I’m admittedly a bit behind when it comes to addressing Crane Kenney’s comments from this past weekend on 670 The Score’s “Inside the Clubhouse,” a consequence of heading home for a high school reunion. However, Brett Taylor at Bleacher Nation was able to transcribe a portion of that interview. Specifically, he focused on how the Cubs apparently still have a lot of money from this year’s baseball budget that will roll over to next year and perhaps beyond.
Rather than getting into much about how the Cubs’ president of business operations is saying the quiet part out loud here or questioning the veracity of the repeated claims about how much revenue really goes into the on-field product, I want to dig into the why. More specifically, I want to examine a few of the potential reasons for Jed Hoyer and the front office running under budget while playing in one of the two weakest divisions in MLB.
First, it’s good to establish a little context. For those of you who would like even more, the full interview is embedded below.
“As I said, all the resources that weren’t used that would’ve pushed us up the ladder on the payroll chart this year will go into next year’s budget,” Kenney explained. “So I feel really lucky that Tom has never said, ‘No, I don’t want to spend.’ It’s whatever’s in the system goes into our baseball operations department to try and win.”
Citing their frequent concerts — Dead & Company played this past weekend — and the new sportsbook that will be completed in time for next season, Kenney touted the organization’s ability to generate revenue. The Cubs have reiterated ad nauseam that all excess profits are being channeled back to the baseball budget, though it’s impossible to know just how true that is without seeing the books.
By a show of hands, how many of you actually believe that claim? Interesting, looks like a few folks out there might be interested in a bridge I’ve got for sale. Please be sure to leave a comment with your contact info so I can get you some more details.
“You obviously take care of your fixed expenses, so the labor and other expenses that go into running our operation,” Kenney said. “And we’ve been really fortunate the Ricketts family, they’re not a public company, they don’t have to satisfy shareholders. They let us put every dollar that’s not used in running the business back into the payroll.
“So as you point out, we have a lot of money left at the end of this year that we need to spend. All of that will roll over for next year. And again, we trust our baseball operations to make good decisions with those proceeds and they’ll either use them next year or down the line. But again, they stay inside the system. And I get it’s boring, I keep saying this every year, but it’s a closed loop. When the time is right, we’ll spend those resources to build a great team.”
That last line echoes what Jed Hoyer said on the same airwaves just a few days earlier, which I don’t think should be chalked up to coincidence. But the problem is that it doesn’t line up with what either Hoyer or Tom Ricketts said during the offseason, when both stated publicly that the necessary resources would be available to build a competitive team right away.
So how did the Cubs go from “we certainly will spend this winter…to be competitive [in 2022]” to rolling over “all the resources that weren’t used” into the budget for ’23? Here are five possibilities and thoughts on the more comprehensive reality.
They lied during the offseason
We obviously don’t know how much money is going to roll over, so it’s possible Kenney is referencing such an insignificant sum that it wouldn’t have made a difference. Except that doesn’t really hold water because the Cubs did spend to add Seiya Suzuki, Marcus Stroman, Yan Gomes, and Wade Miley, among others. While the roster was never going to be capable of winning 95 games, better health and a little good fortune would have netted around a .500 record.
The fact of the matter is that the Cubs did spend last winter, just not enough to have truly put them in contention. We’ll add a little more color to that a few items later, but I don’t they were outright dishonest as much as they were presenting a best-case scenario that was very unlikely to play out.
The rollover is based on current salaries
Though this would go against everything Kenney said about all the extracurricular activities raising lots of money, it’s possible he’s simply looking ahead to the trade deadline and the money that will fall off as players are moved. I think this could very well be part of it, particularly if you consider that they might have factored in the possibility of extensions as part of the budget.
From the simplest standpoint, you can look at Miley, Smyly, and possibly Willson Contreras and/or Kyle Hendricks as baseball expenses that will no longer be a factor next year. That’s not really the same as “rolling over” budgeted money, but I’m not sure we should count on Kenney to be the most forthright person on the planet.
Failing to adjust to lockout timing/getting cute
This is almost certainly in play, especially when we consider how Hoyer discussed spending “in the most intelligent fashion possible.” The Cubs went into the offseason hunting for bargains and thought they got one in Stroman just before the lockout. But that really just fell into their lap as a massive November spending spree saw free agents flying off the shelves in anticipation of a transaction freeze.
Once the lockout ended, the Cubs appeared to have misjudged the market and were trying to “thread the needle” on what they considered Goldilocks deals. Hoyer had talked several times about not wanting to anchor the payroll to a massive contract, but they seemed likewise unwilling to work something out for a very short term.
Though I almost made this its own category, I think there’s an aspect of getting too cute or trying to be perfect that colors the big picture. Along with free agents who weren’t signed, the Cubs had opportunities to make deals for “bad” contracts that would have seen them getting top prospects in return. The most prominent of those was Eric Hosmer, and a deal was apparently closer than just speculation.
Dialing your risk tolerance down to one of the lowest settings limits your chances to get burned, but it also makes the path to success narrower and longer.
Pursuit of Carlos Correa
More specifically, we can look at the market’s top shortstop as an example of the Cubs being unwilling or unable to make the necessary gambles to be competitive. There were reports that they were trying to convince him to accept a seven-year deal at a time when it was still believed he was seeking 10 or more, then came a rumor that they had offered $30+ million annually.
Correa instead opted to accept a three-year deal with Minnesota that could earn him $105 million, but that also has opt-outs after each of the first two seasons. While I wrote at the time that it didn’t seem to make sense for a Cubs team that would need a little more time certainty, the Twins currently sit in first place in the AL Central. If the goal was to spend on a winner while limiting long-term commitment, Correa sure seems to fit the bill.
If there’s any truth at all about the Cubs being willing to go to $30 million AAV on Correa, they absolutely have money to roll over. Now, the above rumor is more than a little suspect because it indicates that Correa’s previous agents failed to pass the offer along to him and that the Cubs never reached out to Scott Boras following a change in representation.
Either way, the offer would have come prior to giving Suzuki $17 million a year. Put it all together and you can see how there might be another $13-15 million just sitting there. It’s not a stretch to believe Hoyer was given a $160 million baseball budget and that the surplus isn’t being used at this point.
They’re being dishonest now
You could also choose to believe Kenney is full of it and the claim of more money for next year is just a ploy to keep fans interested at a time when apathy is nearing an all-time high. Then there’s the idea that a budget surplus can’t really roll over unless it’s comprised of liquid cash that can be held onto and added to another, similar block.
But since most budgets are simply a measure of what a company/person is willing to spend, coming in under budget just means spending less. It’s not like MLB teams get a credit against the competitive balance tax for avoiding it. Who knows, maybe Ricketts maintains a Scrooge McDuck vault where all those wheelbarrows of cash are dumped for future spending.
The real answer is that it’s probably a mix of everything above, though I’ll allow you to apply your own assessment of the degree to which the organization is being honest. Hoyer has talked about threading needles and spending intelligently, all of which indicates slim margins and the need for impeccable timing. From the outside, it appears as though the Cubs’ timing was poor and the resultant margins they created were far too slim to provide a buffer against reality.
That has led to a team on pace for roughly 100 losses and repeated explanations about how the organization’s money works. Now I guess we just sit back and hope we never have to hear those explanations again.