Maintaining Financial Flexibility: 2017 Vintage – Part Two

Following the same path as last year, part one of this series looked at each of the Cubs’ offseason transactions to gauge whether they allowed the Cubs more or less financial flexibility in the years moving forward. This offseason was clearly different than last, as winning the World Series definitively changed the trajectory and unbridled urgency of the front office. Beyond that, a team without many holes and a free agency class that lacked impact starting pitching kept the transaction wire relatively quiet. To quickly catch us up to speed, here are the Cubs’ late-breaking transactions that transpired after part one was published:

– The Cubs acquired former top pitching prospect Eddie Butler from the Rockies for James Farris, after Butler was DFA’d by Colorado.

– The Cubs acquired control specialist Alec Mills from the Royals for Donnie Dewees, after Mills was DFA’d by Kansas City.

Each deal represents the kind of high upside, limited risk trade for which this front office has come to be known. In Butler, the Cubs received a cross-firing righty that folks seem determined to compare to Jake Arrieta. While Butler’s delivery and velocity make it a tempting thought, it’s prudent to back off comparing him to a Cy Young winner just yet. There is some upside though, and the former Rockie will make an interesting project for Chris Bosio.

The ex-Royal Mills is in the mold of a different Cy Young finalist, this one being Kyle Hendricks. Mills himself said that he recognizes the most similarities of repertoire with Hendricks, though I am certain he would quickly assert that he has a long way to go before establishing himself the way Hendricks has the past three seasons. After dominating the minor leagues to the tune of a 3.03 ERA for five seasons, Bosio is surely licking his chops at the chance to refine the young man into a solid major-league starter.

To summarize the Cubs’ offseason, they made four signings of players expected to be on the major-league roster (Koji Uehara, Brett Anderson, Jon Jay, Brian Duensing), with each contract being of the one-year variety. In Butler and Mills, the Cubs traded for players still pre-arbitration eligible with five and six years of team control left, respectively. Finally, the Cubs traded four years of Jorge Soler for one year of control for Wade Davis, a questionable move that bolstered the bullpen and should allow the Cubs to avoid overpaying at the deadline for a reliever as they did last July. However, it certainly left some “upside” on the table in regards to Soler, as they waited a year too long to capture his trade value. If we thought last year left the Cubs with an excellent amount of financial flexibility, the conservative approach this offseason took that to an entirely different level.

The Cubs clearly have the best roster in the Central Division, if not in the entire game. Let’s look a step beyond the rosters themselves and analyze how each team in the Central is positioning themselves financially for the future. The future commitment numbers in parentheses are considered with all options picked up, and all arbitration and other associated costs included.

Milwaukee Brewers

2016 Payroll: $75,244,791

2017 Estimated Current Payroll: $53 million ($65.7 million)

2018 Commitments: $25 million ($77.1 million)

2019 Commitments: $25 million ($69.8 million)

2020 Commitments: $18 million ($85.4 million)

2021 Commitments: $4 million ($96 million)

Farm System: Strong; potential impact players at every level

Outlook: The Brewers major-league roster looks largely as it did a year ago, with only a handful of assets worth much from a major-league perspective. The trade of Jonathan Lucroy and Jeremy Jeffress returned special minor-league talent in Lewis Brinson, Luis Ortiz and Ryan Cordell from the Rangers, but it also served to leave the current roster even less interesting than last season. The emergence of Jonathan Villar gives them something exciting to watch, but they will need to decide whether his age and four years of team-control coincide with a competitive window. The team reportedly offered Villar an extension recently—he appears to have rejected the overture—which makes sense from a broader perspective. They should either attempt to extend him in an effort to control 6-7 of his prime years, or they should trade him for younger players at an opportune time.

The only two legacy contracts on the team belong to veterans Matt Garza and Ryan Braun. This will likely be the end of the road for Garza, as he will not be able to reach the required plateau of starts needed to vest his complicated option for 2018. Should Garza start solidly this season, there is an outside chance a contender will dead a low-level prospect to the Brewers for him, but that represents a best-case scenario to salvage any value out of his failed contract.

