Did Cubs Front Office Blow Budget Recklessly or Did Ownership Move Financial Goalposts?

Hey, have you heard the news about the Cubs operating under a restricted budget this winter? No worries, I’ll allow you a moment to collect yourself from the shock. Okay, now that you’ve come to terms with this very recent revelation, let’s move on to the conflict between expectations and reality.

Viewed absent proper context, it’s easy to look at a payroll currently projected to fall around $226 million and believe the Cubs are devoting more resources than ever to baseball operations. While that’s technically true, the issue for fans who’ve been following the saga through each twist and turn are left scratching their heads after hearing how the narrative has shifted.

The frustration is not that the Cubs aren’t spending money, because they are, it’s that they aren’t spending as much as they could/should. More accurately, the disconnect has spawned from the perception that they’re not spending in the manner they led everyone to believe they would. For more on that, we need to look back to last February and the wake of the Yu Darvish signing.

After playing coy and discussing their desire to remain under the competitive balance tax threshold after being penalized the previous season, the Cubs weren’t seen as favorites for Darvish. Then the offseason played out, prices came down, and they made a big splash. Theo Epstein knew at the time that devoting nine figures to the pitcher would impact the budget, but he maintained hope that there’d be plenty left down the road.

Ed. note: I’ve included tl;dr summaries at two different points below for those who’d prefer the quicker version or who’ve already familiarized themselves with the quotes and/or general situation.

“[The plan for next year] remains to be seen, but look, I think anytime you sign a multi-year contract, you’re taking away a little bit of flexibility in the future in exchange for talent now and in the future,” Epstein explained “That’s not just the case with Darvish, but with the other investments we made.

We would never put ourselves in a position to be completely inflexible going forward, but yes, when you commit $126 million to someone it does take a way a little bit from future flexibility.”

Alright, with me so far? Good. Oh, just for the record, any emphasis in these quotes is mine. Let’s get into some more of what Epstein said last year before we visit Tom Ricketts’ comments from Thursday.

“We have some work to do to make sure we’re in a position to pounce if a certain great fit or just the right special player happens to become available,” Epstein said. “Or somebody wants to be in Chicago and something becomes too good to turn down, it’s just too impactful, or too good a deal (and) would mean too much to the team, we just need to be in a position to do that.”

Hmm, the right special player? Someone who wants to be in Chicago? Too good to turn down? *Looks around* Nope, guess I don’t see anyone like that among the 150 or so free agents who still remain unsigned.

“Tom (Ricketts) was very supportive,” Epstein said of the Darvish acquisition. “It’s wonderful to have an owner like that that sees the big picture and then once he’s gotten a real taste of winning isn’t necessarily content just to be a contender or in the mix each year, but really wants to capitalize on this window that we have and deliver championship baseball to our loyal fans who certainly deserve it.

“We’re starting to capitalize on some new revenue streams and that allows us to fish in these waters as long as we do it in a responsible way for the short and long term.”

Now, I know the whole Marquee business may seem new if you’ve been distracted by the tedious task of searching for the Cubs on a different channel each night, but this has been a long time coming. The Cubs have known they’d be launching a new broadcast venture since at least the end of the 2015 season, so it’s not as if they’re flying by the seat of their pants here. Put that in your back pocket as we get to our next section.

We understand that funds aren’t unlimited, but we have also been told that money will be there should the situation call for it. And now that ownership has seen how much revenue a title generates, it figures they’d want to get back atop that mountain. Which could mean throwing more money at it, especially with the advent of a new TV deal that figures to ramp things up even more.

I already did a full breakdown of Ricketts’ comments Thursday morning, so we’ll get right into the quotes.

“The fact is, I don’t think people fully understand…we work very hard to drive revenue to the team,” Ricketts explained. “And when we drive revenue to the team, it ends up in the baseball budget. But we also have all of our own stadium expenses, we’re one of the few teams in baseball that have to cover all of their own costs. We have about $20-30 million a year, depending on the year, of local taxes no one else has.

“We have to pay a huge amount of money. People don’t realize when you raise revenue as a club, you pay about 40 percent of that to the house, to the league, to share with other teams. So we’ve worked really hard to get to the point where we can be one of the top spenders in baseball.

“We’ll never catch the Yankees because they’re the Yankees. And we probably won’t catch the Dodgers because of their television contract. But now we’re at the point where we can be in those top few spenders on a consistent basis, and then it comes down to you put the money to work and you get the right guys you want, build the team you want.

“When you make any free agent signing — not to pick on Darvish or any of them — you know that you can’t spend that dollar twice and you have to budget that into the future,” Ricketts said. “So that’s gonna limit what you can do the following year. And one of the things this year that we knew going into this offseason was that we weren’t gonna have as much flexibility as years past.

“We didn’t have big contracts coming off, we didn’t have a lot more cash coming in. And as players get into their arbitration years, I think people forget that…they all have these built-in raises. So you have to manage your player budget to account for the fact that in arbitration, players are getting more money every year.

“We have the highest baseball budget we’ve ever had this year. But maybe it doesn’t feel like that to people because we didn’t go out and sign a giant free agent.”

“We like our club and we’re among the very top spenders, so I just think all that stuff’s kind of misguided.”

Listen up while I do a little mansplaining for everyone who doesn’t understand really esoteric concepts like arbitration raises and taxes. Basically, we have to pay a lot of money in both. You should also feel sorry that we don’t get to keep the amusement taxes we generate for the city, though we do get to keep the revenues from the buildings we’ve bought and developed all around Wrigley Field.

Oh, and that massive influx we were expecting from TV revenue? Yeah, it’s not quite the same as it was when we were all salivating over it a few years ago. Which is to say we don’t actually have those additional funds Theo talked about, but you should really talk to him about that and not me.

I know he told you last year that signing Darvish and Tyler Chatwood didn’t preclude us from landing that perfect free agent this winter, but those guys really sucked in 2018. I’m just not sure another huge contract is the best idea when we need to ensure this massive business remains profitable.

Rather than try to actively sway your position one way or the other, I’ll just wrap it up here and leave it to you to decide what the deal is. Did Theo Epstein knowingly cost the Cubs a chance to sign Bryce Harper when he landed Yu Darvish and Tyler Chatwood? Was bringing Cole Hamels back the straw that broke the camel’s back?

Or did the Ricketts family move the goalposts, leaving Epstein to doink this offseason like Cody Parkey? Maybe it’s a mix of all those things. And for those who’ve been wondering whether ownership has placed a moratorium on big contracts after watching Darvish, Chatwood, and Jason Heyward fail to meet expectations, I’d ask why the Cubs are unable to make even small moves at this point.

But hey, wherever you fall on the blame scale, you can rest assured that there is at least one area in which the outlook has remained the same. The Cubs do have to make moves. Just what those are remains to be seen, but something else has to get done yet. So that’s cool, I guess.

Epstein (2/14/18): “Rosters are flexible, payrolls are flexible, I’m sure there are future moves that we can make.”

Ricketts (1/17/19): “I’m sure Theo’s got a few moves left in him.”

Gird your loins, folks, all the movez are inbound.

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