An updated estimate of the 2023 Cubs payroll and luxury tax

Earlier this offseason, we took a look at the Cubs’ estimated payroll and luxury tax figures, helped out as always by BCBer The Deputy Mayor of Rush Street.

That was seven weeks ago and the Cubs went on a mini-spending spree after that, signing quite a number of free agents.

I’ll get to that in a moment. First, late Tuesday news broke that both Anthony Kay and Manuel Rodriguez, who had been designated for assignment, cleared waivers and were assigned to Triple-A Iowa. Unlike Mark Leiter Jr. and P.J. Higgins, who were eligible to elect free agency because they had been previously outrighted to Triple-A and did so, neither Kay nor Rodriguez had that right, and so they remain in the Cubs organization. Both will receive non-roster invitations to Spring Training and both do have a chance to make the Opening Day roster.

Here is the current Cubs payroll, with luxury tax hits. You will notice that there are 30 players on the list; only 26 will be on the Opening Day roster, of course. The discrepancies:

• Jason Heyward has been released but the Cubs are paying him this year and that money counts against the luxury tax
• Kyle Hendricks and Codi Heuer will start the year on the injured list
• David Bote is being paid under the terms of his multi-year deal, but is not currently on the 40-man roster

With that, I turn the rest of this post over to The Deputy Mayor of Rush Street.

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The 2023 Cubs Roster: Sorry Crane, This Still Isn’t the Moment.

TOP LINE: The Dep has a serving of crow ready to munch on along with his still decent lunch today, because Jed Hoyer proved me wrong on my contention that he wouldn’t end up finding an “intelligent deal” with one of the Big Four shortstops in the market this year. He’s also (in effect) spent all the way back to within spitting distance of the CBT/luxury tax threshold. OTOH, even with a bit extra of a spending spree this winter, the Cubs remain a team with a chance to contend for a playoff spot — but probably not a pennant contender.

And if Crane Kenney was trying to imply that there were unspent funds from the past few seasons sitting in some account, waiting for the front office to spend on players, that didn’t happen. The Cubs sit around $15 million under the initial tax threshold, leaving a decent amount of leeway should the team be in a position to buy/add this coming July. And perhaps add one more reliever, maybe a lefty like Zack Britton, Matt Moore, or old friend Andrew Chafin, if any of their prices come down as camps get ready to open next month.

Since we last ran these numbers, some notable transactions were made:

12/14 - Signed Cody Bellinger
12/15 - Signed Brad Boxberger
12/19 - Signed Jameson Taillon
12/21 - Signed Dansby Swanson
12/24 - Signed Drew Smyly
12/29 - Signed Tucker Barnhart
1/13 - Signed Eric Hosmer
1/20 - Signed Trey Mancini.

Also, Minor League Deals - RHP Adrian Santana, CF Ben DeLuzio, RHP Ronny Lopez, LHP Eric Stout, SS Sergio Alcantara, LHP Roenis Elias, LHP Brad Wieck, C Dom Nunez, LHP Ryan Borucki, RHP Nick Neidert, LF Mike Tauchman.

Current Projected Opening Day Roster - The 40-man roster is currently FULL.

OF (5) Happ - Bellinger - Suzuki - Mancini - Velázquez
IF (6) Wisdom - Swanson - Hoerner - Hosmer - McKinstry - Madrigal
C (2) Gomes - Barnhart
SP (5+1) Stroman - Steele - Taillon - Smyly - Sampson (Hendricks on IL)
RP (8+1) Hughes - Wick - Boxberger - Alzolay - Estrada - Rucker - Thompson - Wesneski (Heuer on 60-Day IL)

40 man position players in minors (6) - Kevin Alcantara, Miguel Amaya, Alexander Canario, Brennen Davis, Miles Mastrobuoni, Christopher Morel
40 man pitchers in minors (6) - Javier Assad, Ben Brown, Ryan Jensen, Caleb Kilian, Julian Merryweather, Ethan Roberts (60-Day IL)

Notable non-roster players in minors - Matt Mervis, David Bote, Ben DeLuzio, Manuel Rodriguez, Anthony Kay.

Quite possibly a reach, my roster has Christopher Morel getting the Ian Happ treatment, starting back in Iowa to try to make some hitting adjustments after MLB pitchers wrote a ‘book’ on him. And then I have Matt Mervis starting back in Des Moines, partially as there’s a roster crunch, partially because seven is still greater than six years of control.

Let’s go ahead and look at the Current Player Payroll.

(Note, these figures are for each player’s ‘cap hit’, the charge against the Cubs’ luxury tax spending level. The base luxury tax threshold is $233,000,000 for the 2023 season.)

