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An updated estimate of the Cubs 2021 payroll and luxury tax

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And some thoughts about why the team is headed the way they are.

Geoff Burke-USA TODAY Sports

The weekend announcement of Kyle Schwarber’s signing with the Nationals brought out all the doomsayers again, those who think the Cubs are “tanking” or are going to trade away all their stars before the 2021 season begins. There were rumors all over Cubs Twitter (one of the reasons I steer clear of most of it) that Kris Bryant was going to be traded this weekend. Didn’t happen, and probably won’t before the season begins.

One thing is clear: Cubs ownership could put more money into the 2021 payroll if they chose to do so, because even with their non-stated apparent goal of staying under the first luxury-tax threshold, they’re several tens of millions of dollars under it at this juncture. They have clearly chosen not to do so. So stipulated.

The Cubs are far from the only MLB team taking this position. As we stand fewer than seven weeks until the first scheduled Spring Training game, only two teams — the Mets and Padres — have been aggressive in making trades and signing free agents. The Padres have taken on two large contracts in trade (Blake Snell and Yu Darvish) and the Mets have signed a couple of free agents.

But the top of this winter’s free-agent class — Trevor Bauer, George Springer, J.T. Realmuto and DJ LeMahieu — remains unsigned. ESPN’s Buster Olney writes that this situation isn’t likely to change as we get closer to the season:

So who is going to step up and pay Bauer what he’s looking for? Maybe his best chance for the most money could be to ingratiate himself with Angels owner Arte Moreno, a strategy that worked well for Albert Pujols a decade ago.

Who is going to seriously compete with the Yankees for LeMahieu?

Which teams are going to dive headlong into the ocean of unsigned veterans and spend?

There is concern that a lot of teams — and a lot of players — will be waiting a long time for a market thaw that is far less than a certainty.

Until and unless the Cubs actually do trade Bryant, Willson Contreras or other parts of the “core,” I will continue to maintain that they are not “tanking” nor doing a full rebuild. It appears Jed Hoyer’s approach is to attempt to put together a contending season in 2021 with the pieces he has, in a very weak division, and once fans are allowed back in the stands either later this year or in 2022, go after more expensive players at that time.

Again, you are correct in stating that ownership could spend more if they chose to do so. They have chosen not to.

Here are the current salary numbers for Cubs players for 2021, and then, as usual, I am going to turn the rest of this post over to BCBer The Deputy Mayor of Rush Street for a full explanation. Note that there are more than a potential 26- or 28-man roster’s worth listed. Dep will explain that. Yu Darvish is listed because the Cubs are paying part of his salary in 2021.

Cubs estimated salaries and tax hits for 2021

Player Salary Tax hit
Player Salary Tax hit
Jason Heyward $23,000,000 $23,000,000
Kris Bryant $18,600,000 $18,600,000
Anthony Rizzo $16,500,000 $16,500,000
Craig Kimbrel $14,333,333 $14,333,333
Kyle Hendricks $13,875,000 $13,875,000
Javier Baez $10,700,000 $10,700,000
Zach Davies $9,000,000 $9,000,000
Willson Contreras $5,600,000 $5,600,000
David Bote $3,000,000 $3,000,000
Yu Darvish $3,000,000 $3,000,000
Ian Happ $2,500,000 $2,500,000
Kyle Ryan $1,200,000 $1,200,000
Dan Winkler $900,000 $900,000
Jonathan Holder $750,000 $750,000
Alec Mills $590,000 $590,000
Adbert Alzolay $585,000 $585,000
Rowan Wick $585,000 $585,000
Jason Adam $580,000 $580,000
Nico Hoerner $575,000 $575,000
Duane Underwood Jr. $575,000 $575,000
Ildemaro Vargas $575,000 $575,000
Brad Wieck $575,000 $575,000
Phillip Ervin $570,000 $570,000
------------------------- ------------ ------------
Gray Fenter $570,000 $570,000
Miguel Amaya $570,000 $570,000
Dillon Maples $570,000 $570,000
Brailyn Marquez $570,000 $570,000
Tyson Miller $570,000 $570,000
James Norwood $570,000 $570,000
Max Schrock $570,000 $570,000
Justin Steele $570,000 $570,000
40-man minor leaguers (estimate) $2,250,000
Player benefits and misc (estimate) $15,500,000
Reserve withheld for trades/buffer $10,000,000
TOTAL $128,168,333 $155,918,333
LUXURY TAX THRESHOLD 1 $210,000,000
LUXURY TAX THRESHOLD 2 $230,000,000
LUXURY TAX THRESHOLD 3 $250,000,000

Now, here’s Deputy’s analysis.


