YOUR 2017 CHICAGO CUBS, WELL MAYBE... (Part Two)

Yesterday we started building the roster by looking at some of the rules in layman terms. We discussed minor league contracts, major league contracts, minor league options and waivers in Part One. Today we’ll discuss:

Rule 5
Competitive Balance Tax
Minimum Salaries
Pre-arbitration
Arbitration
Free Agency

RULE 5

Many of these rules are designed to keep some level of fair competition between the 30 teams. Without some of these rules, teams could hoard talented players at the minor league levels. One rule that keeps players from being stored in the minors is know as Rule 5. It puts a limit to the number of years a drafted player or internationally signed player can remain in the minor leagues. After a player has reached this limit the team has a few options. The only way a team can keep that player is to sign them to a major league deal and put them on their 40 man roster. If they don’t, these players become eligible for another league draft, commonly called Rule 5 Draft. The other option is to waive them out right.

Hector Rondon and Caleb Smith were acquired by the Cubs via this Rule 5. Well actually Smith was drafted by the Milwaukee Brewers from the New York Yankees and the Cubs then traded the Brewers for Smith. However, Smith is still under the Rule 5 stipulations. This means if the player is not part of the 25 man roster for the entire season he must be offered back to his original team. If Smith doesn’t make the 25 man roster, he will likely go back to the Yankees.

COMPETITIVE BALANCE TAX

In addition to Rule 5 one of the main ways to keep rich teams from hoarding talent, is the Competitive Balance Tax or Luxury Tax. There is no salary cap in Major League Baseball. However, MLB has put a limit on how much a team can pay out in players’ salaries. In 2017 that limit is $195M, in 2018 $197M and in 2019 it jumps to $206M. In 2016 the Cubs allocated just over $205M and thus had to pay additional funds for exceeding that limit. Most teams stay under the limit, but it hasn’t stopped big market teams from spending on talent. The Boston Red Sox, from 2004 to 2007 exceeded the limit all four years. Recognize those years? The BoSox won the World Series in 2004 and 2007 all under the watchful eye of General Manager Theo Epstein.

Here is a link to a more detailed description by the MLB:

http://m.mlb.com/glossary/transactions/competitive-balance-tax

MINIMUM SALARIES

Once a player is added to the 25 man roster the number of seasons is tracked. These days on the 25 man roster is referred to service time. Once a player is established on a major league roster they are typically under team control for six years. Because the way these days are calculated there can be some slight of hand in controlling a player, Kris Bryant anyone? When the 2016 MVP, oh and the 2015 Rookie of the Year, was assigned to the 25 man roster, 2015 did not count toward one of his six years. Bryant is under team control from 2016 to 2021, at which point he can become a free agent. The league minimum salary for 2017 is $535,000, which is what most first year players receive.

PRE-ARBITRATION

Year two of a players MLB career is considered a pre-arbitration year. Teams and players typically agree to a salary amount for one year. A player usually has three years of pre-arbitration, signing one year deals with increases based on performance. As mentioned earlier, Addison Russell received such an increase. It was actually a significant increase making $527,000 in 2016 and now he will receive $644,000 in 2017. In addition to Bryant, Javier Baez, Willson Contreras, Carl Edwards, Kyle Hendricks, Tommy La Stella, Mike Montgomery, Kyle Schwarber, and Matt Szczur will all go through this one year signing process. Of course expect Bryant to get as much as $800,000 while La Stella might not get much above the league minimum.

UPDATED MARCH 9 – Cubs signed new one year deals with all their pre-arbitration players, but the terms of only a few have been disclosed.

Javier Baez – $609,000
Kris Bryant – $1,050,000 (largest pre-arbitration deal in history)
Kyle Hendricks – $760,050
Addison Russell – $644,000
Kyle Schwarber – $565,500

ARBITRATION

Bryant and Russell are also exceptions to the common three years pre-arbitration and three years arbitration. This will be their second and last year of pre-arbitration. At the end of 2017, they along with Hendricks will now be eligible for arbitration. All that means is if the player and team can’t agree on a one year deal an arbitrator will assign the salary. Theo Epstein and Jed Hoyer are known for avoiding arbitration and signing their players to what both sides agree is fair compensation based. All four arbitration eligible players signed with the Cubs without an arbitrator. Pedro Strop actually signed an extension, as you may have heard. Instead of signing for one year, the Cubs signed him for two years, making him eligible for free agency in 2019, not 2018.

FREE AGENCY

Justin Grimm agreed to terms in his first year of arbitration, so has two more years of this process before he becomes a free agent. Hector Rondon agreed in his second year, with one more year before free agency. You can see all this information at websites like this one by Spotrac: http://www.spotrac.com/mlb/chicago-cubs/payroll/

Meanwhile the hot topic is Jake Arrieta, who agreed to one more year with the Cubs, hoping to test the free agent market in 2018. It was possible Arrieta and the Cubs could have agreed to an extension. The key word being agreed. The report is that Arrieta would like a top end deal of 7 years for $200M and the same report is stating the Cubs do not want to commit to that number of years. So in 2018 Arrieta will be a free agent,which means he can sign a contract with any team.

2018 FREE AGENTS

In fact there are several Cubs that will become free agents in 2018. That list includes Brian Anderson, Wade Davis, Jon Jay, John Lackey, Miguel Montero, and Koji Uehara. Which totals about $60M in salary. In addition to Arrieta, the Cubs will have to consider whether or not to re-sign these players too. It is likely only two or three, if any, will be re-signed. I would say the front runners are Davis, Anderson, and Uehara. I can see under certain circumstances that Jay and maybe Lackey are back. Arrieta is the real wild card, but many think he’s gone and it is very likely Montero is also gone. If you’re interested in free agent pitchers from other teams, again Spotrac is an excellent resource: http://www.spotrac.com/mlb/free-agents/2018/starting-pitcher/

Tomorrow we’ll construct our rosters, using this information, as well as player performance levels.