The purchase of the Chicago Cubs by the Ricketts family finalized in October 2009 was heralded as a new era in Cubs baseball. Many of us - myself included - believed that ownership by a family invested in the team's fortunes as opposed to by a corporate conglomerate would elevate the franchise to greater heights, particularly given the family's supposed financial wherewithal.
The new ownership was expected to commit substantial resources to the on-field product in addition to renovating Wrigley Field.
Needless to say, things haven't gone exactly as planned. While the Yankees celebrated the signing of Japanese righty Masahiro Tanaka this week, the major Cubs news involved the filing of a lawsuit against the team by rooftop owners across the street from Wrigley Field. The on-field product has receded to depths previously unseen even by the Cubs. Recently fired hand-picked manager Dale Sveum compiled the worst winning percentage in Cubs history by a full-time manager who oversaw the team for at least two seasons. Much of the promise of the Theo Epstein/Jed Hoyer/Jason McLeod hiring has yielded to despair as the team has compiled just a 127-197 record in two years, a stunningly awful .392 winning percentage.
Just how bad has it gotten? The Cubs 127-197 is worse than the Boston Red Sox's records were good in their two World Series-winning campaigns under Epstein, Hoyer, and McLeod: the Red Sox combined to go 194-131 (.597) in 2004 and 2007.
Perhaps just as importantly, Cubs attendance is down from a franchise-high 3,300,200 in 2008 all the way to a 15-year low of just 2,642,682 in 2013. This comes as the Cubs prepare to negotiate a substantial portion of their television contract and as the club seeks city support in green-lighting their Wrigley renovations.
But not all is lost. The team has amassed an enviable collection of amateur talent, acquiring prospects through trades, the amateur draft, and international amateur free agency in Latin America and East Asia. The core that many hoped would be ready in 2014 looks more likely to be established in 2016, but it is in place nonetheless.
However, the team needs to supplement that core with MLB-ready talent. This reality made the Tanaka whiff that much more damaging. As the team now looks to next offseason to add significant pitching talent - and with a bumper crop of free agent pitching available next winter including Cincinnati's Homer Bailey, Detroit's Max Scherzer, Cleveland's Justin Masterson, Boston's Jon Lester, Kansas City's James Shields, and Japan's Kenta Maeda - fans are right to wonder if the new ownership actually has the financial might to compete in the marketplace.
With that in mind, I thought it would be a useful and enlightening exercise to examine the team's player personnel spending over the past few years. This does not consider capital improvements - like the new Dominican academy, the Cubs portion of the new Spring Training facility in Mesa, and the Wrigley Field improvements - or other sources of spending such as front office costs.
The Methodology
I broke spending down into four categories: the Opening Day 40-man roster, international free agent bonuses (and salaries in some cases), amateur draft bonuses, and dead money. I treated signing bonuses as actually paid in the year of contract. I also assigned at least a then-league-minimum salary to every member of the 40-man roster.
There are imperfections with this approach. For example, it doesn't consider mid-season transactions that add salary - like the acquisition of Rich Harden and Chad Gaudin in 2008 - or those that ship out salary - like the trade of Scott Feldman to Baltimore in 2013.
There are some invaluable resources out there, most notably Cot's. Perfect Game also provides signing bonuses for picks in the first 10 rounds of the amateur draft. For both the draft and international free agency, I compiled all bonuses of at least $100K then made an estimate of the additional amount spent in each avenue beginning with $1.5M in 2007 and increasing $100K each year. While this likely misstates the actual spending in any given year, it should approximate the totals.
Here is a year-by-year snapshot dating to 2007 - the final year of Tribune Co. ownership - with the annual spending in each category through the estimated 2014 season.
2007
40-man: $112,633,999
International Bonuses/Salaries: $2,720,000
Draft Bonuses: $6,307,250
Dead Money: $0
TOTAL: $121,661,249
2007 is an excellent jumping-off point as it tracks the ownership changes and coincides with the beginning of the most successful two-year stretch for the club in decades. The spending spree prior to the season that saw the addition of Alfonso Soriano, Ted Lilly, Jason Marquis, and Mark DeRosa to a strong, in-prime core of Carlos Zambrano, Derrek Lee, Aramis Ramirez, and Ryan Dempster pushed the payroll up into big boy territory. However, minimal spending on amateur talent - I'm quite confident that my generous $1.5M estimates on both categories propped up even smaller numbers - portended of the prospect dearth that would plague the franchise for the next half decade or longer. That number includes a $3.2M bonus for Josh Vitters. The only larger bonuses in the 2007 draft went to #1 pick LHP David Price ($6M), #2 pick 3B Mike Moustakas ($4M), #5 pick C Matt Wieters ($6M), #27 pick RHP Rick Porcello ($3.58M), and #30 pick RHP Andrew Brackman ($3.35M). It's not as if the Cubs were terribly cheap, yet they clearly had no adopted the spending approach of the Tigers, Red Sox, and Yankees who loaded up on mid-round talent like Will Middlebrooks and Anthony Rizzo.
