Estimating 2016 Payroll

[Transmogrified Tiger]

There's a couple disparate threads where this is touched on, let's round things up to see if we can get a clearer picture, starting with past payrolls. Here's the Opening Day payroll from each year of the Epstein era from Cot's:

 

2012: 109 million

2013: 107 million

2014: 92 million

2015: 120 million

 

The important thing I'd like to try to do is infer the baseline that the front office was working from prior to new revenue streams(signage, TV, attendance, etc). One thing that gives us a pretty big hint is how Lester's contract is structured and their statements up to and around it. Lester got a 15 million signing bonus paid this April and a healthy 15 million as his salary this year. We've heard allusions to the failed Tanaka pursuit rolling over into future payrolls, and the math seems pretty close here. If you use 105-110 million as the previous baseline, the 15 million saved in 2014 matches up pretty nicely. Add in the fact that Cot's is counting Lester at 20 million towards this year instead of the more appropriate 15, and 2015 is only a mild increase payroll wise. That's important because there's a bunch of new revenue sources that started this year.

 

Radio - The switch to WBBM I doubt paid less than WGN, but I don't think this moves the needle.

 

Signage - The video boards weren't up for the full season, but I imagine those agreements were made ahead of time once ownership flipped the bird to the rooftops last summer. If there's any revenue source that was baked into the 2015 payroll I bet this was it, although because it's not fully realized with the partial season on the video boards I imagine there's more room to grow it. Here's a Chicago Business article where 'experts say' it could bring in between 10 and 20 million per year: http://www.chicagobusiness.com/article/20140527/BLOGS04/140529849/cubs-unveil-new-outfield-signs-wrigley-field-renovation-plans

 

Attendance - A quick yearly comparison of total attendance:

 

2012: 2.88 million

2013: 2.64 million

2014: 2.65 million

2015: 2.96 million

 

At a conservative $50/person all included, that's 4 million more in revenue than 2012, and at least 15 million more than 2013-14. It's important to note that attendance was 3 million plus in the Hendry era, but this is money that the preceding seasons just did not have.

 

TV - This is where things get more fun. h/t davell for his post here.

 

CSN - Per this link, CSN per-game went up 150k this year. That's about 12 million in new revenue.

 

ABC - The same link says ABC is paying 750k for their 25 games that were previously on WGN at 250k per game. That's another 12 million

 

WGN - There haven't been concrete figures released about WGN's new deal that I've seen. The above link says that the Cubs were hoping to get 500k per game although the Tribune claims the deal was "more favorable" to WGN. That leaves the net change in revenue from losing a couple million to gaining another 10-11 million.

 

Postseason - There was some debate on this in another thread, but the general rule of thumb I've seen and seen loosely validated is that teams get around $5 million per home game. Even taking half that as a conservative estimate, you're looking at another 10-15 million of one time revenue.

 

Add all of that together, and post 2015 the team has somewhere in the neighborhood of 50-75 million more in *recurring* revenue to work with than it has in previous seasons. We don't know if this will go 100% to payroll(the renovations might need to be paid from this for example), and some of it might have been applied to last year's payroll, which with the additions of Haren, Hunter, Jackson and Soriano ended up pushing 125 million.

 

With all of that in mind, what should we expect for next year? That's the point of this thread, as there's lots of room to wiggle numbers and agree/disagree. Personally, my guess is that there is room for the payroll to go to at least 140 million if not 150 million right away. That's not a hard number, my guess is that if they get to 150 million it's because they added/kept multiple somewhat expensive players instead of going big on a couple(e.g. no Heyward + Price/Greinke), but that still gives a lot of room to be creative and not have to slash payroll to add one big fish either.

 

If you've made it this far, I commend you. If I'm missing something, especially with the revenue stuff, I'd be happy to be corrected, this isn't an area where I'm supremely confident so I tried to source everything I could. This thread isn't for me to pontificate though(too late), so curious where you see the overall number landing for 2016.

