It only makes sense that the day we find a chart showing how efficient the Cubs are with their money is also the day they signed Jason Heyward for 184 million dollars.
On Thursday night, Reddit user and apparent Yankees fan Constant_Gardner11 posted a table showing every MLB team’s “Spending as a Percentage of Revenue” – which is exactly what it sounds like.
Divide your team’s payroll by how much revenue they brought in, and you get the magic Payroll/Revenue figure. The chart below is ordered from highest spending percentage to lowest – so obviously being lower on the list would generally be a good thing.
The ‘Revenue’ column is based on totals from the 2014 calendar year, seeing as 2015 isn’t over yet.
Either way, it’s saying which teams did the best job of being efficient with their owner’s money in the recently completed 2015 season.
Naturally, the first thing that jumps to mind is how low on the list some playoff teams – like the Cubs, Cardinals, Pirates, Mets and Astros – are in comparison to other playoff teams like the Dodgers, Blue Jays, and Rangers.
Or how much lower those first five teams are than the pretty awful White Sox.
But as today’s Jason Heyward-is-coming-to-Chicago news signified, that chart is going to look a lot different next season for the Cubs (and basically every other team).
Still, with an expected jump in team revenue from 2014 to 2015, the Cubs’ payroll/revenue percentage shouldn’t increase too much – even with the additions of Heyward, Ben Zobrist and John Lackey.
Before Jason Heyward chose the Cubs, their 2016 payroll was projecting around $133 million. With Heyward’s 8-year, $184 million deal now official, that means the projection would increase to at least $156 million (since his yearly average is $23 million).
But it could be more than that, considering his deal is reported to have opt-out clauses after years three and four.
— Jon Morosi (@jonmorosi) December 11, 2015
Heyward's first opt-out comes 3 years into contract with #Cubs, source confirms. I expect deal to be front-loaded.
— Jon Morosi (@jonmorosi) December 11, 2015
So let’s say Heyward’s deal brings the Cubs’ 2016 payroll to $160 million. The organization’s gross revenue for the calendar year of 2015 should increase on a similar path that it did from 2013 to 2014 – when revenue jumped from $266 million to the $302 million outlined in the chart (a 14% increase).
Before a wildly successful first season with Joe Maddon even began, the Cubs’ $302 million revenue figure in 2014 made them the MLB’s sixth highest-grossing team. Their operating income of $73.3 million was second only to the Cardinals, and Forbes listed the Cubs as baseball’s fifth-most valuable ($1.8 billion) franchise — months before they beat their archrival in the NLDS.
Now the team will add $21 million from the extra 300,000 tickets sold in the 2015 regular season alone, and upwards of $10 million from four games of playoff revenue. Taking those things into consideration and assuming another 14% increase, the Cubs’ 2015 revenue should check in around $350 million, if not more.
It’s likely the Cubs will make at least one trade to free up salary space and bring their 2016 payroll closer to/under the $150 million mark. But even if they don’t, and you assume Heyward is on a front-loaded deal, the Cubs would still only be spending 46% of their payroll. That’s also under the presumption their 2015 revenue isn’t higher than $350 million, which it very well could be.
Regardless, signing Jason Heyward seemed like a dream that was financially not feasible. In the end, the fact it came true probably had as much to do with his personal preferences (playing for an exciting contender, opt-outs) as it did the Cubs being efficient with their money while making a fruitful postseason run in 2015.
Cubs confirmed they had generous extra money from the business side to use in recent pursuits.
— Bruce Levine (@MLBBruceLevine) December 11, 2015
When you only spend 39% of your previous season’s revenue on payroll and still make a run to the NLCS, you get to sign free agents like Jason Heyward for less money than your competitors even offered.
For the Ricketts family – who have already made the Cubs one of the league’s most profitable teams in their short time as owners – spending “money from the business side” to ensure there are frequent returns to the postseason is just that: a business decision.
With a TV mega-deal on the horizon, Wrigley Field getting shinier by the year, and a stacked lineup that fans can salivate over – business is good on the North side.