An Important Clarification on Alex Bregman, the Cubs, and Competitive-Balance Tax Numbers

[Matthew Trueblood]

As the Cubs and the top remaining free agent circle toward one another, I need to take a moment to correct and clarify something with regard to the contract structure the team and agent Scott Boras have discussed. It could have big ramifications.

Image courtesy of © Sergio Estrada-Imagn Images

The Cubs have "optimism" about signing free-agent third baseman Alex Bregman, a source said Thursday morning. As I reported Tuesday afternoon, the team has made a multi-year offer that would give Bregman multiple chances to opt out, creatively meeting his desire to be paid at a level commensurate with his track record as an elite infielder without locking the Cubs into a six-year commitment of which they are deeply wary. One apparent snarl in that negotiation, however, turns out not to be one—or at least, not to work the way I was initially led to understand.

Here's a crucial passage from Tuesday's piece, about the structure of a deal between the two sides that might allow Bregman to opt out after 2025 having made $35 million or more:

Quote

One way or another, there's likely to be a wrinkle. That's because, if Bregman makes (say) $34 million in 2025 and then opts out, it could push the Cubs over the luxury tax line at the last moment, by changing whatever his AAV would be over four years to that higher number.

After we published that piece, though, I checked in further with sources close to the situation, and heard from a source within another front office. I'm now able to confirm an important modification to that. In the scenario described above, the Cubs would, indeed, be charged the difference between Bregman's annual average value (AAV) and the actual amount he earns in his one season before opting out. However, that money would not be added to their CBT number for 2025, but for 2026. So, rather than having Bregman's CBT number for 2025 leap from (to use the number posited Tuesday) $31.35 million to $35 million as a result of the opt-out, potentially shoving the team over the lowest CBT threshold, that extra $3.65 million would be charged to their CBT ledger for 2026, instead.

In fact, upon further review of the language around player options and opt-outs in the CBA, the effect would be even smaller than that. Here's that passage:

Quote

If a Player fails to exercise or chooses to nullify a Player Option Year that is deemed a Guaranteed Year pursuant to Section E(5)(a)(ii) above, the difference between the amount paid to the Player under his Contract (including any Option Buyout payment) and the amount that has been attributed to Actual Club Payroll (excluding any amounts attributed pursuant to subparagraph (ii) below) of the Club under that Contract shall be added to (or subtracted from) Actual Club Payroll in the Contract Year in which the Player Option Year falls. If a Player fails to exercise or chooses to nullify multiple Player Option Years, the difference between the amount paid to the Player and the amount allocated to Actual Club Payroll shall be applied pro rata over the Contract Years that were nullified.

If the legalese is too much for you, here's the upshot: not only is any difference between the amount actually paid to the player and the AAV of their deal assigned to the year nullified (rather than the one or ones they actually spent with the team), but if there are multiple nullified years, that difference is spread over all the years the player opts out of. So, circling back to the example above, the Cubs would be charged just over $1.2 million in added CBT responsibility per year from 2026-28, should they guarantee him four years and then see him opt out after the first.

Right now, the Cubs have roughly $31.6 million in space beneath the first threshold of the luxury tax, according to Cot's Contracts. In practice, we expect that number to be slightly larger, because the Dodgers included cash in the Ryan Brasier trade Tuesday night that will be applied to his salary and reduce both the real expenses and the CBT number for the Cubs, if only by a very small amount. In other words, they could sign Bregman to a deal worth around $30 million and still stay beneath the CBT line, even if said deal is frontloaded and Bregman subsequently opts out this fall. 

That doesn't mean they'll do so. In fact, while the odds of a union between the two sides continue to rise, the Cubs are also exploring trades that would offload some salary in the event of a Bregman deal. That would give them the breathing room to avoid being pushed over the line if certain players hit key incentives or earn performance-related bonuses; recoup in advance the young talent they wouldn't be able to acquire due to the draft picks and international free-agent spending power they would give up in the process of signing Bregman; and clarify their loaded roster by exchanging some depth on the 40-man roster for more in the lower levels of the farm system. Nico Hoerner's name has heated up in trade talks, just as Bregman's free agency has begun to accelerate toward a resolution.