[davell]

I think I even saw Wittenmyer comment that the attendance bump looks to be worth 22 mill or so.

 

No idea how much of this winds up going directly into ML payroll. 150 seems reasonable after seeing the TV deals making us more.

 

If I were betting on it though, I'd put the over/under at 140. I think we've got plenty of roster flexibility to make that number work for us too.(the more, the better though)

 

Sharma doesn't seem to think we'll go that high. Neither does Rian Watt, who just started covering some games(and the only non Sharma guy worth reading at BPArigleyville IMO)

 

They've talked to Theo and evidently he didn't make it sound we'd get a BIG bump. That said, I'm pretty sure Sharma thought we had no shot on Lester last year. And while Theo is extremely transparent, he never just comes out and says what our max CAN be. He just says if we've used it all up once he's done.

 

As I said in the mega thread, Theo in full on #wearegood mode is going to switch gears and want to do some serious stuff. Having his own contract as leverage should help in getting Ricketts to give him what he needs for payroll too.

 

So I'll say 140 and a 10-15 mill budget(plus penalties) going towards the Cuban IFA's as well.

[Tedward]

Nice post TT, thanks for putting this together, good read. This used to be HoopsCubs forte back in the forum's early days,lol.

 

Any idea where we sit with committed payroll, including projected arbitration eligibles for 2016? I'm guessing @ $100MM. If 2016 payroll target is @ $140MM, hopefully we'll have enough room to land a big FA pitching piece.

[Guest]

Thanks, TT!

[Guest]

Any idea where we sit with committed payroll, including projected arbitration eligibles for 2016? I'm guessing @ $100MM. If 2016 payroll target is @ $140MM, hopefully we'll have enough room to land a big FA pitching piece.

 

Guaranteed contracts

 

Montero - 14

Rizzo - 5.3

Castro - 7.9

Soler - 3.7

Ross - 2.5

Lester - 20

Hammel - 9

 

That's 62.4 million for 7 players

 

Arbitration eligibles (estimates from MLBTR)

 

Richard - 1.1

Coghlan - 3.9

Wood - 6.4

Strop - 4.7

Arrieta - 10.6

Turner - 1.0

Rondon - 3.6

Grimm - 1.0

 

That's 32.3 for 8 players, bringing us to 94.7 million for 15 players

 

Renewals

 

Bryant

Russell

Schwarber

Baez

La Stella

Hendricks

Ramirez

 

At roughly 500k each, that's 3.5 million for 7 players, giving us a total of 98.2 million for 22 players.

 

EDIT: The last thing is to consider Edwin Jackson's dead money. That's 13 million more, to bring the 22 player total to 111.2 million.

 

You can naturally play around with this further. Castro and/or Coghlan could get traded, Wood and/or Richard could get non-tendered, and there's a couple other renewals that could potentially fill in the roster(Szczur, Edwards, Rosscup, etc). But that's a good baseline to do the adding/subtracting from.

[RammyFanny]

We are still on the hook for 11 million for EJax too, right?

 

(Edit: yeah)

[Guest]

Yes, thanks for catching that. I started out thinking 'remember Jackson' and then forgot to account for it by the end. Jackson is another 13 million towards this year.

[rawaction]

So, how does non-tendering a player works against the cap? They can't just non-tender Wood and save 6.4 Mil can they? Aren't they responsible for paying that if no team claims him or responsible for the remaining of the 6.4Mil if a team signs him for less?

[Guest]

So, how does non-tendering a player works against the cap? They can't just non-tender Wood and save 6.4 Mil can they? Aren't they responsible for paying that if no team claims him or responsible for the remaining of the 6.4Mil if a team signs him for less?

 

The cap?

 

The 6.4M is just an estimate of what he'll get as an arbitration eligible player.

 

They can decline to offer him arbitration (or a contract altogether).

