Major League Baseball’s salaries are easily the most complicated among America’s four major sports.
Sure, trying to keep track of the guaranteed money on NFL contracts and how much each guy is owed if cut by certain dates can make your head hurt something fierce.
But at least the NFL, NBA and NHL have salary caps that are a lot easier to decipher. Nothing is as migraine-inducing as MLB’s luxury tax and how it affects teams.
Here’s how it all will come into play for the Cubs this winter in their projected pursuit of the game’s top free agents like Bryce Harper or Manny Machado:
According to the AP report that came out a couple weeks before the end of the regular season, only the Boston Red Sox and Washington Nationals will have to pay the luxury tax in 2018.
That’s huge for the Cubs, because the tax penalties start getting exponentially worse year after year of paying the tax. So heading into this winter’s mega free agent class without any prexisting penalities is a big deal.
That being said, the money issue still seems to be a huge hold-up for fans or pundits when it comes to the Cubs offseason.
So let’s set something straight: Regardless of who the Cubs sign this winter, they are essentially guaranteed to pay the MLB luxury tax for 2019.
The only way they wouldn’t is if they don’t pick up Cole Hamels’ $20 million option or find some team to take on all of Tyler Chatwood’s remaining salary – both unlikely outcomes.
The luxury tax will rise to $206 million for 2019 and with both Hamels and Chatwood under contract, the Cubs will cross that threshold even if they don’t sign a soul this winter.
(Note: Only AAV – average annual value of a player’s contract – matters for the luxury tax. So Anthony Rizzo is set to make over $12 million in 2019, but the AAV of his current contract is below $6 million, making him one of the very best bargains in all of baseball.)
Jon Lester – $25,833,333
Jason Heyward – $23,000,000
Yu Darvish – $21,000,000
Cole Hamels – 20,000,000
Ben Zobrist – $14,000,000
Tyler Chatwood – $12,666,667
Kris Bryant – $12,400,000
Brandon Morrow – $10,500,000
Jose Quintana – $10,500,000
Kyle Hendricks – $7,600,000
Javy Baez – $7,100,000
Steve Cishek – $6,500,000
Pedro Strop – $6,250,000
Anthony Rizzo – $5,857,143
Brian Duensing – $5,000,000
Drew Smyly – $5,000,000
Addison Russell – $4,300,000
Kyle Schwarber – $3,100,000
Mike Montgomery – $3,000,000
Carl Edwards Jr. – $1,400,000
Tommy La Stella – $1,200,000
Willson Contreras – $605,000
Albert Almora Jr. – $605,000
Ian Happ – $605,000
Victor Caratini – $605,000
A few notes:
—The only notable contract coming off the books is Justin Wilson, who made $4.25 million in 2018.
—A large group of guys will be handed rasies in 2019 as some guys will see a bump in arbitration (Kris Bryant, Kyle Hendricks, Addison Russell) while several others are heading into their first year of arbitration with a sizeable jump in salary (Javier Baez, Kyle Schwarber, Mike Montgomery, Carl Edwards Jr. – all of whom made less than $1 million in 2018).
—Keep in mind, this is a rough estimate and gives just a modest raise for Almora/Happ/Caratini while keeping Contreras at $605,000 – which is what he was paid last year. All four players are pre-arb guys, so they will only make slightly more than the league minimum (which will be near $550,000 in 2019).
—Brandon Kintzler also has a $5 million player option, which he very well may exercise, as he’d be hard-pressed to get more than than on the open market after his struggles to end 2018. The Cubs have a $10 million team option on Kintzler, but there’s no way they would pick that up.
Not including Kintzler, the above roster puts the Cubs’ total at: $208,627,143
In other words, the Cubs are going to be paying the luxury tax after 2019 barring any crazy circumstances. That 25-man roster above absolutely will not be their Opening Day roster, so any additions made by Theo Epstein’s front office would just continue to push the team farther beyond the tax threshold.
The key here is HOW MUCH the Cubs will want to go over the luxury tax, as draft implications start to be handed out the higher above the tax a team goes. As an organization’s payroll rises above the second checkpoint ($237 million in 2018), their first draft pick drops 10 spots.
But if the Cubs are picking 30th to begin with (which is their goal in 2020 after winning the 2019 World Series), is it really that big of a deal? We’re not talking about the difference between drafting 2nd overall and having it drop to 12th overall.
The Cubs also would already forfeit a draft pick as compensation if they sign a guy like Harper, though Machado does not require draft pick compensation since he was traded during the middle of the season.
Epstein’s front office has been cognizant of this luxury tax for years, which is why it was a big deal that they signed Darvish for 6 years instead of 5, pushing the AAV of his contract from $25 million per year to $21 million per year and helping to ensure the Cubs did not go over the threshold in 2018 and thus carry a blank slate into this winter.
The Cubs will have big decisions to make on the futures of Chatwood and Russell, which could impact the 2019 payroll.
But as it stands right now, “money” should not be a hold-up for why fans or experts don’t want a top free agent like Harper playing his home games at Wrigley Field next season.