Nonetheless, this clarification is important. Right now, the Cubs have a projected 40-man roster payroll around $191 million. Sources said earlier this winter that the team would likely try to settle that number around $215-225 million. That, too, suggests that there's already room for Bregman, but (for reasons I've also already written about) that they might prefer to subtract some money while adding him. That would also ensure some in-season flexibility in Jed Hoyer's budget, a failsafe the front office values highly. The fact that whatever AAV the two sides agree to will be the fixed CBT obligation of the team to Bregman for 2025 is crucial, because it makes it incrementally but measurably more likely that they can get a deal done with him on terms that fit their ownership-dictated budget and provide all the advantages available to them under the CBA.

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[KCCub]

Yep. They can absolutely add the "fluff" to his contract to incentivize a likely one year opt-out if that's what they ultimately want. It seems like if Bregman happens, trading Nico for prospects is the likely path. I know many don't like that path, and I'm not sure I do either, but that is a path that can lead to Bregman's bat (This matters for playoffs more than anything when arguing Nico vs Bregman's value being a wash over a full season), Shaw playing 2b, and using prospects at the TDL to land that #1 or #2 playoff starter we need. 

[squally1313]

27 minutes ago, Matthew Trueblood said:

That would give them the breathing room to avoid being pushed over the line if certain players hit key incentives or earn performance-related bonuses;

Was curious about this. Cots is obviously not the end all be all here, but from what I could tell:

• Shota: $1m for winning the Cy Young, $500k for 2nd or 3rd, $250k for 4th-10th
• Boyd: $100k for hitting 80, 90, 100, 110, 120 innings pitched, so theoretically $500k total
• Kelly: "may earn additional $500k annually in performance bonuses based on games started"
• Brasier: "may earn additional $4m(!) in performance bonuses based on relief appearances". This looks to be $2m/year.
• Berti: "may earn additional $1.3m in performance bonuses"

[cubsguy20]

Just go over the luxury tax. You're the Cubs. SMH, the way this front office operates is ridiculous.

[Bertz]

41 minutes ago, KCCub said:

Yep. They can absolutely add the "fluff" to his contract to incentivize a likely one year opt-out if that's what they ultimately want. It seems like if Bregman happens, trading Nico for prospects is the likely path. I know many don't like that path, and I'm not sure I do either, but that is a path that can lead to Bregman's bat (This matters for playoffs more than anything when arguing Nico vs Bregman's value being a wash over a full season), Shaw playing 2b, and using prospects at the TDL to land that #1 or #2 playoff starter we need. 

The math part of my brain doesn't like going down this path.  That said this lineup is really perty 

Happ

Suzuki

Bregman

Tucker 

Swanson

Busch

Shaw

PCA

Amaya

So I'll likely get over it quickly if Jed sticks the landing and gets a good deal for Hoerner.

[mul21]

9 minutes ago, cubsguy20 said:

Just go over the luxury tax. You're the Cubs. SMH, the way this front office operates is ridiculous.

*ownership

[SOFNR]

4 minutes ago, cubsguy20 said:

Just go over the luxury tax. You're the Cubs. SMH, the way this front office operates is ridiculous.

I tend to agree it shouldn't matter and the Cubs should be flexing their financial muscle on a regular basis. But it is a bit of a weird spot this year. Going barely over last year was pretty dumb. They're very likely go over in 2026, maybe by a decent amount. Resetting this year is probably a smart move. Ultimately they shouldn't be near as scared as they are of that first line, but that seems to be the reality. For where we are in the offseason, I'm pretty ok with staying under, as there isn't a ton left they can really do. But if they get Bregman, and have to trade Nico for salary I'll be pretty pissed. Or if they get Bregman, and then refuse to go out and improve a good team at the deadline because of money. The tax should definitely never stop them from going all in when they've got a legit chance to win it all.

[KCCub]

2 minutes ago, Bertz said:

The math part of my brain doesn't like going down this path.  That said this lineup is really perty 

Happ

Suzuki

Bregman

Tucker 

Swanson

Busch

Shaw

PCA

Amaya

So I'll likely get over it quickly if Jed sticks the landing and gets a good deal for Hoerner.