The 2021 Cubs Roster: You Can Still Believe

TOP LINE: We’ve had two months of offseason pass since our last payroll update, and there’s been a bit of drama with some players non-tendered and a trade of note. But there really hasn’t been much in the way of building up a Cubs team to try and defend the NL Central title, much less visions of a viable, deep-playoff-run contender.

Oh, we also changed from wondering from what Theo Epstein was going to do this winter to wondering what Jed Hoyer will do this winter.

Let’s review the off-season moves that affect the Cubs’ 2021 Player Payroll.

Note: The Cubs signing players like Ian Miller and Nick Martini to minor league contracts doesn’t really count for purposes of this article, unless you believe they were signed with a good chance to make the 25-man roster (such as Jason Kipnis last year).

(The same applies to promoting a few players to the 40-man roster back in November.)

December 2: Albert Almora Jr., Jose Martinez, Kyle Schwarber and Ryan Tepera non-tendered
December 2: Claimed RHP Robert Stock off waivers from Boston Red Sox. (pre-arb 3 season)
December 17: Signed RHP Jonathan Holder as a free agent
December 22: Claimed LF Phillip Ervin off waivers from Seattle Mariners. (pre-arb 3 season)
December 29: Traded P Yu Darvish, C Victor Caratini and $3 million to San Diego Padres for P Zach Davies (1 year, $9 million arb 3 estimate) and four minor leaguers
January 4: Released P Colin Rea to pursue an opportunity in NPB

That leaves 35 players on the Cubs’ 40-man roster as we wait for PBO/GM Jed Hoyer to fill out the team.

(Note, these figures are for each player’s “cap hit,” the charge against the Cubs’ luxury tax spending level. The base luxury tax threshold increases to $210,000,000 in 2021. And 2021 is the final year of the current CBA.)

Players with guaranteed contracts

Heyward $23,000,000
Rizzo $16,500,000
Kimbrel $14,333,333
Hendricks $13,875,000
Bote $3,000,000
Darvish $3,000,000¹
============TOTAL $73,708,333============

¹ The Cubs are paying $3,000,000 cash/luxury tax spending on Yu Darvish’s 2021 contract as part of his trade to San Diego.

Arbitration players (based on MLBTR estimates)

Bryant $18,600,000
Baez $10,700,000
Davies $9,000,000
Contreras $5,600,000
Happ $2,500,000
Ryan $1,200,000
Winkler $900,000
Holder $750,000
============TOTAL $49,250,000============

Note: The MLB minimum salary for 2021 will be approximately $570,000 — subject to a COLA adjustment from last year’s $563,500, which was an $8,500 raise from the $555,000 minimum in 2019.

Pre-arb players more likely to make the 26-man roster

Mills $590,000 (OUT OF OPTIONS)
Alzolay $585,000 (0 or 1 option)
Wick $585,000 (1 option)
Adam $580,000 (2 options)
Hoerner $575,000 (3 or 4 options)
Underwood $575,000 (OUT OF OPTIONS)
Vargas $575,000 (OUT OF OPTIONS)
Wieck $575,000 (1 option)
Ervin $570,000 (OUT OF OPTIONS)
===========TOTAL $5,210,000===========

Pre-arb players more likely to start in the minors

Amaya $570,000 (2 or 3 options)
Maples $570,000 (OUT OF OPTIONS)
Marquez $570,000 (3 or 4 options)
Miller $570,000 (2 options)
Norwood $570,000 (1 option)
Rodriguez $570,000 (2 or 3 options)
Schrock $570,000 (2 options)
Steele $570,000 (1 or 2 options)

Other Expenses

40-man roster players in minors $2,250,000
Pension payments & sundry expenses $15,500,000
(Reserve withheld for trades/buffer)² $10,000,000
============TOTAL $27,750,000============

GRAND TOTAL FOR CAP PURPOSES $155,918,333

LUXURY TAX THRESHOLD $210,000,000

CUBS CURRENTLY UNDER THE TAX BY $54,081,667

² In this case, I imagine if the budget is closer to the tax threshold, that will be a buffer against going over. If the budget is lower than customary, it would then be up to Hoyer to set a legitimate trade budget that he wants to hold back for July.

Note: Jon Lester’s buyout of $10,000,000 is a 2021 cash expenditure, but it is for money that’s already been accounted for in previous seasons for luxury cap spending purposes. There is no “cap hit” for a contract at the time a team option is bought out’ The same is true for the $1,000,000 buyout paid to Daniel Descalso.

