According to an Associated Press report, Major League Baseball payrolls dropped 4% in 2021 compared to 2019, the league’s last full season. The $4.05 billion total spent on player salaries might seem like a lot sans context, but it’s nearly $168 million lower than two years ago and represents the lowest total expenditure in a fully completed year since 2015.
The Cubs had a payroll of just over $152 million in 2021, a drop of 31% from their $220 million figure two seasons earlier. Luxury tax, schmuxury tax, that wasn’t just about avoiding penalties. And while even their greatly reduced payroll was almost as much as the Pirates ($50.3M), Guardians ($53M), and Orioles ($59M) combined, it should still represent a floor level for spending on the North Side.
Maury Brown has an excellent breakdown at Forbes, complete with several charts and comprehensive data on actual payrolls and luxury tax spending. Keep in mind that those figures can be very different based on a number of factors, so it’s important not to conflate them when talking about roster construction and how teams may be (un)willing to spend in free agency or on big trade acquisitions.
You should also be very careful when presented with the information that the Yankees have spent nearly $341 million in luxury tax penalties since that system came into existence in 2003. First, operating with a budget that triggers those penalties is a conscious choice by ownership. Second, those penalties come out to just 9.2% of the team’s total payroll expenditures over that 19-year span.
For what it’s worth, the Yankees have had an Opening Day payroll north of $200 million in 10 of those seasons and have exceeded a $208 million CBT figure in nine of the last 10 seasons. Tom Ricketts has repeatedly said the Cubs can’t operate like the Yankees or Dodgers, both of whom have much richer — like, MUCH — broadcast-rights deals, but slashing payroll by 31% and not immediately boosting it back up to at least the $180 million range would be a tremendous indictment of ownership’s financial management.
We’re not even talking a top-5 budget here, as $180 million would have put the Cubs ninth in MLB between the Angels ($182M) and Cardinals ($169M). And if I’m not mistaken, one of those teams had Albert Pujols and that massive extension for Mike Trout while the other traded for and extended Paul Goldschmidt before stealing Nolan Arenado. And the Cards did it all despite being such a small market that they receive compensatory draft picks.
The Cubs have spent the last several years talking about how their payroll has remained among the highest in the league, which is not untrue on the surface. However, it’s a function of having bigger deals cover for the fact that they’ve signed almost no mid-level role-players since before the 2016 season. Consider that Yan Gomes‘s two-year, $13 million deal is the largest the Cubs have given to a free agent position player since Jason Heyward.
That concept of going big early and letting the money momentum carry isn’t unique to the Cubs, either. Total payrolls in 2021 were down 4.6% from a high of nearly $4.25 billion in 2017, the first year of the CBA that just expired. Huh, it’s almost like that spending spike was a way to placate players as a faux act of good faith while owners slowly tightened the purse strings over the next four years.
Sounds similar to spending nearly $2 billion on free agents in November just before locking the players out, then publicly touting that spending as a means by which to curry favor with fans. I’ve covered this enough by now that I don’t feel obligated to retread too many old footsteps here, so I’d suggest reading more about all this in the piece about baseball players earning less than their peers in other professional sports.
MLB revenues and franchise values have skyrocketed over the last decade or so, yet player salaries are stagnant or decreasing. Surely even those willing to side with the owners on these matters can see how that’s something players might be just a wee bit up in arms about.
This is at the heart of the current CBA negotiations, though the two sides won’t be cracking open the financial ribs of the agreement until some point in January. If the owners continue to pretend like they’re losing money and can’t afford to give ground in a few key areas, the disparity between revenue and payroll could cause very serious problems.