Cubs Trying to Trim Payroll After Burning Themselves with Minimal CBT Overage

One of the ideas making the rounds as a Cody Bellinger trade to the Yankees remains in limbo over the matter of a few million dollars is that the Cubs should just keep him and let the playing time sort itself out. Though it would create a great deal of positional redundancy now that Kyle Tucker has been acquired, having that kind of expensive depth is something a big-market payroll with only one nine-figure contract should easily be able to absorb. Roster Resource currently projects the Cubs at roughly $215 million for 2025, or $26 million under the first level of competitive balance tax penalties.

So why are they seemingly determined to move as much of Bellinger’s minimum $32.5 million guarantee (max $52.5M) off the books? I know a lot of folks will respond with something like, “Because Ricketts is cheap, rabble, rabble,” but that’s not really accurate when you’re talking about a team that went over the CBT threshold this past season. What we should all really be grousing about is the allocation of budgeted funds by a front office that tried to tiptoe right up to the cliff and ended up falling over despite apparent efforts to avoid such a fate.

As unfair and reductive as it may be to compare a baseball team’s payroll to a routine grocery trip, the parallels make for an easy analogy. Let’s say you head to your local version of Da Jewels with $237 cash to load up on food and snacks. You’ve got some coupons and are willing to buy generic over brand, not to mention checking for dented cans and meat that’s about to reach its expiry. Oh, there’s also a weird promotion going on when you’re there.

Anyone who stays under their budget just pays what the register says, but those who go over will be charged additional fees that will then be reallocated to some of the people who spent less. Knowing this, you’d probably be very careful to remain well enough under your allotted budget to avoid the penalty. Or perhaps you’d figure enough others would be similarly frightened that you’d have easier access to some higher quality products and would be better off hitting the ATM to go over by enough to make the penalties worthwhile.

What’s more, going over forces you to give up a couple eggs if you purchase specific products the next time you’re in. Again, knowing you’re going to be handcuffed one way or the other would have most of you being sure to be either well under or well over that established level. Because an overage of 28 cents would seem downright irresponsible, right?

Just imagine explaining to your spouse or whomever that you can’t get their favorite kind of chips next time because it’ll cost you two eggs and the ability to spend as much in the international foods aisle(s). Then you’ve got to answer questions about why you ended up getting less with your money than they expected based on how much you spent. The conversation might be a little easier if you could justify it by splurging on some high-end items that will taste better and last longer.

Instead, you’re throwing out stuff from the last grocery trip because it dried out or got moldy and you’ve got a lower budget for the next trip. Not ideal, but maybe having less to spend will force you to be more intentional about how you fill your cart.

That 28-cent overage wasn’t just drawn out of thin air, it’s the equivalent of the Cubs having an estimated luxury tax payroll of $237,281,243 for the 2024 season per Cot’s Contracts. That comes out to a mere 0.12% over the penalty line, which strikes me as malpractice from a team-building perspective. Even if we go with Roster Resource’s slightly less conservative estimate, the Cubs landed at $238,681,839 to go 0.71% over. The financial penalties themselves aren’t the issue due to the minuscule overage, but losing those eggs is a big deal.

The Cubs tend to avoid courting players who’ve turned down a qualifying offer because that would mean losing their second-highest pick in the subsequent draft and $500,000 of international bonus pool money. But as a luxury tax payor, they would have to forfeit their second- and fifth-highest picks along with $1 million from their bonus pool. That’s a hefty increase for going over by what could be as little as low six figures.

While I understand that managing a massive payroll isn’t as easy as keeping a running total of groceries, that’s literally how front offices earn their paychecks. Or rather, how at least two members of the front office earn their paychecks.

“Yeah, in terms of the CBT calculations, it’s complicated enough so that we have to have a couple guys here that are constantly trying to help us figure out exactly where we are, exactly where other teams are,” GM Carter Hawkins explained to 670 The Score back in August. “It has a lot to do with players that get injured and just where guys are in their contracts and there’s a lot of minutia to that that makes it difficult to say exactly where a team is.

