It’s Time to Put the Cubs’ Financial Situation Into Perspective

The Chicago Cubs have drawn attention for many reasons in the last five years. One of the most notable of those, is that they have seemingly failed to get their money’s worth on a significant proportion of the money they’ve spent bolstering the Major League roster. The team signed Jason Heyward only to watch his offensive production drop off a cliff, brought in Tyler Chatwood to see him struggle with injuries and fail to live up to his potential, and signed dominant closer Craig Kimbrel only for him to be anything but dominant in a Cubs uniform. Once those deals are all done, they will have cost the Cubs over $260 million, and up until this point on those contracts, those players have been worth a combined 7.5 fWAR to the Cubs. Those are three of the worst examples, but they help explain why the Cubs, despite having one of baseball’s highest payrolls on a yearly basis, failed to win the division in 2018 and collapsed down the stretch to miss the playoffs entirely in 2019. Now, though, the team is actively cutting its payroll under the guise of needing to save money. It’s time to put the team’s financial situation into perspective as the choice not to spend money on the roster is actively worsening the team that takes the field at Wrigley.

Let’s start by clarifying where the team’s money is coming from, and exactly how much money that is. According to Forbes, as of April 2020 the Cubs are the fourth-most valuable MLB franchise, worth an estimated $3.2 Billion USD. The team is owned by the Ricketts family, who acquired the team in 2009 and is worth an estimated $5.3 Billion USD. That is some serious money – more than almost any fan of the team can really fathom.

My next premise may sound bold, but in reality it is not by any means: there is no excuse for the Cubs not to have a top 5 payroll in baseball every single year. This is because of how much money the Ricketts family has, and more importantly because of how much they make simply by owning the team. Here, I go back to the figures I cited above: the family that owns this team has a net worth of $5.3 Billion, an incredibly large sum that far outweighs even the largest conceivable payroll. Not only is the family immensely rich, but they’ve already profited from owning the Cubs: they won a bid to purchase the team 12 years ago for $900 Million, and the value of the team has appreciated by *over 250%* since then to the $3.2 Billion I mentioned above. Now, this morning, a valuation by Sportico was released that estimates that the franchise (including stadium value, the stake in Marquee Sports Network, and team-related real estate) is worth $4.14 Billion – almost a billion dollars more than the Forbes estimate from a year ago. As Bleacher Nation notes, this will likely result in a rift between this estimate and the one that will come from Forbes next month. Regardless, it’s a confirmation that pandemic or not, the value of the Cubs and and the stadium they play in is astronomical. Then factor in that Wrigley Field was recently designated as a US Federal Landmark, providing the Ricketts family with “between $100 million and $125 million in tax credits” per year on top of the booming value of the franchise (Chicago Tribune). Sports ownership is an incredibly lucrative investment, and the Ricketts family has already seen their investment appreciate remarkably. MLB continues to set revenue records, and teams continually sell for more as time passes. Every owner makes more money than they could ever try to put into a payroll for the team’s players, and nothing is going to change that – not even a temporary loss of revenue from limited ticket sales for a season or two. It follows, then, that the team has the means to challenge the luxury tax on a yearly basis without the Ricketts family ever losing money as a result.

Now, let’s take a look at how much money is going into the player payroll. We’ll start with a simple graph to illustrate the team’s total payroll by year since 2018:

(Team salary of the Chicago Cubs by year, 2018-2022. 2020 prorated to full 162 game season. 2022 Salary figure expresses guaranteed contracts, meaning that it does not include options or salaries of players who will be in arbitration. Source: Spotrac)

The team’s payroll has dropped off a cliff. After running a payroll well north of $200M in 2019 and 2020, the team has cut down its payroll considerably for the season to come, and seems to be continuing in that direction with very little financial commitment to the roster being guaranteed after this season.

This massive financial drop-off, as most are, is primarily the result of most of the contracts of the team’s most expensive players coming to an end, along with very few players seeing their salary increase year-over-year. Only four Cubs had their salary increase by $1M or more between 2020 and 2021: Ian Happ ($624,000→$4.1M; +$3.476M), Willson Contreras ($4.5M→$6.65M, +$2.15M) Kyle Hendricks ($12M→$14M, +$2M), and Javier Baez ($10M→$11.65M, +$1.65M). These four players will collectively cost the Cubs a little over $9M more than they did in 2020.

Nearly every single other position will cost the team roughly the same as it did in 2020, if not less, and this fuels the significant slash in payroll. From my season preview article for the team:

The narrative of the off-season can be written entirely with only the Darvish trade to serve as context… The goal was to cut down on the cost of the Major League roster this season. Comparing every single free agent signed by the Cubs for $2M or more this off-season with the player who filled their same position last year, the Cubs are spending less money at every position. Pederson signed for less than Kyle Schwarber did in Washington, Davies is on a cheaper contract than Darvish, Arrieta signed for less than Quintana did in Anaheim, and even Williams signed for half a million less than Tyler Chatwood did with the Blue Jays… Factor in that Jon Lester’s contract is gone and that Quintana and Chatwood both cost a lot more in 2020 than they have now signed for in 2021 and the Cubs 2020 payroll of $233.8M (before adjusting for the shortened season) has dropped by over $90M to the current projected 2021 payroll of $143.7M, with the team going from having baseball’s third largest payroll to its 12th largest.