Braun, on the other hand, is one of the more intriguing names to watch as the trade deadline nears. Two years ago, his contract was considered an albatross and completely unmovable, especially considering his status as a pariah throughout baseball. However, a resurgent 2016 saw him OPS .903 and regain his status as an elite hitter, making a trade once again a palatable consideration. His contract is still an impediment ($80 million guaranteed remaining), so the Brewers will most likely have to eat part of it if they want an elite prospect in return. From my perspective, with where the Brewers are currently, I think it makes sense to offset some of his salary to improve the prospect package coming back to Milwaukee.

Beyond the major-league team, the Brewers have assembled an exciting prospect base in their minor-league system. They have received acclaim for their talented collection by many pundits, rising to become a top tier system in the mind of many analysts. It starts with shortstop Orlando Arcia, who made his major-league debut last season at just 21 years old. Arcia is a former top-10 overall prospect and has an exceedingly bright future. Beyond that, a trio of outfield prospects in Brinson, Corey Ray and Brett Phillips provide plenty of thump to dream on in the future. Isan Diaz has a cool name and a precocious bat, as he acquitted himself very well (.827 OPS) in his first stint in the Midwest League at just 20 years old. Finally, Josh Hader, Ortiz and Phil Bickford provide balance on the pitching side of the prospect equation. All-in-all, it has quickly become a stout system with tremendous upside.

While the farm system is primed to bear fruit for years to come, the picture isn’t so great from a financial prospective. As I mentioned last year, the Brewers television deal is atrocious, and several consecutive losing seasons have put revenue and attendance in doubt. They enter the season with the lowest payroll in the majors, and you can expect that to continue dropping just as quickly as they can shed Braun’s contract. Long-term, their competitiveness will depend on just how fruitful their farm system proves to be, and whether or not the good citizens of Milwaukee head back to the gates once a competitive team is fielded.

Cincinnati Reds

2016 Payroll: $114,297,733

2017 Current Payroll: $82.9 million ($94 million)

2018 Commitments: $62.3 million ($92.9 million)

2019 Commitments: $53.7 million ($88.6 million)

2020 Commitments: $35.7 million ($103.7 million)

2021 Commitments: $25 million ($76.7 million)

Farm System: Above-average; perhaps still uninspiring

Outlook: Virtually everything I said last year still holds true, as the Reds are fully in rebuild mode. Here’s the problem I see: the major-league roster is completely devoid of talent outside of the machine we call Joey Votto. As everyone knows, Votto has an albatross of a contract that will likely eliminate any prayer of receiving difference-making prospects, if he can even be traded at all. Raisel Iglesias, Billy Hamilton, and Adam Duvall are probably the most valuable assets after Votto, and they simply won’t return the kind of talent that the Reds need to really vault their rebuild to the next level. This has become a completely uninteresting roster on every level.

Beyond the $169 million they still owe the 33-year-old Votto, they also owe Homer Bailey $68 million, and Devin Mesoraco over $20 million. They have become a textbook case of failing to understand when your window is closed, and signing large contracts at precisely the wrong time.

It’s not that their farm system isn’t good—it’s certainly interesting—it’s just that I don’t see the elite level of talent needed to really build a contender at any point in the near future. There are nice pieces, but three of their top prospects are already 23 or older, and that doesn’t bode well when attempting to compete with the Cubs, Cardinals, and Pirates. It’s baseball, which means anything can happen, but my feeling is that we’ll look back on this decade in history as a very bleak time for the proud franchise from Cincinnati.