Players with Guaranteed Contracts: (14, plus Heyward’s buyout, and Bote off the 40-man roster)

Swanson $25,285,714
Stroman $23,666,666
Heyward (released) $23,000,000
Bellinger $17,500,000
Suzuki $17,000,000
Taillon $17,000,000
Hendricks (IL) $13,875,000
Smyly $9,500,000
Mancini $7,000,000
Gomes $6,500,000
Barnhart $3,250,000
Bote (minors) $3,000,000
Boxberger $2,800,000
Sampson $1,900,000
Wick $1,550,000
Hosmer $720,000 [net]
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TOTAL $173,547,380
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Arbitration Players: (all 3 cases settled, plus Heuer on the 60-day IL)

Happ $10,850,000
Hoerner $2,525,000
Madrigal $1,225,000
Heuer (IL) $785,000
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TOTAL $15,385,000
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(Note: The MLB minimum salary for 2023 is $720,000.)

Pre-Arb Players more likely to make the 26-man roster - as things stand: (10)

Alzolay $730,000
Estrada $720,000
Hughes $730,000
McKinstry $730,000
Rucker $730,000
Steele $760,000
Thompson $760,000
Velázquez $730,000
Wesneski $720,000
Wisdom $750,000

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TOTAL $7,360,000
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Pre-Arb Players more likely to start in the minors (12, plus Roberts on the 60-day IL):

Alcantara
Amaya
Assad
Brown
Canario
Davis
Kay
Kilian
Mastrobuoni
Merryweather
Morel ($740,000 if in majors)
Roberts (IL)

Other Expenses:

40-man Roster Players in Minors $2,250,000
Pension Payments & Sundry Expenses $16,500,000
Cubs’ Share of Pre-Arb Bonus Pool $1,666,667
(Reserve Withheld for Trades/Buffer)¹ $10,000,000

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TOTAL $30,416,667
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GRAND TOTAL FOR CBT/CAP PURPOSES $226,709,047

LUXURY TAX THRESHOLD $233,000,000

CUBS REMAIN UNDER THE TAX BY $6,290,953

¹- Optional Expense, but some amount figures to be held back from whatever Tom Ricketts sets the baseball budget at.

ADJUSTED FOR ACTUAL PAYROLL EXPENDITURES IN 2023

GRAND TOTAL IN CASH OUTLAY $209,891,667

(This figure includes deducting $6,817,380 in adjustments between contract payouts and cap valuations, and less the optional $10,000,000 trade buffer.)

Before I wrap this update, I want to mention one ‘baseball’ reason Hoyer may have decided not to spend into the luxury tax in 2023.. the 2024 International Free Agent class.

By signing Dansby Swanson (a Free Agent with a qualifying offer) the Cubs surrendered $640,000 in available IFA spending room for the year-long signing period which recently began. The team was still able to sign three well-regarded prospects. But next year, as reported in Cub Tracks last month, the Cubs are “favorites” to land the top prospect (Fernando Cruz) in the 2024 IFA class. (Which more-or-less means they have a ‘handshake’ agreement for a deal that will be signed next January.)

It’s not like one player would take up the entire yearly allotment, but this one prospect might take half of the Cubs $5.3 million spending pool. And it’s likely the team has other tentative signings already worked out — it’s the way that market works. Besides signing a top free agent, spending into the luxury tax costs a team $500,000 against their next season’s IFA spending pool.

Another aspect that the team worries about more than even I do, is that there are luxury tax spending odds and ends to watch, such as player bonuses, which get added at the end of the season. In addition to Trey Mancini’s $500,000 in achievable bonuses (for 400 plate appearances), Drew Smyly could earn up to an additional $3 million by throwing 150 innings this season, Yan Gomes could earn up to $1 million by catching in 111 games — and so can Tucker Barnhart. The only award bonus I’ve found is Cody Bellinger gets $1 million if he wins Comeback Player of the Year.

Further, there are also two or three 60-Day IL placements expected once Spring Training starts. Those players will get full salary while on the IL, and they will require three additional players to replace them on the 40-man roster, being paid the league minimum or better. So that’s around $720,000 in additional luxury tax spending for each full season of carrying a player on the 60-Day IL. (Even if it’s Kyle Hendricks, his contract is accounted for, we’re counting the cost of an extra pre-arb replacement on the rosters.)

But while I’m generally aware of these additional payroll cap expenses, I trust the front office to keep their eye on the ball.

BOTTOM LINE: So the Cubs might not have “won” the off-season, but that trick doesn’t usually work in any case. For what I believe Jed Hoyer & Co. are doing, I’d say they did it pretty well this winter. In a player’s market and considering the self-imposed spending constraint of the $233 million tax threshold, it’s not a bad haul, and there’s hope for the excitement at Wrigley Field to last into September again. It’s better than I expected, so I’ll tip my cap to the Triangle Building and start watching for those moving vans around Clark and Waveland.