[Guest]

So, how does non-tendering a player works against the cap? They can't just non-tender Wood and save 6.4 Mil can they? Aren't they responsible for paying that if no team claims him or responsible for the remaining of the 6.4Mil if a team signs him for less?

 

If they non-tender a player, he is a free agent the Cubs have no financial obligation to him going forward. In other words, zero financial consequences to non-tendering someone. Non-tendering Wood(or Richard or Turner or...) would save the amount of money they're estimated to get, although the roster spot has to go to *somebody*.

[rawaction]

So, how does non-tendering a player works against the cap? They can't just non-tender Wood and save 6.4 Mil can they? Aren't they responsible for paying that if no team claims him or responsible for the remaining of the 6.4Mil if a team signs him for less?

 

If they non-tender a player, he is a free agent the Cubs have no financial obligation to him going forward. In other words, zero financial consequences to non-tendering someone. Non-tendering Wood(or Richard or Turner or...) would save the amount of money they're estimated to get, although the roster spot has to go to *somebody*.

 

Forgot he was arbitration eligible and not under actual contract.

[Guest]

That 6.4 for Wood does seem a bit of a price if he's just a bullpen piece, and not even one of your top three. Does he have trade value at that price?

 

I know they've said they have multi-year budgets, so they don't necessarily need to back-load contracts, but this would seem to be the year to the extreme backloaded contract if necessary. You'll have 20M falling off from EJ and Hammel after 2016 and 14M from Montero after 2017, with the really only significant FAs being Arrieta and Strop in 2018 (arguably Wood in 17).

[SouthSideRyan]

But we'll have to start paying our rookies in '18.

[davell]

But we'll have to start paying our rookies in '18.

 

Arguello Speak has no need for elite players, just rookies and some seriously shitty Scotch.

[Guest]

But we'll have to start paying our rookies in '18.

A small amount.

[Guest]

That 6.4 for Wood does seem a bit of a price if he's just a bullpen piece, and not even one of your top three. Does he have trade value at that price?

 

I know they've said they have multi-year budgets, so they don't necessarily need to back-load contracts, but this would seem to be the year to the extreme backloaded contract if necessary. You'll have 20M falling off from EJ and Hammel after 2016 and 14M from Montero after 2017, with the really only significant FAs being Arrieta and Strop in 2018 (arguably Wood in 17).

 

Wood's trade value is pretty minimal. Good teams won't want him as a SP, and bad teams won't want his pricetag or lack of team control(he's a FA after '16). You could maybe see some other competitor giving up on some disappointing MLB player in exchange for having Wood as depth. Not exactly sure what that looks like though, maybe Leonys Martin if his market is pretty cool?

 

I don't think you'll see any super creative or extreme backloading, but shifting a few million per year down the road(especially beyond the new TV deal) seems likely with any really big contract.

[SouthSideRyan]

But we'll have to start paying our rookies in '18.

A small amount.

 

Hopefully not.

[Guest]

But we'll have to start paying our rookies in '18.

A small amount.

 

Hopefully not.

Biggest first year estimates this year are the mid 6's. Josh Donaldson who had accrued 15.4 career WAR of value as a Super Two last year lost his arbitration case at 5.75M. I think Bryant is the only guy we can be disappointed if he doesn't eclipse that. I mean it won't be a super small number, but we're talking veteran stopgap pitcher salary.

[Guest]

But we'll have to start paying our rookies in '18.

A small amount.

 

Hopefully not.

Biggest first year estimates this year are the mid 6's. Josh Donaldson who had accrued 15.4 career WAR of value as a Super Two last year lost his arbitration case at 5.75M. I think Bryant is the only guy we can be disappointed if he doesn't eclipse that. I mean it won't be a super small number, but we're talking veteran stopgap pitcher salary.