Pittsburgh Pirates

2016 Payroll: $105,866,836

2017 Projected Payroll: $90 million ($98.8 million)

2018 Commitments: $55.9 million ($97.9 million)

2019 Commitments: $38.9 million ($88.1 million)

2020 Commitments: $10.6 million ($67.7 million)

2021 Commitments: $12.5 million ($75.6 million)

Farm System: Strong; obnoxiously persistent

Outlook: I find myself becoming something of an apologist for the pesky Pirates, as it seems I am constantly impressed with their collection of talent at both the major and minor-league levels. Yes, they finished five games below .500 last year, but don’t let that fool you into thinking they won’t be competitive this season. They feature the best outfield in baseball; a glittering combination of power, speed, and graceful defense. Should Gregory Polanco continue his ascent into stardom, the combination of Andrew McCutchen, Starling Marte and Polanco could vault them back into contention.

Beyond their star-studded outfield, the starting rotation remains highly intriguing. Staff ace Gerrit Cole looks to bounce back from a down season (3.88 ERA, 7.6 K/9), while Jameson Taillon tries to cement himself as a big-league starter. Phenom Tyler Glasnow seems like he’s been around forever, but he’s still only 23 innings into his major-league career. Should Glasnow burst onto the scene this season, the three-headed monster at the top of their rotation could begin to resemble their talented outfield.

The infield should get a boost from a full season of slugging first basemen Josh Bell, but they need a rebound from perennially forgiven Jung-ho Kang and Josh Harrison to really become an offensive force. Despite the presence of some holes on the roster, this is still a team with tremendous star talent and upside.

This is what I wrote last year regarding the Pirates revenue situation: The revenue side of the equation is rather perplexing. Attendance has skyrocketed to nearly 2.5 million per year as the team has found success, ranking them 15th in the majors despite their reputation as a small-market team and the benefit received from large-market revenue sharing. Team President Frank Coonelly is on record saying that while the local television contract terms are bound by a confidentiality agreement, the reported figure of $18 million per season is “grossly understated.” Between growing attendance, burgeoning talent, impressive fiscal restraint and endless financial flexibility, make no mistake about the trajectory of this organization. These poor Pittsburgh Pirates are not a warm story of a shepherd boy, they are David in all of his righteous anger selecting five smooth stones from the brook.

Despite a slight dip in attendance to 2.2 million fans, most of this still holds true. They don’t have a single bad contract on their books, and their minor-league system remains overflowing with interesting talent. Their starting pitching is young and talented, as is the majority of their core. Even the veteran McCutchen is only 30 years old, meaning he should have plenty of productive seasons left in him. He also represents a tough decisions for the Buccos, as they control just two more years before he is a free agent. They are going to have to quickly decide whether they intend to go all out these next two seasons, or whether they will trade away the face of their franchise to continue to stock their farm system and retain their steadfast conservative fiscal outlook.

St. Louis Cardinals

2016 Payroll: $167,016,170

2017 Projected Payroll: $136.7 million ($141.1 million)

2018 Commitments: $98.7 million ($140.2 million)

2019 Commitments: $83.2 million ($113.7 million)

2020 Commitments: $63.7 million ($134.3 million)

2021 Commitments: $34.2 million ($119.5 million)

Farm System: Average; holding steady

Outlook: In the not-so-distant past, the Cardinals organization would have been the most straightforward, succinct write-up of any of the teams in the Central Division. Today, they are easily the most controversial and convoluted team to discuss. A large portion of thoughtful people still fall into the “they always find a way” camp, which is totally understandable given the endlessly successful nature of the organization over the past 15 years or so. There are the projection systems, which vary all of the way from “playoff team” to PECOTA projecting them to win only 76 games. Finally, my personal belief that they missed a huge opportunity this offseason to trade off a bunch of aging veterans to better align themselves for the future with their young core. I’ve already made the point, so I’ll try not to belabor the issue, but Alex Reyes going down for the season cemented a major part of my bear thesis—they were simply too dependent on two young arms, and don’t have the depth or star talent to contend with the Cubs this year. If the Cardinals extend face-of-the-franchise catcher Yadier Molina as has been rumored, this is another strong signal that they are living in the past without a realistic assessment of where they currently stand as a franchise.

