Playing Ball with MLB on International Play Nets Cubs Ownership Nice Benefits. They're Not Sharing.

[Matthew Trueblood]

Show me a billionaire who doesn't like a tax loophole, and I'll show you a liar. Show me one who uses their windfall to spread wealth or joy, and I'll show you a con man.

Image courtesy of © David Banks-Imagn Images

Remember back in mid-September, when the Cubs announced an increase in season-ticket prices for 2025? It got plenty of attention at the time, because the team was then wrapping up a second straight disappointing 83-win season and because they hadn't made the playoffs (in a real way, playing more than one postseason game after a full season of games) since 2017. The team's rejoinder, though, was that they had to make up for lost revenue from the two games they won't get to host at Wrigley Field in 2025. 

Because they'll be the home team for both contests against the Dodgers in Tokyo next month, the Cubs will only play 79 regular-season contests at the Friendly Confines this season. That was the talking point the team used to justify the increase in per-game prices; season ticket-holders were just having their investments spread over fewer dates.

No one really bought that at the time, but let's specifically debunk the idea for good, now. The Cubs aren't losing any revenue as a result of playing in these games. In fact, they come out ahead, even before they dig deeper into the pockets of customers for the balance of their games.

Here's the language from the current collective bargaining agreement about how the league will handle revenue lost via games played outside the United States as parts of showcases like this one:

Quote

The Office of the Commissioner shall compensate Clubs that have one or more home games replaced by an International Play Event for lost revenue. Replacement costs that Clubs receive for participating in an Event shall be excluded from Net Local Revenue.

In other words, since the Cubs are the home game for both teams, they will get a replacement check from the Commissioner's Office that matches their typical revenue for two home games—and, that (small, but not insignificant) slice of their revenue pie will not be counted toward their shareable revenue, so they get to keep it all. Normally, they'd have to pay 48% of that money into the league's revenue-sharing pool, less the amount they would stand to get back as the league redistributes its pooled funds evenly throughout the league.

This is a major financial break for the Cubs, but the Ricketts family didn't pass along any of the projected increase in profits. They haven't spent nearly enough money this winter, full stop.

No, this is not about Cody Bellinger, whose play and continued struggles to stay healthy made him a poor fit for the 2025 Cubs, anyway. The Cubs said they would reinvest the $25 million they saved when they dealt Bellinger to the Yankees, and they have. Since that trade, they've spent:

• $8.5 million on Ryan Pressly
• $5.75 million on Carson Kelly
• $6 million on Justin Turner
• $5 million on Colin Rea
• $3 million on Jon Berti
• $2.75 million on Caleb Thielbar

That's $31 million, and it'll end up being more, as some of those guys hit certain incentives and some minor-league signees make the team and earn small but non-zero amounts of money above the league minimum. Still, right now, the team only has a projected 40-man payroll of $192.9 million and a CBT number of roughly $213 million.

In their defense, they did try fairly hard to spend more than that. We know they made offers to Tanner Scott and Alex Bregman that significantly exceeded the net present value of the deals they actually signed. They had at least two trades die at the medical review stage this winter, each of which would have increased their payroll for 2025. They might yet spend a bit more, for seasons beyond this one, by extending one of their young players and securing longer-term control of them at a good price.

Depending on the shape of any such spring extension, maybe we'll find their budget justifiable by Opening Day. Right now, though, the team's payroll is not bumping up at all against the competitive-balance tax threshold or sitting anywhere close to their real spending from 2024. Those two things should not be true, given not only the huge revenues they collected even during a disappointing season, but the fact that they'll get a nice little tax-free payday this year to further bolster their income for 2025. Ownership continues to privatize profits and socialize losses for their customers, the fans.

View full article

[CubinNY]

I don't know what else we would expect.