Introduction to the Cubs’ Shift in Budget
When the Cubs signed Alex Bregman to a five-year, $175 million contract last week, the move answered some of the looming questions about the team’s offseason budget. It was clear that they were operating with more leeway than last year, when they opened the 2025 season with the 12th-highest payroll in baseball, a large-market team sitting in the middle of the pack in spending.
Understanding the Cubs’ Budget Leeway
The Cubs finished last year safely under the first luxury tax threshold ($241 million), with a Competitive Balance Tax payroll of a little over $231 million, according to the Associated Press. Already this year, with the first threshold set at $244 million, the Cubs have a luxury tax payroll somewhere in the range of roughly $240 million (Cots Contracts) to $257 million (Spotrac), according to publicly available projections, which tend to be more conservative than the actual figure.
Weighing the Luxury Tax
“It’s extra dollars, and it’s extra things such as draft picks and international money and things of that nature that you’re factoring in,” general manager Carter Hawkins said of how the Cubs are weighing the luxury tax. “But you’re also factoring in the competitiveness of your team, and you’re factoring in how big of an impact those different penalties may be. And I think this year, with where we are in our window, it’s probably less of a consideration than it has been in prior years. That doesn’t necessarily mean that we’re going to be over or under.”
Impact on the Roster and Competitiveness
Considering the Cubs also are still trying to improve the roster, however, it seems likely that they’ll end up over the line. And at the same time as they’re pushing their chips to the middle, the Brewers, who last year won the National League Central with the best record in MLB, are continuing to lose core talent, as they have for several years running. On Wednesday night, they traded rotation leader Freddy Peralta to the Mets.
Future Plans
“We’re not done with the offseason,” president of baseball operations Jed Hoyer said last week. “We were very healthy last year position-player wise … and I don’t think we can count on that every year. So I do think that adding depth to our roster is still something that we’re going to be focused on.”
The Role of Deferred Salary
Staying under the tax last year will help the Cubs avoid escalating penalties for spending over the threshold for consecutive years if they do go over in 2026 – while teams like the Dodgers, Mets, Yankees, Phillies and Rangers have simply paid the tax for the last three years straight. The Cubs also generated playoff revenue last year, after a four-year drought and fan-less pandemic season before that. Chairman Tom Ricketts always insists that the baseball budget reflects the previous year’s revenue.
Shift in Policy on Deferrals
At the same time, the business arm of the team budged on its aversion to deferring salary, as seen in Bregman’s contract, which sources confirmed included $70 million in deferrals. The Cubs have included deferred money in contracts before – look at the deals Jon Lester and Jason Heyward signed going into 2015 and 2016. But the structure of Bregman’s contract was unique because it deferred base salary.
Evolution of the Cubs’ Contract Strategy
“This was the most we’d ever done,” Hoyer said. “And it was really a lot of conversations we had with [chairman Tom Ricketts] and [president of business operations Crane Kenney] and the business side throughout the year. You’re always thinking about evolving as an organization and thinking about things differently. And we have a lot of fruitful conversations about that, and that led to this deal.” Last spring, the Cubs’ anti-deferral policy hindered their pursuit of Bregman. The Cubs’ four-year, $115 million offer included some deferred money, sources told the Sun-Times at the time, but not nearly as much as the Red Sox’ winning bid.
Flexibility in Contract Structures
“Obviously the timing was different last spring, so the kind of contracts we were talking about were different,” Hoyer said when asked if those discussions last spring laid a foundation for this deal. “It was more just the level of interest. When the season ended and he opted out of his contract, I called him pretty quickly and made it clear that we were interested again.” The Cubs, with the deferral policy lifted, also had more flexibility as they played with possible contract structures.
Conclusion
The Cubs landed on a deal with Bregman built around stability, rather than the flexibility that last year’s offer afforded. The contract was a year longer, and instead of opt-outs, it included a no-trade clause. Though the deferrals necessitated extra calculations and spread sheets as the parties neared the finish line, they made the larger financial commitment work for both sides. The Cubs’ shift in budget and policy signals a new era for the team, one that prioritizes competitiveness and flexibility in contract negotiations.
FAQs
- Q: What was the value of Alex Bregman’s contract with the Cubs?
A: $175 million over five years. - Q: How does the Cubs’ luxury tax payroll compare to last year?
A: The Cubs have a luxury tax payroll somewhere in the range of roughly $240 million to $257 million, up from last year’s $231 million. - Q: What was unique about the structure of Bregman’s contract?
A: It deferred base salary, with $70 million in deferrals, which was a shift from the Cubs’ previous policy on deferrals. - Q: How does the Cubs’ budget reflect their priorities?
A: The Cubs’ budget reflects their focus on competitiveness, with a willingness to spend to improve the roster and a shift towards more flexible contract structures.
