As has been frequently reported here and elsewhere, not to mention by members of the front office, the Cubs are not likely to be serious players at the top of the market. It’s also been reported that they’re “in” on Bryce Harper and they’re expected to meet with him either prior to or during the Winter Meetings in his hometown of Las Vegas next week.
Theo Epstein said during the GM Meetings that nothing off table, but as our Tom Loxas wrote recently, the Cubs would have to get creative in order to make something work. So could a template for that creativity lie in the rotation of Harper’s former team?
For the Nationals, who were reportedly operating under their own payroll restrictions, signing lefty Patrick Corbin to a six-year, $140 million deal effectively eliminates the possibility of bringing Harper back. But it also gives the Nats three top-flight starters, all of whom have some degree of salary deferments built into their deals.
Half of the seven-year, $210 million contract Max Scherzer signed prior to the 2015 season is deferred in the form of $15 million payments on July 1 of each year from 2022-28. Similarly, Stephen Strasburg‘s seven-year, $175 million extension includes $10 million annual payments from 2024-30. While the specifics of Corbin’s deal aren’t yet known and the deferrals are reportedly smaller for a shorter period of time, the trend continues.
Strasburg’s contract should be of particular interest to Cubs fans, and not only because it’s at least partially responsible for Jake Arrieta‘s departure. And as one of the rare Scott Boras clients who inked an extension prior to reaching free agency, the flame-throwing righty offers a sliver of hope that Kris Bryant could eventually do the same. Of course, the combination of Strasburg’s health and role created a circumstance more conducive to the extension.
But those are just some individual corollaries, what we’re really concerned with here is more of the concept of deferrals and how it could aid the Cubs. The first thing we need to be aware of is that pushing back big chunks of contractual obligation does not decrease the deal’s average annual value, since that would represent an obvious circumvention of the competitive balance tax. So the AAV is still the total guaranteed money over the length of the actual contract.
The benefit to the player is pretty obvious: locking in his income as far into the future as possible. But what about the team? If they’re still on the hook for the same luxury tax hit, why not just rip the band-aid off right away? Because by spreading out their financial responsibilities, they improve their immediate bottom line by increasing liquidity. And since the future payments are fixed, inflation effectively reduces their actual impact over time.
If you’ve been keeping score at home, you know that the Cubs are imposing a cap on the 2019 payroll. Exactly what that limit is and why it exists we don’t know, but the best bets are the $246 million threshold for the highest tax penalty and issues with their new broadcast deal. It’s also possible the abbreviated postseason run meant a slower turn on the Ricketts’ $750 million Wrigleyville investment.
Not that the Cubs aren’t still raking it in, because they are. Just maybe not to the degree they thought they’d be, thus preventing them from lustily investing an additional $350 million into an individual rather than another bar. With that in mind, maybe going the Strasburg/Scherzer route and deferring a boatload of money would allow them to pursue Harper more readily. Hell, maybe they can go full-on Bobby Bonilla and spread the payments out over 25 years. I’m kidding there, but only a little.
Such a move would not be without precedent, either for the Cubs or Harper’s camp. Jason Heyward, who was also the most coveted right fielder on the market, agreed to a unique contract structure that included two opt-outs and a $20 million signing bonus that pays out in $5 million annual installments starting in 2024 (unless he opts out, in which case the bonus is paid immediately). So, you know, just double that whole thing and maybe shift an extra $5 million to the deferments and there you go.
That’s overly simplistic, but it’s not a stretch to imagine how a deal of $350 million for 10 years could work. Harper gets a base salary of $15 million per with a $50 million signing bonus that’s spread equally over the decade. Then he gets $15 million annually for another decade after the conclusion of the deal. The Cubs would still be on the hook for the luxury tax consequences, but that cost — perhaps as much as $20 million depending on other moves — would be nearly a wash with the deferred money.
Increasing thresholds and existing contracts falling off the books will change the calculus moving forward, then there’s a whole new CBA coming after 2021. And by the time those deferments come due, Hotel Zachary and its myriad Ricketts-owned neighbors should be churning out more than enough cash to foot the bill. Oh, plus the TV deal. That’s the Cubs’ side of things, so how about Harper?
Boras was already mentioned earlier in terms of Scherzer’s deal, but the bombastic super-agent also reps Scherzer. And Harper, of course. And Bryant. And Addison Russell, except that’s a whole ‘nother ball of wax. Point being, Boras is clearly very comfortable negotiating non-traditional pay structures when they make sense for his clients. And for a Harper deal to make sense for the Cubs, it sounds like creativity will have to rule the day.
The Cubs’ reported reluctance to spend the same kind of “stupid money” Phillies owner John Middleton boasted about isn’t just a calculated leak and it’s not some sort of leverage mechanism. Well, not totally. Those close to the organization, up to and including beat writers and rival teams, are all pretty much in agreement that the money talk is legit. At the same time, we’re talking about Theo By-God Epstein.
Patrick Mooney of The Athletic wrote much of the same in a piece about the Cubs’ plans concerning Harper, noting that “Ricketts and Epstein might be the only ones who know about [plans to go big].” I still don’t think they’ll be aggressive enough for a meaningful pursuit of Bryant’s buddy. But maybe, just maybe, things shift just so and the Cubs could spend stupid money in a smart way.