What matters is whether the Cubs spend more than $237 million in average annual salary and benefits in 2024, exceeding the first competitively balanced tax threshold. This is very important for a variety of reasons. First, if they cross that threshold, it’s only by a small amount, which shows extraordinary incompetence. Jed Hoyer’s comments on 670 The Score in August, suggesting he expected the team to become taxpayers, came as a shock to many fans. Because Hoyer’s method of persuasion was that it was a foregone conclusion for him from the time he chose to sign Cody Bellinger. A one-year contract (with a two-player option) that both parties agreed to in late February.
But if that’s true, why didn’t the team spend more aggressively? Even after signing Bellinger, they had some great free agents available and some good players were in the shadow of Opening Day. He was traded in part because the team needed to make a salary change. Simply put, no team should spend slightly more than the tax threshold. The way to do that is to spend right up to those thresholds and bring in as much talent as possible without stepping into new slots or incurring harsher penalties. Additionally, it was clear to many outside observers that the Cubs were not outright championship favorites after re-signing Bellinger. If Hoyer knew that, why didn’t he find a way to spend another $10 million after bringing Bellinger back? If he did not, it would be a disappointing statement about his acumen as a manager.
But after delving into the invaluable resource that is Cot’s Contracts, I think we need a more nuanced conversation. Because everything may not be as it seems. This site is run by Baseball Prospectus (of which, full disclosure, I’m also a contributor), specifically Jeff Euston. After thoroughly researching the Cubs’ salary breakdown for 2024, I emailed Euston some follow-ups.
The problem is: According to Cotto, the Cubs are just $277,157 above that line. This is not the specific salary paid to each player in 2024, but rather the average annual amount of the contract, which was negotiated as part of the tax base calculation when the association and league launched this system. Based on various dues and allowances. Multiple Collective Agreements Course. But the important thing is that Euston (and everyone else trying to do similar work at competing dealerships) needs to estimate some of the more nebulous costs involved. Is it possible that the Cubs haven’t actually crossed that line despite what Hoyer said in August?
In short: Yes.
“The Cubs could go either way and come within 1 million or 2 million of the threshold,” Euston wrote in an email. “There are inevitably things that are not made public, such as credits, cash involved in trades, undisclosed bonuses, etc. I was confident that the Angels would pay taxes above the threshold in 2023; Somehow it fell below the mark. I still don’t know how they did it for all of their season trades. So I accept the uncertainty and the possibilities. We will provide our best forecast and adjust as we learn more.”
This is consistent with the attitude, approach, and knowledge level of other people doing the same job in public, and (believe it or not) tracking this for a major league team. Even some people who make it their business agree. Every team has a specific idea of their tax situation, but even that reality can change a bit in the form of various unexpected last moments. And many teams, like us, are not sure about the opponent’s situation. .
But wait a minute. After all, if the Cubs could possibly fall within this tax range — which would make a lot more sense than exceed it due to such a large organizational rounding error — why did Hoyer do this? Did he come close to saying the opposite in the summer?
It all comes back to Bellinger. A few weeks after his now-infamous appearance on The Score, he spoke at the beginning of a postseason press conference as if it was almost a foregone conclusion that Bellinger would be released from his contract. I want you to remember. It wasn’t a great season, good or bad, marred by outfield injuries, but despite a hefty $50 million left on his contract for two more years, Hoyer is hoping that the former MVP will test the market and sign up for a longer contract. He seems very confident that he is going to earn years. Term contract. Other sources are speculating similar results.
If that were to happen, much of the above would become meaningless, as Beringer’s tax number would change enough to make his current margin appear small around the threshold. Players still have options, but contracts are calculated based on total guarantees divided by the number of years the player can choose from if they wish. Therefore, Bellinger’s tax number is now $26.7 million. If he opts out, having earned $27.5 million this year, he will receive a $2.5 million buyout when he retires. Therefore, his tax number in 2024 jumps up to $30 million and is no longer close to the line.
Based on the information we have, I think we can say this fairly confidently. The Cubs know a little more than we do, and if Bellinger opts in, they’ll stay below the 2024 tax threshold. But they also expect Bellinger to opt in. out — and they’re okay with that. The way I read the situation, Hoyer is fine with being a tax-paying team this year if it means allocating another $30 million this winter as he sees fit. That’s true. He’d rather have that flexibility than have Bellinger back down the line and into a congested offensive mix that still needs an upgrade, and he’s hoping things work out that way.
Again, I think it’s all about crossing the line, and I still think Hoyer messed up the decisions that led to this situation when it comes to building a team next year and the hurdles they will face along the way. There is. . The Cubs would have money to spend if Bellinger opts out, but I don’t believe they’ll spend as much money as they need to either way. Additionally, Hoyer accepted that signing a top-level free agent with a qualifying offer would cost the Cubs significantly more. Part of that cost was paid for with non-renewable resources: draft picks and bonuses. The amount allocated to spending on international free agents was greater than what it would have cost them if they had remained within the norm.
Even if the amount of money a team pays in taxes to the league is small, these penalties are significant. It’s OK to accept those extra costs if they were sacrificed on the way to building a strong team last season, but the Cubs were far from that. Again, if Bellinger’s contract truly committed the team over that line, they should have spent millions of dollars more aggressively working on improving their roster after signing Bellinger.
We’ll see how things pan out in the coming days and weeks. I still believe Bellinger will do what’s best for himself by opting in, but if he does, we’ll have to listen carefully to see if Hoyer changes his tune about the team’s tax status. there will be. The league also plans to make an official announcement regarding taxpayer status in November, putting an end to the mystery. If Bellinger opts out, the mystery won’t even materialize, but lingering questions remain, including why Hoyer thought the 83-win team he changed would be an even better team. It will be. , and why the owners believe they can turn this 83-win team into a better team in 2025.
