Bryce Harper, Salary Caps, and the New @Cubs TV Network

With Spring Training having started and Bryce Harper and Manny Machado both remaining unsigned, players are grumbling and fans are wondering.  A few thoughts:

Bryce Harper is a Scott Boras client, and Scott Boras clients don’t sign early.  Greg Maddux was a Scott Boras client, and when he signed with the Cubs in 2004, he signed the day before pitchers and catchers were to report.  Now that might have been because Maddux was hoping to sign with somebody else, or it might have been Scott Boras.  I don’t know.  Still, the situation with Bryce Harper this year is getting to be ridiculous.

What one needs to understand about baseball free agents is that they are not like free agents in, for example, basketball.  First, the salary structures in basketball and baseball are different, but more on that later.  Second, you can’t be sure one free agent is going to turn a team around in baseball.  There are free agents in basketball that can just about guarantee the team will make the playoffs.  It’s not that way in baseball.

While baseball doesn’t have a salary cap (like football, basketball and hockey), it has a “luxury tax.”  And the important thing is that the way the luxury tax has changed over the years and the way baseball has changed, has given baseball something very similar to a salary cap.

It used to be that, if you went over the luxury tax threshold, you would have to pay a penalty; i.e., you would have to pay money to the league.  The more you went over the threshold, the higher the amount you had to pay.  This wasn’t fun, but it was just money, and if you were in a big enough market, you might be willing to do it.  Especially since, back then, there were teams that thought they could win with enough free agents.

But the luxury tax has changed in a couple of ways.  First, the amount of the penalty has gotten higher.  Perhaps more importantly, however, if a team exceeds the luxury tax threshold by too much, jas (unless they are in the top worst teams, in which case their second pick would move down ten slots.  This is a big deal, especially with the success teams have had recently with building winning teams through draft choices instead of free agents (see, for example, the Chicago Cubs in 2016).  Lower draft choices is a big enough deal that teams want to make sure they do not exceed the threshold by so much that this happens. 

Which means that, in spite of what the players union thought, baseball is getting very close to having a hard salary cap – or at least a hard-enough salary cap.  Which is going to be an issue come the renegotiation of the agreement between the players and MLB after the 2021 season.  But at least we have three years before that.

Now, what does all of this mean for the Cubs and why they haven’t signed a big name, big dollar free agent this year?  The Cubs are already at the luxury tax threshold.  Not only did they spend big money on free agents last year (see Yu Darvish, Lance Morrow, and Tyler Chatwood), but they have a couple of big-dollar free agents already on the roster (think John Lester and Jason Heyward).  Plus the other guys are earning more money as they get more service time.  (See here.)

Which means if the Cubs spent money on a big-name free agent this year , they would either have to get rid of one or more of the expensive free agents they already have (without paying any of the salary he is getting; who wants Jason Heyward for $20+ million a year) or go way over the threshold and both pay increasing penalties and possibly get lower first round draft choice. 

Which is also relevant when it comes to the new Cubs TV network.  The idea of the Cubs having their own TV network was, as Crane Kenney put a long time ago, so he could take a wheelbarrow full of money into the baseball side of the team.  Which he might still be able to do.  But the problems of exceeding the luxury tax threshold are such that I really wonder if the Cubs are going to use that wheelbarrow full of money to buy more free agents.  (See above.)  Which means the Rickettses will have a wheelbarrow full of money (i.e., your money), but no way to spend it on the team in terms of salaries for major league players (at least that they are willing to do).  In other words, the fans will be out a wheelbarrow full of money, and the Rickettses will have a wheelbarrow full of money.  And everything else will be pretty much the same.