Cubs executives met with Bryce Harper and agent Scott Boras during the Winter Meetings, holding discussions that reportedly were around three hours in length, Gordon Wittenmyer of the Chicago Sun-Times reports. No deal appears to be close between the two sides, though the most intriguing detail stemming from the meeting is that president of baseball operations Theo Epstein asked Harper and Boras to check in with the Cubs before agreeing to a deal with another team, in order to give the Cubs more time to try and create payroll space for the free agent slugger.
We’ve heard all offseason long that the Cubs have little in the way of spending capacity, and outside of modest deals to sign Daniel Descalso and Kendall Graveman, there hasn’t been much activity at all coming out of Wrigley Field. The decision to exercise Cole Hamels’ club option is still the Cubs’ biggest move this winter, and that transaction required a corresponding move (trading Drew Smyly to the Rangers) in order to clear some money off the books.
The Cubs certainly have their share of high-priced contracts that haven’t yet worked out — Jason Heyward, Yu Darvish, Tyler Chatwood, Brian Duensing, Brandon Kintzler, and Brandon Morrow stand out as players who delivered subpar seasons in 2018, either due to injuries or just a poor performance. Of course, those same reasons present major obstacles in finding a trade partner for any of those names. Adding to the team’s difficulty is that the Cubs firmly intend on being contenders in 2019, which is why they aren’t seriously considering dealing the likes of Kris Bryant or Anthony Rizzo.
Some creativity will certainly be required if Epstein and his front office plan to make a serious run at Harper, considering that Boras has every intention of landing a record-setting contract for the outfielder. Chicago could certainly explore the type of luxury tax-reducing salary dump trade that the Dodgers have become experts at in recent years, most recently their seven-player swap with the Reds just two days ago. That very deal has been rumored to be part of the Dodgers’ own pursuit of Harper, so the Cubs could already be behind the Dodgers in that regard, though Harper (like most major Boras clients) isn’t expected to sign until later in the offseason.
As per Roster Resource, the Cubs are currently on the hook for a payroll in excess of $220MM next season, which comes with a projected luxury tax price tag of just under $234.5MM (reminder: the luxury tax payroll carries some different calculations than solely the dollar figures on the MLB payroll). This puts them in position to exceed the $206MM Competitive Balance Tax threshold, and thus pay a tax penalty of 20% of every dollar on the overage. This is the “first-timer” rate for any team that exceeds the threshold but stayed under the line in the previous season. If the Cubs’ tax bill were to exceed the $246MM mark next season, they’d face a larger financial penalty as well as a ten-spot drop in the draft order for their highest selection in the 2019 amateur draft. (The Red Sox faced this penalty for their $40MM+ overage last season.)
The Cubs have owed luxury tax just once in their history, as crossing the CBT threshold in 2016 resulted in a $2.96MM tax bill. Needless to say, this was a small price to pay considering that the Cubs ended their World Series drought that season. As MLBTR’s Tim Dierkes has observed in the past, the actual dollar amount surrendered for these luxury tax payments is a veritable drop in the bucket for a big-market team, so there isn’t any major financial downside for a team to pass the threshold once, or even multiple times.
The Cubs are also expected to have even more revenue on hand in the form of a new TV contract, though it could be that ownership wants to have that money firmly in place before making any future financial commitments. 2019 is also the last year of guaranteed salaries for Hamels, Morrow, Kintzler, Duensing, Ben Zobrist, Steve Cishek, and Pedro Strop, so quite a bit of payroll money will be available next winter to help in ducking under the tax threshold, or at least avoiding the higher $40MM+ overage penalty.