2008
40-man: $130,621,000
International Bonuses/Salaries: $3,740,000
Draft Bonuses: $6,004,500
Dead Money: $0
TOTAL: $140,365,500
2008 saw a sizable jump in overall spending, almost exclusively from expenses at the MLB level. The most notable salary increases came from Kosuke Fukudome's free agent deal and extensions for Ryan Dempster and Carlos Zambrano. Amateur spending - particularly internationally - continued to lag behind that of major market clubs, although few of us cared as the team enjoyed its most successful season since 1945 playing to a .602 winning percentage.
2009
40-man: $139,226,500
International Bonuses/Salaries: $4,725,000
Draft Bonuses: $4,894,700
Dead Money: $2,653,279
TOTAL: $151,499,479
Payroll increased nearly $10M over the 2008 spending total, yet the team struggled through an 83-78 year that spelled the beginning of the end for Lou Piniella's tenure. The team actually made some noticeable international signings in the final year before the Ricketts family took control.
2010
40-man: $142,874,000
International Bonuses/Salaries: $6,975,000
Draft Bonuses: $5,136,000
Dead Money: $1,500,000
TOTAL: $156,485,000
The spending transition began in 2010, although it wasn't immediately clear based on the MLB payroll. The team sank to a 75-87 record despite the all-time high 40-man payroll. International amateur spending reached a new high although the club once again failed to take advantage of unlimited draft spending in the manner employed by major players.
2011
40-man: $137,886,000
International Bonuses/Salaries: $7,020,000
Draft Bonuses: $13,399,000
Dead Money: $0
TOTAL: $158,305,000
The top year of total spending, although only by a slight margin over 2010. The team's 71-91 record spelled the end of Jim Hendry's tenure as GM. The Ricketts clearly put their stamp on amateur spending, however, beginning the process of restocking the farm system with a slew of high-profile additions including:
- $1.6M to sign 2nd round pick 1B Dan Vogelbach
- $2.5M to sign 14th round pick RHP Dillon Maples away from a dual-sport commitment to UNC
- $1.6M to sign Venezuelan C Mark Malave
- $1.1M to sign Dominican SS Luis Acosta
2012
40-man: $96,906,000
International Bonuses/Salaries: $15,270,000
Draft Bonuses: $10,323,700
Dead Money: $15,500,000
TOTAL: $137,999,700
The first appearance of massive dead money, this iteration in the form of year five of Carlos Zambrano's deal. The 40-man payroll plummeted as did the team's fortunes in an insufferable 101-loss season. Despite the new cap on draft spending, the Cubs were still able to spend significantly thanks to their sixth-worst record in 2011. A well-managed bonus pool enabled the club to sign RHP Duane Underwood away from his University of Georgia commitment.
The much more significant spending took place on the international front. The team signed Cuban lefty Gerardo Concepcion to an almost-immediately regretted five year, $6M contract. However, they more than offset that signing by grabbing fellow Cuban OF Jorge Soler and Dominican RHP Juan Carlos Paniagua in a final international spending spree...or so we thought.
2013
40-man: $94,504,000
International Bonuses/Salaries: $12,345,000
Draft Bonuses: $13,533,400
Dead Money: $0
TOTAL: $120,382,400
40-man spending decreased slightly and overall spending returned to the 2007 level despite the massive influx of cash into the game. However, the spending locations changed dramatically with nearly $26M spent on amateurs. The club wisely spent freely in Latin America and East Asia, incurring only one-year restrictions in maximum bonuses that may be awarded en route to signing the top two Latin American talents: Dominican OF Eloy Jimenez and Venezuelan SS Gleyber Torres. The club signed three other Latin American youths for at least $270,000, the nabbed Taiwanese RHP Jen-Ho Tseng for $1.625M. Proving that they were not fully satisfied, the Cubs reportedly nabbed Venezuelan SS Wladimir Galindo in late December, although his signing has not been confirmed and terms are not available (I estimated his bonus to be comparable to others ranked in the 21-30 range of the top international free agents). The team also made excellent work of their amateur draft bonus pool, saving enough in the first ten rounds to grab 12th round pick RHP Trevor Clifton for $375,000 without incurring any loss of picks.
