Tuesday, May 14, 2013

The state of the organization

As the season itself meanders into May, the small samples are being shaken off and it's becoming more in focus what is happening for the various teams. I still think the Cubs are a bit better than their record would imply, but not enough better to be meaningful. Similarly, I'm beginning to feel like we, as fans, have a better grasp on what's happening with the organization.

The finances 

The first year under any new regime is going to be a bit chaotic, and triply so with a new organization with as broad of a mandate as the Epstein Era has been given: Rebuild a major market organization from top to bottom.

The Cubs went from national consensus contenders for Pujols or Fielder to a slashed-payroll, fire-selling 100-loss team with whiplash speed. It was hard to get a grip on what was happening as it happened. I'm a big believer that results matter, and if the results are bad, someone needs to be taking the blame, but it was hard to get a handle on it. Was this just the fruits of Hendry's failures? Was Epstein tanking the team? Was Ricketts being cheap?

My feeling at the time was that the Cubs did have a talent deficit in the upper minors, but that they could paper over it temporarily with continued FA spending, especially in a 2011-12 FA class that fit our needs quite nicely. That would provide a bridge to allow the new front office to field competitive teams while waiting for the lower-minors prospects in place to move up and for new crops of prospects to be drafted and developed.

As details of the Cubs' finances have began to come out this spring, it turns out the money was never there, and the team is reaping the fruits of decisions made several years ago. The Tribune Co., realizing nearly a billion from the sale of the team, wanted to minimize its tax liability on that windfall and insisted on a complicated, restrictive sale agreement that scared off many buyers (and imo, should have scared off all of them, but all that Sam Zell needed was one sucker).

I am not a tax accountant by any means, but the result seems to be this:

The Ricketts were forced to buy the team with debt and pay down only the interest, not the principle, for some number of years (I think 10). Concurrently, the team would be bought as a "family trust," a vehicle that saved even more taxes for the Tribune, but meant that the Cubs were restricted to spending their operating revenue on ordinary business expenses. They can't deficit spend in any given year.

If revenues fall, as they tend to do when the team is bad and empty seats multiply at Wrigley, then that money must be made up elsewhere. So must money spent on infrastructure and a new, expanded front office. That explains the nearly $40 million drop in payroll from its 2009 peak.

With revenue still dropping and only half a TV deal forthcoming, I don't expect much improvement on that front in upcoming seasons.

The stadium

It appears that Ricketts had a plan in place to combat the debt payments and spending restrictions. He hoped to expand quickly with a Wrigley Field expansion that would install a lot of advertising signage and a jumbotron to drive up revenues, while paying for the expansion (and badly needed renovations) with a $300 million subsidy from the Illinois and Chicago governments.

Three years later, there will be no subsidy and the Cubs will in fact be buying the city a few million dollars worth of stuff in exchange for easing of restrictions that would have prevented the Cubs from expanding in the way that they hoped, as well as add more night games. The new revenues from the expansion and night games will be funneled back into the renovations itself to pay for it, rather than supporting expanded spending on the rest of the team.

So while it's indisputable that the Cubs will be much better off when the renovations are complete, it's quite disappointing that it appears we won't reach that point until 2019 at the earliest, and we won't be able to enjoy any of its enhanced revenues for quite some time.

So in summary, don't expect massive payroll increases to come back anytime soon. Nobody knows exactly what the Cubs will be able to spend until they spend it, but my guess is that pessimism should reign in that regard until the stadium renovations are complete, unless they can convince Comcast to give up their TV rights and allow them to negotiate a full new TV deal before 2019.

The team

So by 2019, we'll hopefully have in place an elite top-to-bottom farm system, built by our brilliant front office, and a freshly renovated stadium that is a revenue-driving machine to go with our massive new TV deal.

Until then, how bright is the future? I'm going to go with "Meh."

We've got some positives, to be sure. There's some interesting young talent on the MLB roster already. Even at a reduced payroll, they've still got more money to spend than most teams, especally in their own division.  The lower minors are teeming with talent.

The drawbacks is that the MLB team is pretty bad, and the upper minors aren't much better.

I think sometimes fans underestimate the plexiglass effect in baseball. The pull toward the middle is strong. It's much, much easier to move a team toward .500 than it is away from it, in either direction.  It's relatively easy to improve a bad team and hard to make it worse. It's very hard to improve a good team and easy to make it worse.

2013 Cubs

As I type, the Cubs are 16-22 with a run differential of a mere -5. Going into the season, I had them projected at around .475, a 77-win pace, and they are a bit behind that, but I think the quality of the team is about the that, maybe even a touch better. The early season is a maelstrom of mixed messages with variance and fluky performances, but mostly the Cubs have been a bit unlucky not to have a couple of more wins. They are an under .500 team, but they don't belong in a conversation with the Marlins or Astros just yet.

But unless they go on an incredible hot streak fairly quickly, they'll be bad enough to warrant another fire sale, which will help them pile up the losses in August and September and likely get themselves into position for a 90+ loss season and a top-10 draft pick.

The most interesting question is how deeply will they trade?

The obvious candidates are guys whose contracts end after the current season. Garza and Feldman should both fetch some valuable prospects to some degree or another if they are healthy at the deadline. Marmol, Baker and Camp are could probably find new homes if the Cubs picked up their entire remaining salary and didn't ask for anything in return.