I mentioned in last year’s piece that the stunning conviction of former Scouting Director Chris Correa should lead to stiff penalties from Major League Baseball, pending an internal investigation. Commissioner Rob Manfred recently handed down those penalties, but utterly failed to set a stern precedent of discipline in a case that amounted to massive corporate espionage. In one of the most egregious instances of a wink-wink/nod-nod favor I’ve ever witnessed, the Cardinals were forced to surrender their “first two” draft picks in the upcoming draft.

On the surface, this may seem like a reasonable punishment, until you consider that Manfred already knew the Cardinals had no first round pick because of the signing of Dexter Fowler. Further, the first pick the Cardinals have to “give up” is a competitive balance pick which the Cardinals earn for doing nothing, despite having the ninth highest payroll in baseball last year. In total, it amounts to a gentle slap on the wrist for one of the most storied franchises in baseball, and does almost nothing to dissuade enterprising teams from hiring an army of minimum wage two-bit hackers to try and gain an advantage. Despite the laughable punishment handed down by Manfred, it doesn’t change the permanent stain on the organization’s sterling reputation.

With the news of Reyes’ injury, the Cardinals farm system lacks the impact punch it has had for the better part of two decades. It isn’t a bad system, but it doesn’t have the potential star power that other systems contain. Their top player beyond Reyes (according to MLB Pipeline) is Carson Kelly, a relatively light-hitting converted-catcher who carries excellent defensive skills. Kelly will be a good pro, but there doesn’t appear to be anyone with Eloy Jimenez’s immediate star power in their system. My favorite player in their system is Delvin Perez, an 18-year-old shortstop who dropped to 23rd in last season’s draft due to a failed test for performance-enhancing drugs. Perez is the one guy I see that could be a future superstar, but he’s still several seasons away from making an impact.

This organization isn’t going to go away without a fight. They are too proud, too good and too voodoo-ish to simply fade into oblivion. However, if the fans stop showing up (as appeared to be the trend last season), the situation could turn sour very quickly. They are going to have a very hard time competing with the Cubs the next five years or so, and will need to sustain revenue drivers to continue to compete with them after that. I wouldn’t say it is code red in St. Louis, but the alarm bells have been going off for 12 months or more, and almost no one is paying close enough attention.

Chicago Cubs

2016 Payroll: $188,492,394

2017 Projected Payroll: $161.4 ($170.2 million)

2018 Commitments: $79.2 million ($104 million)

2019 Commitments: $72 million ($102.7 million)

2020 Commitments: $43 million ($106.9 million)

2021 Commitments: $31 million ($136.5 million)

Farm System: Average; slowly declining

Outlook: The linear nature of this Cubs team is almost as unthinkable as Kris Bryant’s ascension, culminating in a historical World Series win last November. They perfectly followed a path that Tom Ricketts and Theo Epstein laid out in 2011, ultimately breaking the longest championship drought in professional sports history.

The challenge now will be avoiding the complacency that naturally comes as a side-effect of achieving a long sought after goal. If they can avoid the pitfall of a championship hangover, this team is positioned exceptionally well to attempt to establish a dynasty. It starts with five years of cheap control of the best combo in baseball, Anthony Rizzo and Kris Bryant. Beyond those two on the positional side, they are blessed to also have a group of players that have as much upside to potentially still harness as any organization in the league. Kyle Schwarber, Addison Russell, Willson Contreras, and Javier Baez are all under 25 years old, and are just getting started in their major-league careers. This says nothing of Ben Zobrist and high-priced Jason Heyward, owners of a bevy of All-Star game appearances between them.

The pitching has always and will continue to be the biggest question, as the hoard of amateurs drafted by this front office have yet to produce a surefire major-league starter. Jon Lester and Hendricks appear to be long term workhorse solutions, but beyond that there are a pile of questions beginning in 2018. Epstein’s figurative and literal primary objective over the next few seasons is simple: find pitching.

