does this relate to the Cubs?

Photo by Mary Turner/Getty Images

For much of this offseason, I have assumed the Cubs would spend in 2020 as they did in 2019, that is, up to the highest level of luxury tax. In 2020 that will be $248 million. Last week, it was revealed that the Cubs, Red Sox and Yankees were the only three teams paying luxury tax in 2019. The Cubs’ payment was $7.6 million, or about what they paid Kyle Hendricks last season.

But the Cubs have spent essentially nothing this offseason, apart from signing a couple of fungible relievers and some minor-league deals. They passed on players that weren’t expensive and could have helped them — Eric Sogard, Josh Lindblom, Gio Gonzalez, among others.

Over the weekend, Maury Brown at Forbes posted this article about Major League Baseball’s record revenues for 2019:

Gross revenues for the league were $10.7 billion for 2019, up from $10.3 billion last year, according to industry sources who spoke on the condition of anonymity. That marks the 17th consecutive year that MLB has seen record growth.

The league surpassed the $10 billion mark in 2017 after seeing steep growth. League sources indicate that that trajectory should reoccur over the next few seasons as new national television deals kick in. FOX reached an extension in 2018 that starts in 2022 and runs through 2028 with a reported value of $5.1 billion, a 40% increase from the current media rights agreement. Negotiations for extensions with ESPN and Turner Sports are on-going and would arrive at the same time. In 2020, a $1 billion uniform deal with Nike kicks in.

That’s... a lot of money. Lots of it now, more to come later, per those new national TV contracts.

So that made me take another look at the Cubs’ estimated payroll for 2020. For the purposes of this article I’m using Cot’s estimates on this spreadsheet.

According to Cot’s, the Cubs currently stand at $184,050,000 in payroll, but $210,048,033 for luxury tax purposes in 2020. Those numbers are pretty close to what I had in my last payroll estimate here December 9, so let’s go with them.

$210,048,033 is over the first luxury-tax level for 2020, which is $208,000,000.

If a team goes over the luxury tax two (or more) years in a row, the penalties increase. Without going into a lot of math here, the Cubs might owe somewhere close to $11 million in luxury tax for 2020 if they were at that payroll level, which is about... what they’re paying Kyle Hendricks for next season.

Sorry to keep bringing you up, Kyle. Just the way the dollars fall.

Anyway, in taking another look at this after reading Maury Brown’s article, it does seem that the Cubs are not going to spend another dollar until:

  • They find out what the resolution of Kris Bryant’s grievance is, and
  • They clear some payroll to get under $208,000,000.

The Cubs have never stated this as a payroll goal, unlike the Red Sox, who have explicitly said so (noted in this Ken Rosenthal article), and likely a reason they’re shopping Mookie Betts and David Price.

This is no way to run a sport, and certainly not a way to run the Chicago Cubs, who were supposed to have a “window of contention” that ran through at least 2021. This feels like a way of slamming that window shut.

One thing I’d like you to look at in particular when you look at the Cot’s spreadsheet is these large salaries coming off the books after 2020:

Jon Lester: $20,000,000
Tyler Chatwood: $13,000,000
Jose Quintana: $10,500,000

(Lester is due a $10 million buyout, but that’s already been baked in for luxury-tax purposes.)

That’s $43.5 million coming off the budget for 2021! The Cubs ought to be well under the luxury tax after 2020. Essentially, then, they’re saying that paying about $11 million in “dead money” is too much to pay for another shot at a ring.

I disagree with this notion, if that’s indeed what the Cubs are doing. Sure, maybe they need clarity on Bryant’s status before they do anything, and maybe they’re trying to deal Quintana and finding no takers. Beyond that, this Cubs team still is a talented ballclub and there’s a non-zero chance they could contend for a division title even if they stand pat from now until Opening Day.

But with revenues in MLB at record levels — and given the Cubs’ success over the last five years, you’d think that would be the case in Chicago, too — they really ought to not worry too much about $11 million in penalties in 2020.