Jake Arrieta did things in Chicago that had only been replicated by one pitcher ever – Bob Gibson. His stretch from July of 2015 through the end of June of 2016 was the second most dominant stretch of pitching ever. Jake is a huge reason the Cubs have been to three consecutive NLCS’ and a giant reason they won the World Series in 2016. His legacy will ALWAYS be closely tied to the Chicago Cubs.
As much as he has done for the Cubs, and what the Cubs have done for him – it just isn’t smart baseball finance to re-sign Jake.
I’m not going to sit here and say that he isn’t worth it either. In fact, I think he will be worth every single penny he can squeeze out of an organization. If he gets a $150, $175, $200, $250 million deal – it will be worth it.
Sure he will be a 32-year-old pitcher come opening day 2018, but Jake is one of the most physically fit players in baseball. His diet would cause Olympic bodybuilders to fire their nutritionists out of pure fear of its strictness. It is reasonable to believe that Jake *can* pitch well into his late 30’s, however you wouldn’t be wrong to question his effectiveness towards the end of a six or seven-year deal.
So, if I am saying Jake is worth it, and it sounds like a good idea to sign him… why would I say it doesn’t make sense? Money.
But of course, money is the issue, right!? The Cubs have tons of players who will be expecting large salary bumps in the coming years. By 2023 the Cubs could have nearly $150,000,000 tied into eight players – not including Jason Heyward.
If you were to add Jake’s potential $25 million to this mix, the team would have a salary around $200,000,000 with these eight, Jake, and Jason. There would be another 15 roster spots to fill out for their 25-man roster as well.
Now it isn’t like the Cubs wouldn’t be able to afford it, they certainly can. The organization is printing money at 1080 W Addison (or 3721 N Clark). By this time the ever-expected TV deal will be in place making the team millions more per year. With team support and other revenues, this will jump up the most valuable franchise lists in all sports.
So why would signing Jake not be a good idea? It comes down to MLB rules really. Several intertwined rules.
MLB Luxury Tax
The biggest factor the Chicago Cubs have to weigh is the MLB Luxury Tax. Come the 2023 season, the luxury tax will be an estimated $214,000,000. Signing Jake, and retaining the above players, the team would have roughly $14 million to spend on the rest of their roster. If the Cubs surpassed the luxury threshold, the team would face a 20% on the dollar tax.
Now it isn’t like the Cubs wouldn’t be able to afford a 20% tax. But it becomes a steep penalty in years two, three, and beyond. Third-time offenders would face a 50% tax on the dollar. For an example, the Cubs paid $2.96 million in 2016 (17.5% based on the previous agreements), had they surpassed the luxury tax in 2017, their penalty would have been 40%, in 2018 they would pay 50% if they violated the tax again.
There are added penalties as well. Like if a team surpasses the tax by $20 to $40 million, they would have an additional surtax of 12%. Above $40 million they would pay an additional 42.5% tax for first-time offenders, and 45% for any subsequent offenders.
So basically this becomes real money. The Cubs are an organization rich in resources, on and off the field, but they aren’t the type that just loves to give away free money (see rooftops).
This isn’t the only penalty for the luxury tax either…
QO and free agents
Under the current labor agreement, teams that surpass the luxury tax aren’t just hit financially… they are hit from the talent pool as well.
Follow the scenario…
A team offers a Qualifying Offer (QO) to one of their players that will enter free agency. Team’s know 99% of players reject this offer, electing to pursue long-term agreements in free agency. Teams offer the QO because if that player signs elsewhere, they will receive draft-pick compensation.
The current agreement has changed the rules a bit because guys like Theo Epstein have taken advantage of the rule to make their organizations better. The strategy wasn’t cheating, they just found a way to manipulate the rules to their advantage. Under the previous agreement, a team would gain a first-round sandwich pick (after the first round, but before the second round) in the subsequent draft.
Now the highest pick a team could receive is a pick after the competitive balance round between the second and third rounds of the draft. Quite a bit of a difference. But that isn’t the end of it…
Teams that surpass the luxury tax would lose both second and fifth highest picks if they signed a player which rejected a QO. They will also lose $1 million from their international bonus pool, which with the Shohei Ohtani talks, we know is rather important.
If we flip things, any Cub that would sign elsewhere after rejecting a QO would only return a draft pick after the fourth round. So the Cubs could lose a high-value player and only receive essentially a fifth-round pick in return.
I am sure when Theo Epstein says they would love to bring Jake back, he is being earnest. But this is also why the Cubs will not go more than four-years for the hurler. Anything longer severely inhibits their spending in the future. Not because they can’t foot the bill, but because signing Jake Arrieta in the winter of 2017 causes the team serious issues when this current roster is ready to be turned over.
There would be little chance the Cubs played in future offseasons. They would be handicapped in subsequent drafts. They could lose out on future international players. Signing Jake Arrieta is shortsighted, not only because there is a need now, but the future needs of the team would be severely handicapped.
So believe Joe Maddon when he says “Jake’s probably gone.” It isn’t because the Cubs wouldn’t love to have a 200 inning arm in the rotation. It isn’t because the team couldn’t pay him $25 million over six years. It is because the financial issues a long-term deal with jake will cause in the future.