ADJUSTED FOR ACTUAL PAYROLL EXPENDITURES IN 2021

GRAND TOTAL IN CASH OUTLAY $155,720,000

(This figure includes $9,801,667 in buyouts and adjustments between contract payouts and cap valuations, less the optional $10,000,000 trade buffer.)

This cash figure comes into play if the baseball budget is set under the luxury tax threshold and considering current financial conditions, management goals, etc.

Projected Roster

OF: Happ, Heyward, Ervin
IF: Bryant, Baez, Rizzo, Bote, Hoerner, Vargas
C: Contreras
SP: Hendricks, Davies, Mills, Alzolay
RP: Kimbrel, Ryan, Winkler, Adam, Underwood, Wick, Wieck, Holder

(4-6 players are needed to fill the 26-man roster: 2 outfielders, 0-2 infielders, 1-2 catchers and 1-3 starting rotation spots/depth left open)

Iowa: Cory Abbott, Miguel Amaya, Gray Fenter, Dillon Maples, Braylin Marquez, Tyson Miller, Christopher Morel, James Norwood, Manuel Rodriguez, Max Schrock, Justin Steele, Robert Stock, Keegan Thompson

Now let’s assess.

The Cubs saved $11.2 million this year by trading/swapping Darvish and Vic Caratini for Davies, and another $13.675 million by releasing Schwarber, Jose Martinez, Almora, Tepera and Colin Rea. They have added $750,000, assuming Jonathan Holder makes the team, for a net savings of $23,555,000 since the start of the off-season.

We began the winter wondering how much financial flexibility Tom Ricketts would give the baseball team after a season where the Cubs sold no tickets. While MLB (under the collective agreement) is still scheduled to play a full 162-game season, holiday season gatherings and mutations of the novel coronavirus have the immediate future looking fairly bleak in the face of rising infections and what appears to be a botched vaccine rollout strategy.

It doesn’t seem likely that Wrigley Field will see more than limited capacity crowds in 2021, and possibly not any live attendance until sometime into the season. Regardless of team ownership clearly having the ability to operate the ballclub through this extraordinary yet temporary adverse business event, none of us fans get to decide how much of a haircut the family’s bottom line is going to take while the country sweats out this calamity.

But for all the discouraging signs and a current payroll some $60 million less than last year, it’s still a “2021 Cubs Roster: Choose Your Own Adventure” exercise. Is it “a winter of our discontent” as Al put it back on November 9, or is Jed Hoyer keeping his powder dry to snap up some number of underpriced free agents later this winter?

Absent reporting of the actual baseball budget, you can still project just about any path short of the Cubs spending into the luxury tax for the third season in a row.

And there remains hope for a splash or two, because of the glacial pace of the free agent market. We’re into the new year and only two players have signed deals over $20 million value, or for more than two seasons (James McCann, four years/$40.6 million with the Mets, and KBO’s Ha-Seong Kim, four years/$28 million with the Padres). The reluctance of any team to offer high priced deals or deals of any length will only give Hoyer better chances for “bargain hunting” as the winter grinds on.

It’s an extraordinary environment for all teams, and right now I’m not sure we have six teams in a six-division league really going hard to improve, at a time where unique market opportunities exist. An inefficient free agent market could bring players at discounted prices and short-term commitments. Beyond the four Al mentioned, just to name a few still on the list, Tommy La Stella, Nelson Cruz, Didi Gregorius, Marcell Ozuna,Jake Odorizzi, and Liam Hendriks are still shopping for a home. There are plenty of other second-level options as well.

It seems to me that only the Padres and Mets are really stretching themselves, while the Yankees and Dodgers will continue to hover close to the luxury tax threshold.

BOTTOM LINE: While Jed Hoyer could put a 26-man roster on the field without signing any further players, I don’t think he could put a credible team together from what’s currently in the organization. At a minimum a starting outfielder, a backup catcher, a MOR starter and one or two depth starting pitchers seem to be required to just get the Cubs back to “parallel tracks.” Personally, my guess is that Jed has $10-20 million to spend, my estimate going into the off-season was for a $170M payroll.

OTOH, if Jed’s sitting on a bunch of money to spend (up to $200 million?), he might yet have a chance to time this depressed market and transform the Cubs into clear Central Division favorites while not tying his hands in future seasons.

Like a Powerball ticket in your pocket with a $550 million jackpot on the line Wednesday, you can dream, can’t you?