Yep. I'm not necessarily pro signing Bregman, just wanted to play devil's advocate against the bear case scenarios and show that, hey, signing Bregman could actually be pretty cool and end up good for us. 

 

[Jason Ross]

1 minute ago, KCCub said:

Yep. I'm not necessarily pro signing Bregman, just wanted to play devil's advocate against the bear case scenarios and show that, hey, signing Bregman could actually be pretty cool and end up good for us. 

 

One of the things that I keep thinking about in my head is how Bregman kind of challenges a lot of what we discuss on the board - that there's no such thing as a perfect signing at a perfect time, that you get good players when you can, and that we wished the Cubs would act more like a big market team. And by signing Bregman, you hit these concepts (mostly). Is he a perfect fit/signing? Not really with Hoerner/Shaw but you can certainly argue he's an upgrade in a way (especially offensively), so get the good player when you can. Is he a super market efficient upgrade over Hoerner? Not particularly, you can probably assume both will finish around the same fWAR level, even if maybe Bregman has some ceiling that Hoerner doesn't. A big market team going for 90+ wins assumes more financial risk and is less efficient. 

I know there's an aspect of this that isn't fully hitting the "act like a big market thing" - it seems likely the Cubs will send Hoerner out for (somewhat) of a financial reason, and the Cubs are seemingly hoping Bregman opts out instead of adding a piece who would be around for a bit...so it's not a perfect parallel, but it's been something swirling around my brain the last few days as I try to examine this from every direction I can.

[squally1313]

1 hour ago, KCCub said:

(This matters for playoffs more than anything when arguing Nico vs Bregman's value being a wash over a full season),

This doesn't actually hold up, right?

[KCCub]

2 minutes ago, 1908_Cubs said:

One of the things that I keep thinking about in my head is how Bregman kind of challenges a lot of what we discuss on the board - that there's no such thing as a perfect signing at a perfect time, that you get good players when you can, and that we wished the Cubs would act more like a big market team. And by signing Bregman, you hit these concepts (mostly). Is he a perfect fit/signing? Not really with Hoerner/Shaw but you can certainly argue he's an upgrade in a way (especially offensively), so get the good player when you can. Is he a super market efficient upgrade over Hoerner? Not particularly, you can probably assume both will finish around the same fWAR level, even if maybe Bregman has some ceiling that Hoerner doesn't. A big market team going for 90+ wins assumes more financial risk and is less efficient. 

I know there's an aspect of this that isn't fully hitting the "act like a big market thing" - it seems likely the Cubs will send Hoerner out for (somewhat) of a financial reason, and the Cubs are seemingly hoping Bregman opts out instead of adding a piece who would be around for a bit...so it's not a perfect parallel, but it's been something swirling around my brain the last few days as I try to examine this from every direction I can.

Agree with all this and one thing I keep coming back to in my mind and ties into your point of challenges what we discuss on the board is Matt Chapman.

Rewind back to the off-season before 2024 and Chapman was a consistent topic/debate on this board. "He's old and declining!" "His value is only defensive and will decline rapidly as he ages!" "His 2023 was propped up by a good first half!" "He had a 60 wRC+ from August to end of season!" The point is, we analyzed the horsefeathers out of Matt Chapman and most everyone came to the conclusion that he's not worth it with all factors considered. We couldn't have been more wrong as he put up a beautiful 5.5 fWAR season last season and received a nice 6/$150m extension going into his age 32 season opposed to the "value" we had hoped for at 3b. 

[KCCub]

2 minutes ago, squally1313 said:

This doesn't actually hold up, right?

SLG is more valuable in a playoff series, no? Hasn't that been a topic for years that stringing hits together is more difficult against playoff rotations/pitching vs having guys that provide more SLG? Forgive my ignorance if that's been proven inaccurate, but in theory, I would much rather have Bregman's bat for a playoff run than Hoerner's tools. 

[squally1313]

4 minutes ago, TomtheBombadil said:

Someone catch me up here. CF, C, bench, and much if not most of the pitching staff will be min salary for 2026, no? 