“But I do think, barring any changes, that it’s likely that we’ll be over this year, and that’s about where our budget was. That’s about where we were and it’s something we expected to do, and something that Tom allowed us to do.”

Between hindsight’s corrective lenses and a bit of educated speculation about what the Cubs thought would happen, it would seem they were banking on Bellinger opting out of the last two years of his deal. That would have resulted in a $30 million average annual value ($27.5M salary + $2.5 million buyout) rather than the current $26.67 million AAV. While shaving $2.5-4 million off the books would have been more difficult, going over by that much more would have at least seemed less like a clerical error.

The Bellinger stuff was a little more complicated because he held all the power due to his player option. When it comes to Drew Smyly, however, the Cubs bear the full freight of the blame — which is a little harsh, but still — for allowing his salary to push their payroll higher. Well before they were unable to get a team to pluck him from waivers and assume a prorated portion of his salary, they watched as he racked up performance bonuses that impacted the bottom line significantly.

Smyly’s continued heavy usage late in the 2023 season boosted his innings count and earned him an additional $2 million in bonuses. Not just for that season, but for 2024 as well. His contract called for bonuses of $250,000 at 110 and 120 innings, then $750,000 for reaching 130 and 140 innings. Smyly ended up with 142.1 innings after logging 3.1 frames over four of the Cubs’ last six games of the season. Hitting those thresholds bumped his origanal $9.5 million AAV to $11.5 million, more than the team’s CBT overage by either estimate above.

I’ve wondered in the past if that factored at all in David Ross being replaced by Craig Counsell ahead of last season. While it’s certainly not the only reason, it’s possible that a lack of communication or outright refusal to truncate the lefty’s usage created a bit of friction between the previous manager and his bosses. Either way, the responsibility ultimately falls to those in charge.

If you didn’t want Smyly racking up innings in a relief role after being moved out of the rotation, perhaps you should have paid for better relievers in the offseason. And perhaps the budget iterations should have all been run with Bellinger opting in as the default. I’m sure that’s an inevitability the front office factored in, which is why the trade rumors began almost immediately after he chose to return rather than test the market.

This mercifully brings us to the conclusion that the Cubs appear hell-bent on staying far enough under the $241 million penalty threshold for 2025 that they don’t need two accountants working around the clock on payroll estimates. Regardless of where you stand on their choice to avoid the top tier of free agency, I think we can all agree that they shouldn’t have to spend past the CBT threshold just to generate 83 wins. So with a desire to reset their penalty status while also getting to 90+ wins, some hard decisions will have to be made.

I’m just naive enough to believe that trading Bellinger isn’t just about avoiding taxes, but could also be about freeing up additional funds to put toward a Tucker extension. Rather than spend any time debating whether the Cubs should have to do that — they shouldn’t — it’s best to acknowledge the reality that there appears to be at least a very strong desire to avoid a CBT hit this coming season. Combining that with the worn-out concept of threading the needle may cast a different light on these comments from Jed Hoyer during the Winter Meetings.

“There is nothing that precludes us from being involved in those players,” Hoyer said when asked about Juan Soto. “We did, organizationally, decide not to pursue that one. It doesn’t mean in the future we won’t but that was one we didn’t.”

Just a few days after saying this, Hoyer pulled off the biggest trade of the offseason for the best hitter the Cubs have had since at least prime Kris Bryant. An argument can easily be made that Tucker is even better than KB was over his first five seasons, but we’re still talking about a guy who’s only under contract for one more year. Wait, is that Tucker or Hoyer? It’s both, which is part of the reason the Cubs were so willing to take the plunge here.

I have to believe another big driver is Hoyer’s willingness to work out an extension with Tucker, which could keep the front office in Chicago for a few more years as well. Making an offer that might have to go to $40 million AAV for at least eight years while remaining comfortably below what appears to be a hard deck will require sacrifices elsewhere. The real problem is doing all that while ensuring the Cubs finish better than a distant second in a division that features four mid- or small-market teams.

That’s not an enviable position, but it’s one Hoyer actively got himself into by leaning on value and possibly misjudging the results of one or two moves.