There’s a lot to take in with all of that information, and there’s also a lot of emotions attached. As I mentioned previously, many of the players that comprised a significant chunk of payroll didn’t perform up to their contracts, so in a sense it is relieving that the team has financial flexibility once again after having barely enough financial flexibility to patch up the team in most off-seasons since 2016 without exceeding the luxury tax. Even if this relief is temporarily justified, it should be followed by confusion and frustration. This is the last season that we’re guaranteed to see Kris Bryant, Javy Baez, and Anthony Rizzo play as Cubs, and there’s at least $60M that could be spent to improve the team around them without the franchise exceeding the luxury tax in 2021. The team already traded away a Cy Young-caliber pitcher in Darvish to save the money that he would have been due over the next three seasons, despite clearly having space under the luxury tax threshold to keep him. The loss of Darvish will be huge to the team in 2021, and there’s no excuse for trading him and his contract away without turning around and spending that same money elsewhere to improve the team (note: I can’t come up with a better player on whom that money could have been spent than Darvish, all things considered).

After this season, the implications grow larger, as all three of Bryant, Baez, and Rizzo are currently going to become free agents upon the conclusion of the Cubs season. The presence of these three players on the roster even for the remainder of 2021 is far from guaranteed: Kris Bryant trade rumours have been plentiful for over a year now, and with expiring contracts these three players would likely be some of the first to arise in trade talks should the team turn into sellers at the trade deadline. It has been all but promised to fans that at least one of the three most beloved players in team history will be wearing a new uniform come 2022. Ownership has spent the past several seasons arguing for the need to pay these core players as a reason not to dedicate money beyond 2020, and now it appears that even these players may not see their true payday in a Cubs uniform. 

There are certainly factors that complicate this discussion, not the least of which is that it has been exceedingly difficult to evaluate many of the players currently on the roster as injuries, inconsistency and several other factors (juiced ball, shortened season) have been at play. A valid argument could be made that paying some of the current players, most notably Kris Bryant, what they may demand in extensions or as free agents is not the best investment of the team’s money when considering only production on-field. Still, they’re the embodiment of Cubs baseball in its most recent age, and there’s value in keeping around the players that are most beloved by fans (they’re pretty good baseball players, too). Even if deals with all three of Bryant, Baez and Rizzo don’t ultimately come to fruition, there are plenty of other players deserving of a payday who would be valuable in the long-term: Willson Contreras is established as one of the better catchers in baseball, and Ian Happ was the team’s best position player last season in addition to becoming the assistant to the director of morale over the off-season.

The fear of errantly spending money on players that won’t actually help the team is certainly a factor as well, but this too cannot be a roadblock to spending money. When so many of the team’s recent investments have gone poorly, the difference between spending money and spending money well is prescient. However, arguing against spending money in fear of spending that money poorly is an argument to find a new GM that will spend the money better, not an argument to avoid spending that money at all. The team has hired Jed Hoyer to take up baseball operations because they have faith in his ability to do so, and the fear of spending poorly cannot be an excuse to avoid the effort of improving the team whatsoever. Beyond the players currently on the roster, there are plenty of ways for money to be spent that would massively improve the Cubs, and the team cannot hold back out of fear of locking themselves into a bad contract. It is entirely possible that the Cubs are gearing up to be major players in the coming free agent class, which they should absolutely take advantage of. However, after watching the team trade away its best pitcher and suffering through trade rumors for homegrown, fan favorite players, it certainly doesn’t feel like the team is trending towards spending big on players in the short term. 

In summation, the Cubs are choosing not to spend money that could hugely improve the team in 2021, instead opting to save $60 Million for an ownership family that has already made over $2 Billion just by owning the team and who will continue to make more regardless of how much money is spent to pay players. Since the COVID pandemic first struck and teams lost the revenue associated with ticket sales, the Ricketts family has made it exceedingly clear that their top priority is saving their own money rather than fielding an excellent baseball team. Now, the consequences are manifesting before our eyes as the team deteriorates without promise in the coming years and fan favorites are sent packing, and frustration should be pointed directly at the Ricketts family for this. Cubs fans deserve nothing less than the best effort to put a competitive team on the field on a yearly basis, and that starts with spending the money that is at the team’s disposal. No, the team is not losing money, and no, there was not a need to cut payroll for the 2021 season. Players on the roster now need to be extended, and the team should be a big spender in the coming free agency market. Anything less is a disappointment, and it should make fans irate if the team is not spending the money at its disposal to be successful.

All salary information courtesy of Spotrac.

Ryan Ruhde

Cubs, Royals and general analysis writer. Emory University Psychology Major/Music Minor and Pre-Med, class of 2023. Find me on Twitter @ruhdolph

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