Cubs’ Crane Kenney ‘Roll Over’ Pay Claims Don’t Pass Muster – NBC Chicago

Crane Kenney’s Pay Demand Makes No Sense originally appeared on NBC Sports Chicago

There’s a rumor swirling around the Cubs’ business operations like a wheelbarrow full of imaginary cash that suggests Jed Hoyer hasn’t used all of his 2022 payroll budget and will therefore have a lot more to spend in 2023.

That’s because he can “carry over” that unused portion to add to the next year’s budget, according to company president and wheelbarrow operator Crane Kenney.

But if that’s true, the Cubs and their cost-cutting rebuild could be in worse shape than the results on the field led us to believe.

“We have a lot of money left at the end of this year that we have to spend. All of this will continue into next year,” Kenney said on 670’s The Score show ‘Inside the Clubhouse’ over the weekend. -end.

Why? What difference should that make?

Although the Cubs, as a private company, do not make their books public, they are one of the most lucrative baseball teams. And even the most conservative estimates of the Cubs’ baseball revenues and costs suggest the ability to leapfrog over MLB Competitive Balance Tax (luxury tax) payroll thresholds while putting money into their pockets.

Since cutting costs after the 2020 season of “biblical” pandemic losses, the Cubs have not come close to the luxury tax threshold.

Any payroll budget allocated by the property that is below the CBT threshold is probably not based on income, but more likely on choices on the part of the vast income to spend on other things or in the bank as a franchise.

If they really have shortfalls that prevent spending at the CBT level while remaining profitable, it could indicate financial restrictions or problems far beyond these short-term pandemic losses (or maybe things such as higher than expected capital expenditures, or recovering 2020-21 losses).

This year, they are expected to reach $177 million for CBT purposes, which leaves a margin of more than $50 million below CBT.

But even if this year’s budget is, say, $230 million (the CBT threshold), that doesn’t mean the Cubs’ budget next year would suddenly become $280 million — and guarantee breaches. the CBT. That does not make any sense.

In other words, there’s no reason to “carry over” money from one payroll budget to another if you’re the Cubs and your income isn’t compromised by debt or debt restrictions. other spending choices.

Meanwhile, while the Cubs’ average ticket prices have remained relatively stable over the past two seasons, they also rank among the most expensive tickets in the game and, according to at least one analysis, the “experience” of most expensive 2022 game day (including concessions, parking, merchandise, etc.).

If the “rollover” policy sounds familiar, it’s because the Cubs became the rare – if not the only – big-money team in the sport to employ such a policy in the early years of the first tanking rebuild under Theo Epstein. and Hoyer.

After the Cubs’ bid for free agent pitcher Masahiro Tanaka failed in 2013, Epstein worked with the team’s chief financial officer to create the baseball operations “piggy bank” to carry over unspent budget.

This mechanism, more commonly used by some teams with more limited economic resources over the years, was necessary due to a complicated debt structure left over from the Ricketts family’s 2009 purchase of the club from Tribune Company.

This debt structure, among other things, created a 10-year management plan that involved bank covenants that restricted spending based on rigid income definitions.

The Cubs have long been immune to these restrictions and have in fact dramatically increased franchise revenue streams and equity – theoretically making any salary budget below the CBT threshold a matter of spending choices.

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