 

 

Bryant, Russell, Soler, Hendricks, maybe Baez, and maybe Schwarber would be 1st year arb eligible. You're talking about potentially ~25 million all in for guys who combined for 5ish million the previous year. I don't think it's a huge concern with the TV stuff coming shortly thereafter, but it's significant.

[Guest]

But we'll have to start paying our rookies in '18.

A small amount.

 

Hopefully not.

Biggest first year estimates this year are the mid 6's. Josh Donaldson who had accrued 15.4 career WAR of value as a Super Two last year lost his arbitration case at 5.75M. I think Bryant is the only guy we can be disappointed if he doesn't eclipse that. I mean it won't be a super small number, but we're talking veteran stopgap pitcher salary.

 

 

Bryant, Russell, Soler, Hendricks, maybe Baez, and maybe Schwarber would be 1st year arb eligible. You're talking about potentially ~25 million all in for guys who combined for 5ish million the previous year. I don't think it's a huge concern with the TV stuff coming shortly thereafter, but it's significant.

Well you already have about 3-4 outlay for Soler, so he's not likely to eclipse that amount by a ton in year 1 of. And as you say, Baez and Schwarbs are maybes for 2018. 25 (in 2015 dollars) definitely seems like the high end.

 

Overall though, '17 is the kind of bottom for payroll projections. So if there is any year to year concern with the budgeting a big '16 to '17 jump for a new FA would be the creative contract we could see.

[mdwilla]

The Cubs have been trying to line up selling off a silent stake in the franchise to a group of celeb investors. This would allow them to operate free of the debt structure they are currently limited by. Getting this done before Hot Stove season begins would really open up the Cubs options for spending this offseason.

[Guest]

Celebs aren't enough, they're just the flashy faces. Give me some of that investment firm money.

[Guest]

The Cubs have been trying to line up selling off a silent stake in the franchise to a group of celeb investors. This would allow them to operate free of the debt structure they are currently limited by. Getting this done before Hot Stove season begins would really open up the Cubs options for spending this offseason.

 

I'm not sure I follow why selling a minority stake in the team gets rid of their debt structure obligations. Is it because they can pay off that debt straightaway or something along those lines?

[mul21]

The Cubs have been trying to line up selling off a silent stake in the franchise to a group of celeb investors. This would allow them to operate free of the debt structure they are currently limited by. Getting this done before Hot Stove season begins would really open up the Cubs options for spending this offseason.

 

I'm not sure I follow why selling a minority stake in the team gets rid of their debt structure obligations. Is it because they can pay off that debt straightaway or something along those lines?

 

If they sell of 10%, you're looking at about $100 million, so that ostensibly gives them lots of wiggle room to avoid operating in the red on the baseball budget. And if they need to divide it up over several years to add flexibility, you can do it over 4 years and give $25 million per until you get clear of the debt service stuff.

[Guest]

The Cubs have been trying to line up selling off a silent stake in the franchise to a group of celeb investors. This would allow them to operate free of the debt structure they are currently limited by. Getting this done before Hot Stove season begins would really open up the Cubs options for spending this offseason.

 

I'm not sure I follow why selling a minority stake in the team gets rid of their debt structure obligations. Is it because they can pay off that debt straightaway or something along those lines?

 

If they sell of 10%, you're looking at about $100 million, so that ostensibly gives them lots of wiggle room to avoid operating in the red on the baseball budget. And if they need to divide it up over several years to add flexibility, you can do it over 4 years and give $25 million per until you get clear of the debt service stuff.

 

I don't think the debt structure stuff is restrictive in the sense that they don't have cashflow though. The agreement specifically restricts non-debt spending, at least the proportion of spending that is not put towards debt. If they sell a chunk of the team and get 100-200 million in cash that they can bring to Zell/Tribune(I forget who at this point) to re-negotiate with, then that makes sense to me. But unless I'm missing something(very, very possible), I don't think simply selling a chunk of the team for cash on hand is much of a solution to the debt structure problems itself.