Are the Chicago Cubs past the peak of their competitive window?

Chicago Cubs: Jesse Chavez wanted to be a Cub in 2019

There was no way the Cubs stood pat on their bullpen this winter. This much was abundantly clear, given the losses via free agency. In the past, there had been rumors loosely connecting the Cubs to lefties Andrew Miller and Zach Britton. Britton was said to want a chance to be a closer again.

But Miller signed with the rival Cardinals. Britton, meanwhile, signed with the Yankees. In New York, Britton won’t get the chance to close unless something happens to Aroldis Chapman. With the Cubs, the lefty would at least had the chance to close while Brandon Morrow worked his way back from offseason surgery and perhaps hold onto the job if he pitched well.

At the end of the 2018 season, Jesse Chavez professed, “If I’m not wearing this next year –points to Cubs logo on shirt– I’m done.” Despite his strong feelings, Chavez signed a two-year, $8 million dollar contract with the Rangers. The veteran journeyman pitched incredibly well after the Cubs traded for him last year. At the time many worried that if the team could not afford Chavez at that price that it was a bad sign.

However, perhaps not re-signing Chavez was the right decision. The free agent relief pitcher market continued to collapse this offseason. At 35 years old, the righty is highly unlikely to repeat the elite level of pitching that he managed with the club in 2018.

Chicago Cubs: Leveraging the Rangers into a trade for Drew Smyly

To add to the bullpen, the Cubs signed Brad Brach to a one-year contract with a second-year option. The rest of the bullpen has been filled out with guys that cost almost nothing such as Xavier Cedeño and Tony Barnette.

Even when the Cubs spent money this offseason by picking up Hamels’ option, they leveraged it to dump some salary. If his option wasn’t picked up, Hamels had a $6 million buyout in his contract. The terms of the trade between the Rangers and Cubs said that if Hamels’ option wasn’t picked the Rangers would pay the buyout. But if his option was picked up the Cubs would have to pay the whole $20 million.

The Rangers wanted the Cubs to pick up said option because Texas would then save $6 million= they would otherwise get nothing for. So Chicago convinced the Rangers to trade for Drew Smyly.

By doing so the Cubs saved the $7 million that Smyly is owed for 2019. The Rangers get something for their millions of dollars instead of just wasting it on the buyout of a contract for a player who isn’t even on their team any longer.

Chicago Cubs are over the luxury tax in 2019

The payroll of the Chicago Cubs organization has never been higher – ever. According to one estimate, the 2019 Chicago Cubs will have a luxury tax number of over $229 million. That’s over the first two of three thresholds for the luxury tax. Two hundred and twenty-nine million dollars is less than $17 million away from the highest threshold of Major League Baseball’s luxury tax.

The luxury tax number can be different than the total of player’s salaries for a given season. Players who have multi-year contracts and get paid different amounts in different seasons have the averaged annual value (AAV) evened over the length of the contract. Buyouts and options in players contracts also impact a player’s AAV. The luxury tax also includes the cost of benefits and minor leaguers on the 40-man roster.

Each luxury threshold has higher and higher penalties than the one(s) below it. The penalties also get worse the longer a team is over the luxury tax. The penalties start out as having to pay extra money for every dollar over (a tax). But eventually, they can result in draft pick penalties and international spending restrictions.

That’s why it has been important for teams to occasionally reset their luxury tax penalties. The Cubs were careful to stay under the luxury tax in 2018 because they knew that they were going to go right past it this season. This season will probably be the first of many seasons that the Cubs will be over the luxury tax given the plethora of young guys inching closer to the open market.

Chicago Cubs: Hendricks got a $3 million raise via arbitration

The Cubs’ core of young players is only going to get more expensive as they go through the arbitration process. For instance, former NL MVP Kris Bryant will earn $12.9 million this year and left-hander Mike Montgomery will earn $3 million.

Kris Bryant, Javier Baez, Kyle Schwarber, Addison Russell, Kyle Hendricks, Mike Montgomery and Carl Edwards Jr. were all arbitration-eligible this year. Willson Contreras, Albert Almora and Ian Happ will soon join that group.

Each year in arbitration a player gets a raise. How much they earn depends on how well they played and how much they earned the year before. In 2018, his first year of arbitration, Hendricks earned $4.175 million. In 2019, he is set to earn $7.405 million.

The former Cy Young finalist was already earning millions before this upcoming season. He pitched well in 2018, turning in just under 200 innings of 3.44 ERA ball. So his salary increased by over $3 million – eating up more of the team’s financial resources.

Chicago Cubs: Anthony Rizzo is the only one to sign an extension with the Cubs.

Further complicating this problem is the fact that the Cubs have, for the most part, been unable to convince any of their young players to sign contract extensions. These extensions would lock in some cost certainty as they would avoid the arbitration process.

