A preliminary estimate of the Cubs payroll and luxury tax for 2023

Dec 5, 2022 - 3:00 PM

I’ve done articles like this for the past few seasons, taking an early look at where the Cubs stand payroll and luxury tax-wise, and this year ... well, it’s different.

Why? Because the amount of money committed to players to date for 2023 is far below any luxury tax that would have to be paid by the club. Like, more than 80 million dollars below the first 2023 luxury tax level of $233 million.

So you’d think the Cubs would have money to burn on good players. We all hope they’ll do so. Nothing’s happened so far — but then again, there are still lots of good free agents unsigned.

Here’s the 26-man roster that could be put together with players currently on the 40-man roster. Note that these are estimates; many of these players probably won’t wind up on the 40-man but it’s what we have to work with as of now. Further, there are 28 players listed with salaries — that’s because Jason Heyward’s 2023 salary counts against both the Cubs’ cash outlays and luxury tax even though he’s been released, and I have left Codi Heuer on the list even though he’ll likely start the year on the IL. That accounts for two more players (listed as “open spots”) being listed, both at the 2023 minimum of $720,000.

Estimates for arbitration-eligible players are from MLB Trade Rumors.

As is my custom here, I now turn the rest of this post over to BCBer The Deputy Mayor of Rush Street, who has put together some more detailed analysis of where the team stands. What’s below the line is his.

Besides talk about the Cubs’ 2023 payroll, feel free to use the comments here for Winter Meetings discussion. If the Cubs make any trades or signings, of course those will be covered separately on the front page.

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The 2023 Cubs Roster: Cost Certainty in the Era of Financial Flexibility (?)

TOP LINE: The Winter Meetings are just getting under way, the CBA negotiations are over and settled, and our BCB estimate shows that the Cubs have around $84 million in cap space below the initial luxury tax threshold to (theoretically) spend. But my opinion is that despite numerous signals coming from the team, Jed Hoyer isn’t planning to spend all the way up to the tax threshold this winter. My view of the landscape has the Cubs landing another couple of solid complimentary pieces as when he signed Marcus Stroman, Seiya Suzuki and Yan Gomes last winter, but I don’t see where “intelligent spending” is going to get a deal done with any of the big four shortstops on the free agent market this winter.

The Cubs finished 2022 with a player payroll of approximately $175 million, which included about $20 million for contributions to the players’ pension fund, the cost of 40-man roster players in the minors, and the Cubs’ equal share of the new bonus pool for pre-arb players. That was about $55 million under the tax threshold. In 2021, the Cubs spent around $37 million under the tax on players.

Notable changes since the end of this past season include Willson Contreras, Wade Miley, Drew Smyly and Rafael Ortega becoming free agents. Jason Heyward was released with the last year of his contract still on the books, and David Bote was outrighted off the 40-man roster to the Iowa Cubs, though his contract also remains on the books.

As for acquisitions, the Cubs traded for minor league IF/OF Miles Mastrobuoni from the Rays, claimed minor league 3B/2B Rylan Bannon off waivers and then lost Bannon on waivers to Houston last Friday. There have been no major league free agent signings yet.

+2 open spots $1,440,000: placeholder value until more players are added

Current Projected Roster: There are currently 36 players on the 40-man roster.

OF (4) Happ - Morel - Suzuki - Velázquez

IF (5) Wisdom - Hoerner - Madrigal - Rivas - McKinstry

C (2) Gomes - Higgins

SP (5) Stroman - Steele - Hendricks - Sampson - Wesneski

RP (8) Wick - Alzolay - Hughes - Estrada - Thompson - Leiter Jr - Rucker - Uelmen

40-man position players in minors (5): Miguel Amaya, Miles Mastrobuoni, Kevin Alcántara, Alexander Canario, Brennen Davis

40-man pitchers in minors (7): Javier Assad, Ben Brown, Codi Heuer (IL), Ryan Jensen, Caleb Kilian, Ethan Roberts (IL), Manuel Rodriguez

Notable non-roster players in minors: Matt Mervis, David Bote

So after talk from the Cubs, Tom Ricketts himself, and word passed along via the beat writers... fans were prepared to see the Cubs ready to make a major splash in the free agent market this winter, so you’d think Jed Hoyer has a baseball budget where he’s authorized to spend every bit of that cap space on bolstering the team for 2023.

I agree that Jed could spend that money. I just don’t think he’ll see doing that as an “intelligent” use of resources as he continues to re-build the team basically from scratch - once the entire core of the 2016 Champions left via free agency or trades.

To be brief, my take is that after dealing with the breakup of the last great Cub team, Hoyer doesn’t want to get into that position again, and he’d rather craft a team that rotates major players in and out on a regular basis. One where he’ll have money available to spend every off-season, not like the post-championship years we went through where there was very little space available to add players while remaining under the luxury tax.

(I’ll just note again that the tax threshold is an artificial spending constraint which the Cubs choose to follow, regardless of team revenues which are generally projected as being in the top 5 in baseball.)

BOTTOM LINE: So what I see is a team that can use a solid defensive center fielder, a corner infield bat, another catcher to pair with Yan Gomes, another mid-rotation pitcher, and two veteran relief arms to give the pitch lab kids some experience in the bullpen. That’s a minimum, and doesn’t really address the hitting/power needs. Or getting a “Marquee Player” for the Marquee Network.

I’m also looking at 2024, when the Cubs will have another $47.5 million or so to spend (Hendricks - $13.875 million, Happ - $10.6 million, and Heyward - $23 million all come off the books.) Marcus Stroman ($23.7 million) and Yan Gomes ($6 million) might or might not come back.

If the Cubs have $84 million in cap space this winter, I’m thinking Jed Hoyer may want to keep $20-30 million of that held back to bolster his 2023-24 winter budget (under the luxury tax), where I see it more likely that the team may be ripe for a Jon Lester-ish big free agent move. That’s why I’m thinking of the offseason budget as closer to $60 million than $84M. Of course, that’s just my read on the situation, we’ll see what Hoyer does in the weeks to come.

One last thought to begin the off-season, if you have $60 million... or even $84 million (in annual average contract value - AAV) to spend, what might that buy you? Allow me to point you to Fangraphs’ crowd-sourced predictions for their top 50 free agents.

Right at the top, the crowd sees Aaron Judge scoring a deal with a $37 million AAV. He’d surely look good hitting at Wrigley Field, but that’s a big chunk of a $60 million budget. As is Carlos Correa at $32 million a year, if Hoyer is willing to go that high, or that long in years for ANY player.

But does anyone want to try and help me find a center fielder, shortstop, corner infielder, catcher, mid-rotation starting pitcher, and two eighth/ninth inning relievers on that budget?

Also, Hoyer might want to extend Nico Hoerner. Al suggested a deal here last August that prices out to an AAV of around $11 million, which would cost an additional $8.8 million off the projected 2023 budget.

We’ll be back at times through the offseason with updates, and of course to discuss events as they transpire.