2014
40-man: $70,420,000
International Bonuses/Salaries: $4,800,000
Draft Bonuses: $11,700,000
Dead Money: $14,500,000
TOTAL: $101,420,000
The 2013 spending made plenty of sense for a team looking to further bolster its amateur talent. However, 2014 is a peculiarly low total given the Cubs' rank in annual revenue (4th), overall franchise value (4th), and operating income (1st) in 2013. The team cannot sign any international amateur free agents to a bonus of greater than $250,000 in the 2014 cycle, so international spending is likely to decrease substantially as I have predicted. Draft spending should remain high given that the Cubs again pick in the top-five in 2014.
So What Does It All Mean?
I was fiery hot with anger (and sadness) when word broke that the Cubs missed out on Tanaka. It's a good thing that analyzing the spending took a few days.
I have been very critical of the Ricketts for not pursuing every avenue to obtain new talent. The trades of previously under-contract veterans like Ryan Dempster and Matt Garza don't actually add talent to the organization; they simply convert current MLB-caliber talent into (hopefully) future MLB-caliber talent. The trades were good ideas at the time and they look like ever better ideas now. Still, in order to actually increase the talent level, new talent has to come in without old talent leaving.
The Ricketts have been aggressive with that approach, particularly internationally where fewer dollars can have a significant impact. The Cubs have been among the heaviest spenders internationally in the last few years with Jorge Soler the crown jewel of said spending. After losing much of 2011 to the defecting/signing process and 2013 to injury, 2014 is a big year in his development. Regardless, he is a great investment for the club. It's difficult to find guys with lethal throwing arms and the ability to hit fifth in a championship lineup. Soler was acquired with substantial risk but at the cost of only money. That's efficiency.
With amateur international spending seriously curtailed this year by the new rules and with a seriously chopped 40-man payroll, I expected the Cubs to make a big addition this offseason of a player who could help in 2015 and beyond. Tanaka made the most sense to me, but a big move for Robinson Cano did too as his lefty power bat would complement the developing barrage of right-handed talent in the system. Sure, the last few year's of Cano's deal figure to eat up more payroll than he will be worth, but the money was there, the need was obvious, and the talent is extreme. At this point, I don't believe that any of the remaining free agents justify their cost, particularly that of the team's 2014 2nd round draft pick.
That leaves them looking to two spots: back to the international marketplace and the 2015 offseason. I was ready to tar-and-feather the Ricketts based on how this offseason has played out. But after taking a step back, I can appreciate that this offseason might just be one last necessary evil in the master plan.
It does mean that the Ricketts aren't willing to spend on a lose that will almost certainly be a loser without massive upgrades all over the place. With the prospect talent projected to grace Wrigley Field at various points in 2014, this isn't an unfounded approach.
The team can use the 2014 season to gather significantly more information about players, answering such questions as:
1. Is Arodys Vizcaino actually healthy enough to pitch?
2. Was Mike Olt's 2013 an inexplicable blip in the road (even with the eye issue) or the new normal?
3. Can Junior Lake be an everyday outfielder or at least a super sub?
4. Can Justin Grimm harness his strong arsenal to slide into the rotation or at least into a long-term bullpen role?
5. Can Neil Ramirez take the next step that has alluded him?
6. Can Kyle Hendricks spin his underwhelming stuff with enough command to make it at the MLB level?
7. Can Jake Arrieta ever put it together?
8. Just how much of a mirage was Travis Wood in 2013?
The answer to each question has a significant impact on the long-term approach of the front office. If Vizcaino returns with force (as his mid-90s fastball and power hook suggest), the team should be set at the back of the bullpen. If Olt's power stroke returns and he continues to draw walks while being a plus defender at 3B, Christian Villanueva can be packaged in a trade and Kris Bryant projects as a corner outfielder, reducing the need for an outfield acquisition. If Lake progresses and looks good for 500 plate appearances, finding a utility man is less important. If Grimm, Ramirez, or Hendricks takes a big step and grabs hold of a rotation job, the need for a serviceable starter evaporates. If Arrieta miraculously figures it out or Wood settles in as a solid starter instead of a lucky one, perhaps the need for multiple starters morphs into the need for just one, pushing the Cubs to look to one of the premier arms next winter.
I expect the Cubs to be players for new free agent Cuban C Yenier Bello, although Bello doesn't appear to be an upgrade over Welington Castillo. Stashing Bello at AAA while he gets some stateside games under his belt seems wise, and the Cubs desperately need to find some catching talent in a system bereft of it after Castillo and George Kottaras.
But the more important short- and long-term acquisitions must come in the form of a top starting pitcher or two next winter. Without such an addition, the Cubs will be stuck attempting to compile a rotation from a group of mid-level arms, a tactic that has worked precisely zero times in the history of baseball. With that big arm or two added in? The Ricketts enjoy restored credibility as the team enjoys a return to relevance.
Ricketts family, we're waiting.
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