The current iteration of the farm system doesn’t hold a candle to previous vintages, but that’s simply because all of those studs are now playing in Wrigley. That’s not to say it’s now barren, as the triumvirate of Jimenez, Ian Happ, and Albert Almora is still exciting enough to warrant our attention. Jimenez could be a future star, while Happ and Almora each have high floors as solid regulars with an All-Star game or two upsides. The front office’s dizzying departure from reason (don’t @ me) that resulted in the sickening Gleyber Torres trade still sticks in my craw, but with therapy, counseling, and constant kissing of my replica World Series ring, that pain should ease with time.

The pitching in the farm system is where a potential dynasty could really be made or broken, as there are a host of arms that could either breakout or bust in the next 18 months. Dylan Cease, Oscar De La Cruz, Duane Underwood, Trevor Clifton, Jose Albertos, Bryan Hudson and Jose Paulino are all names you should get to know, among many others. If two or three of these guys break out and become middle or top of the rotation starters, this franchise could do something historically significant.

I wrote this last year regarding the financial side of the equation, and I think it is truer today than it was when I wrote it last year:

The financial side of the equation isn’t as easily parsed, but in many ways it mirrors the impressive foundation of players the roster now boasts. Wrigley Field is undergoing a tremendous revenue-generating overhaul, and will surely surpass the three-million mark in attendance this year. The front office has committed to maintaining flexibility even in their free-agent acquisitions, and the cost-controlled nature of the young core allows them the ability to pursue the top of the market.

While scoreboards, hotels, and other luxuries bring in the lifeblood of an organization known as cash flow, the real money is made in regional television contracts. While the existing contract that runs through the 2019 season provides them a respectable sum north of $60 million per year, the bottomless pit of resources is likely to come in time for the 2020 season, when payroll will explode as unthinkable amounts of cash land in the coffers from a newly-established Cubs-owned network. While the money itself won’t land until the turn of the decade, the knowledge of its existence will positively affect the ability of the front office to participate in the 2018 class of free agents, and also allow them the flexibility to aggressively pursue extending their existing homegrown talent.

We now know that the Cubs won the World Series, while also drawing 3.2 million regular season fans and destroying memorabilia sales records in the process. While no actual revenue number exists to tell us how much “extra” money they made in the playoffs, the final number is undoubtedly an unconscionable sum. So how did this front office react to the mind-numbing amount of money pouring into the coffers? With discipline, of course. They acknowledged that this free agent class was a flaming pile of bad ideas, and didn’t sign a single player to a multiyear contract.

What they are left with is a team that should be every bit as good as last year’s championship team, and an ace-up-their-sleeve knowing that roughly $80 million is coming off the books after this season. Now, that $80 million includes starting pitchers John Lackey and Jake Arrieta, but there is more than enough money to seamlessly replace those guys without missing a beat. The numbers you see above include estimated arbitration raises for the team’s many young stars, so virtually any free agent over the next few years is in play. Maybe Bryce Harper and Kris Bryant decide they want to play together again…doable! Perhaps Manny Machado decides he and Russell would look great on the left side of one infield…totally plausible! More interested in pitching? That Kershaw guy could be out there by 2018…just saying. The point is, a $200 million payroll is the absolute floor of what this team will be able to sustain by 2019, so the possibilities are almost limitless.

It is a singularly unique time to be a Cubs fan. I can say without any doubt whatsoever that we will never see a combination of young stars and financial flexibility this brilliant again, and I’d argue no fan of the Cubs ever has. There are only a handful of times any fan or writer could say they have seen a collection like this in all of baseball. It is imperative that we milk every ounce of joy out of this team while we can, as we’ll look back on these years as the best time of our collective lives from a baseball rooting perspective.

Lead photo courtesy Matt Kartozian—USA Today Sports

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2 comments on “Maintaining Financial Flexibility: 2017 Vintage – Part Two”

Excellent and very thorough. Thank you.

The ” Gleyber Torres trade still sticks in my craw, but with therapy, counseling, and constant kissing of my replica World Series ring, that pain should ease with time,” had me in stitches….

Isaac Bennett

Glad you enjoyed it!

:-) I am nothing if not petty.

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