FG has the 2026 at $112m in guaranteed contracts for 2026. In 2025 we're paying $27m to arb eligible players, call that $30m for 2026, and then they're estimating $11.4m in 2025 for 'for players not yet eligible for arbitration and other players with non-guaranteed contracts'. We can keep that consistent for 2026. Plus $2.5m for Bellinger, $2.5m for 40 man roster guys in the minors, plus $18m for benefits, plus $1.66m for the bonus pool, you're at $177.6m. I think the argument pre-supposes you're either paying Tucker ($40m) or replacing him in the aggregate with that kind of cash. Rea, Pressly, Brasier 'need' to be replaced as well. 

Honestly it's not as automatic as I thought it was going to be when I started typing it out, unless I'm missing something.

[squally1313]

1 minute ago, KCCub said:

SLG is more valuable in a playoff series, no? Hasn't that been a topic for years that stringing hits together is more difficult against playoff rotations/pitching vs having guys that provide more SLG? Forgive my ignorance if that's been proven inaccurate, but in theory, I would much rather have Bregman's bat for a playoff run than Hoerner's tools. 

I would have guessed that the sample sizes are too small either way to make a definitive lean one way or another and you should just default to 'success' in the regular season translating to 'success' in the playoffs, especially on the offensive side of the ball. 'Success' being combined offensive and defensive contributions. Certainly could be wrong, but I think however you optimize your team for the regular season should be the way you approach the playoffs (setting aside differences in pitching approach because of the additional days off, etc). 

[KCCub]

Just now, squally1313 said:

I would have guessed that the sample sizes are too small either way to make a definitive lean one way or another and you should just default to 'success' in the regular season translating to 'success' in the playoffs, especially on the offensive side of the ball. 'Success' being combined offensive and defensive contributions. Certainly could be wrong, but I think however you optimize your team for the regular season should be the way you approach the playoffs (setting aside differences in pitching approach because of the additional days off, etc). 

Agree with this in principle. We'll just call it a personal preference then. Specifically for a playoff run, I would rather have someone who can go on a Soler, Schwarber, Freeman, etc, offensive run and carry a team through a series. The more guys that have that ability, the better. Again, just a personal preference if the data doesn't support. 

[Rcal10]

36 minutes ago, squally1313 said:

I would have guessed that the sample sizes are too small either way to make a definitive lean one way or another and you should just default to 'success' in the regular season translating to 'success' in the playoffs, especially on the offensive side of the ball. 'Success' being combined offensive and defensive contributions. Certainly could be wrong, but I think however you optimize your team for the regular season should be the way you approach the playoffs (setting aside differences in pitching approach because of the additional days off, etc). 

I agree with you on the offensive side of the ball. The game doesn’t change in the playoffs. It does change from the pitching side, however. Which may be why more slug is needed in the playoffs. I don’t know that to be true. But if it is true that might be why. I do know pens are used earlier and more often k the playoffs. You can’t do it all season. 

[mul21]

1 hour ago, TomtheBombadil said:

Someone catch me up here. CF, C, bench, and much if not most of the pitching staff will be min salary for 2026, no? 

I would say no on the pitching staff.  Steele in arb, Shota at $15m, Taillon at $18M, and Boyd at $14.5M, so that's a pricy starting rotation at the very least.  The pen will likely be cheap outside of any FA signings though.

[Bertz]

2 hours ago, squally1313 said:

FG has the 2026 at $112m in guaranteed contracts for 2026. In 2025 we're paying $27m to arb eligible players, call that $30m for 2026, and then they're estimating $11.4m in 2025 for 'for players not yet eligible for arbitration and other players with non-guaranteed contracts'. We can keep that consistent for 2026. Plus $2.5m for Bellinger, $2.5m for 40 man roster guys in the minors, plus $18m for benefits, plus $1.66m for the bonus pool, you're at $177.6m. I think the argument pre-supposes you're either paying Tucker ($40m) or replacing him in the aggregate with that kind of cash. Rea, Pressly, Brasier 'need' to be replaced as well. 

Honestly it's not as automatic as I thought it was going to be when I started typing it out, unless I'm missing something.

It doesn't change things a ton, but that $112 does not include Shota (since he technically has an option for next year).  However arb commitments should be way lower with Tucker no longer under arb.  It mostly washes out, and I've been using $185 as a placeholder, but that Shota thing tripped me up a few weeks ago so wanted to call it out.