Usually, the team saves some money in the long-term with these kinds of deals. The player guarantees himself life-changing money. The number of years of team control is usually extended, as well.

Really the only player current Cub to sign this kind of contract extension with the Cubs is Anthony Rizzo. If it wasn’t for his contract extension, Rizzo would be a free agent after this season. Instead, the Cubs hold a team option on his services for both the 2020 and 2021 seasons they will almost certainly pick up.

José Quintana is the only other Cub to sign a similar contract extension. But he signed that deal while he was still a member of the White Sox. The Cubs happily inherited the terms of that deal when they traded for him mid-season two years ago.

Chicago Cubs: Ben Zobrist and many others will be free agents soon

Starting next offseason several current Cubs will or could become free agents (depending on contract options). Cole Hamels, Pedro Strop, Ben Zobrist, Steve Cishek, Brandon Morrow, Brad Brach, Brian Duensing and Brandon Kintzler could all hit the open market.

Perhaps Duensing and/or Kintzler won’t win a spot in the bullpen out of Spring Training this year. But if that does happen, it’s a strong possibility the player who ends up with those spots in the bullpen will also become a free agent after the 2019 season (based on the list above).

Some of those free agents might be re-sign for less than they are making right now. If Zobrist doesn’t retire, he will definitely cost less per year on his next contract. His current contract pays him much more than the current going rate. The Cubs were unable to trade him away – although, we still don’t know the level of talks that occurred regarding the utility man.

Re-signing all of the free agent Cubs after 2019 will likely be too expensive. Many of those players will demand multi-year contracts. If the market continues to collapse, the Cubs may be able to afford more of them than we would have thought a couple of years ago. But this will undoubtedly be one of the main storylines as the season progresses.

Chicago Cubs: Chatwood gets paid starter money for the next two seasons

Tyler Chatwood adds a wrinkle to the Cubs’ payroll. Right now the team is essentially paying two players for the fifth spot in the rotation. Chatwood takes home $12.5 million and Hamels gets the $20 million we talked about earlier.

That looks even worse when the $3 million Montgomery is making to be the potential sixth starter in the rotation is factored in. After last season, the Cubs can’t trust Chatwood to fill that role – at least not in any acceptable fashion.

The right-hander has two years left on his initial three-year contract. No matter what happens with him over the next two years, the Cubs won’t have to pay two starting pitchers for just one spot in the rotation.

Chatwood might earn the spot back. He might get overpaid to hold down a spot in the bullpen for the next couple seasons. Or, if things really go sideways, Chatwood might be released. If that were to happen, the Cubs will still be responsible for paying the rest of his contract. So unfortunately the Cubs will be paying him to play for someone else if that’s how things played out.

If the Cubs’ payroll can squeeze through the 2019 and 2020 seasons while effectively paying for an extra starting pitcher, Chatwood’s expiring contract is one place where they could get some salary relief in 2021.

Chicago Cubs: Jon Lester isn’t getting any younger, money gets tighters

Age will play a big role in how well the Cubs play during the back half of this competitive window. The older players are going to lose a step, or a mile per hour on the fast ball. Fortunately, there aren’t many players who fall into that category.

Jon Lester is the most obvious player that we have to worry about aging. Last season Lester’s FIP was 4.39. However, his ERA was 3.32. So Lester started showing signs of becoming one of those crafty lefties who figures out how to outperform his peripherals. This has actually been the trend since he joined the Cubs, with his FIP climbing annually.

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• Cubs: P.J. Higgins deserves to be in the lineup on a daily basis

If Hamels and Zobrist aren’t retained after this season, the rest of the team should still be in the part of their career where they improve with age. But as noted above that will come at a cost.

Cubs might have to let Hamels walk

So this year the front office decided to sacrifice some bullpen quality and a veteran backup catcher to save some money. Next year the Cubs may have to decide to let Hamels go to save money even if he turns out to be the ace of the staff. There aren’t too many other places the Cubs can save money in 2020. The money they save on Hamels may pay for all those arbitration raises.

The peak oil concept says that before we have to worry about running out of oil, we will have a big problem when the world reaches peak oil production and consumption eventually exceeds production. In terms of player salary, the 2019 Cubs might be the peak that the Ricketts family can spend.

The Cubs’ new TV deal may eventually increase the amount of money that can be put towards player salaries. The Marquee Sports Network won’t start broadcasting Cubs games until the 2020 season.

It will take some time for the new regional sports network (RSN) to attract advertisers and its full audience. Once the RSN is maximizing profits it may take another year for that lagging money to be available to the front office to spend on player salaries.

This might be it – the peak level of talent we’ll see for some time, the maximum payroll levels ownership is willing to meet – all of it. But if this competitive window is going to be extended, the front office needs to sign some players to contract extensions and the minor league system needs to graduate some additional young talent to the big league club. Otherwise, that window may close sooner than expected.