The MLB sent the Cubs, Red Sox and Yankees luxury tax bills for the 2019 season on Wednesday, according to the Associated Press. The three are the only teams who have been taxed for exceeding MLB’s $206 million threshold last season.
Per the Associated Press, the Cubs must pay $7.6 million in taxes after their payroll ended the season at $220 million. The Red Sox will pay $13.4 million and the Yankees owe $6.7 million.
The Cubs didn’t exceed the luxury tax threshold in 2018, so they were only taxed 20 percent on their 2019 overages as a first time offender. But if they exceed the threshold in 2020 — it'll jump to $208 million — they’ll face a 30 percent tax on their overages and see their draft pick drop 10 spots if they go over the threshold by $40 million.
The Cubs are trying to get under the threshold this offseason to reset the penalties for 2020. They have a lot of money coming off the books, as the following players are now free agents or have signed elsewhere. Note: they could bring back Ben Zobrist and an arm or two from the reliever group.
-Cole Hamels ($20 million)
-Ben Zobrist ($12.5 million)
-Steve Cishek ($7.5 million)
-Pedro Strop ($6.25 million)
-Brandon Kintzler ($5 million)
-Addison Russell ($3.4 million)
Even if all those players don’t return next season, the Cubs have their work cut out for them to get under the $208 million threshold. Kris Bryant, Javier Baez, Willson Contreras, and Kyle Schwarber will receive raises via arbitration. The Cubs’ payroll is projected to be $191.5 million (per Baseball Reference), and that's before any major offseason moves have been made. They have needs to address, including the bullpen, second base, center field, and the fifth rotation spot.
There are internal options for each group, but the Cubs may look for upgrades externally. That leaves them with less than $20 million of wiggle room, based on the aforementioned projection.
$7.6 million isn't a crushing blow for a big-market team like the Cubs, but they had a disappointing 2019 season in which they missed the postseason. It's easy to throw money at the problem, but the Cubs are looking at the long-run this offseason. They want to maintain financial flexibility for the future as they look to keep their championship window open past 2021.