But if they wanted to really up the return, they need to dip into guys who are under team control for at least one more year. They did that last year with Paul Maholm (who had a team option for 2013) and got the prize of their trade deadline dealings, Arodys Vizcaino.

The most likely candidates are Soriano, DeJesus, Villanueva, Fujikawa and Hairston. It'll be interesting to see if the Cubs trade any of them. None will bring back a blue-chipper, but all could get you something of interest. Trading them, however, creates another hole in the 2014 team that will need to be filled this offseason.

Whether or not they are traded will speak to two things: How seriously the team is going to try to win in 2014, and how confident the front office is in their ability to find mid-level free agents in the upcoming offseason to replace them.

As far as progression of MLB players is concerned, it's too early to know much but the results are mostly positive.

For position players, Rizzo is living up to the love all the statistical projection systems gave him in the offseason. Schierholtz and Valbuena have proven that the front office hasn't completely lost it's knack for finding cheap, useful position players. Starlin Castro's showing a disappointing lack of development that has continued the last two years, but he's so talented and young that it's not that big of a deal in the long run.

Pitching, there's a ton of noise in the stats right now. High or low ERAs don't really tell you much about how the pitcher will do in the future, but you can start to see some patterns in K rates, BB rates, velocity, HR rates, and similar statistics. The most important thing is that Samardzija hasn't turned into a pumpkin. Travis Wood isn't as good as his ERA, but it's nice to see he is still showing a decent K-rate and keeping the BBs down.

After the trade deadline, we have call-ups to look forward to, but there's not much there. Brett Jackson is still striking out in nearly 30% of his PAs at Iowa, so all indications are that he's going to get abused by MLB pitching yet again. I don't know if they'll call up Vizcaino or not, because as a Tommy John recovery they'll want to keep his innings under tight control. Logan Watkins, whose future is right on the borderline between useful 2b starter and utility infielder, will probably get some time and that will be fun. I guess I could maybe see Matt Szczur getting a couple of weeks with the big club if he stops being mediocre at everything at AA.

2014 offseason

The big question going into the offseason, of course, is how much the Cubs will have to spend. The complicated financial situation makes it hard to predict. I wouldn't be surprised to see the payroll come in anywhere between $90 million or $125 million (it is about $105 million this year).

Free agency is not the candy store it used to be, as teams are doing a much better job of locking up their young players to long-term deals before they gather enough service time to hit the open market (see the Anthony Rizzo example this offseason). The 2014 free agent market is super thin.

Every time in baseball is getting a $25 million influx of cash each year, beginning in 2014 with a new national TV deal, and I expect a lot of teams will want to spend that right away as well. So there will be a high demand and limited supply for free agents, which should drive prices through the roof.

The Cubs will have plenty of needs. I have to think we'll get some sort of position player. There aren't any impact third basemen on the market (seems like we've been saying that for awhile now), so we'll kick the tires on Chase Headley, but I suspect we won't want to pay San Diego's price in trade. An outfielder is a logical spot to target a position player somewhat similar in price to Edwin Jackson this year, and a lot of people think it'll be Ellsbury. It's hard to predict exactly which free agents will go where, but I think it's safe to say the Cubs will be heavily interested in at least one FA position player with a yearly salary in the low eight digits.

I've been critical of the idea the Cubs' front office should get too big of a pass because of the "they inherited little from the previous regime" argument, but when you look at the state of organizational pitching, it's hard not to feel some sympathy.

The Cubs have just enough pitching right now to keep the major league rotation looking shiny, but "just enough" pitching is never enough, and the degree to which they are thin at that position is concerning.

Ideally, a team enters the season with 14-16 pitchers it is comfortable with giving major league innings. That's enough for a rotation, a bullpen and some of the younger guys working in the minors who could be promoted if needed or when it is deserved. That's because pitching is a high-attrition position, with a decent number likely to be lost to ineffectiveness and injury every season.

The Cubs are getting squeezed on both sides for 2014: They have five free agent pitchers and absolutely nothing in the minors. With Dillon Maples recently promoted, I think they have three legitimately interesting pitchers above rookie ball: Maples, Pierce Johnson (both in low A) and Arodys Vizcaino. And Vizcaino still hasn't pitched this season recovering from Tommy John surgery and rather ominously was sent back to Chicago for evaluations this week. You might be able to get a partial starting or full bullpen season out of Vizcaino next season, but that's it for help from the minors unless some guys (Cabrera? Dolis?) take unexpected leaps forward.

It's also possible (though not certain) that the Cubs take either Mark Appel or Jonathan Gray in the upcoming draft with the No. 2 overall pick, and either of them could see MLB time in 2014 (though probably not a full season of 30+ starts).

So for 2014, the pitchers the Cubs have under control that I project to be better than replacement level (the theoretical level at which you can find a player for free if you need him, off the waiver wire or in the minors) are:

Samardzija, Jackson, Wood, Villanueva, Russell, Fujikawa, Vizcaino. We're basically halfway to the 14-16 total you really need. Adding half-a-dozen or more useful MLB pitchers via free agency and trades in one offseason is a daunting, almost impossible task.

At best, we're probably looking at maybe a slightly better version of this season, where the Cubs went into the spring with exactly enough pitchers. They had hoped to have 7 good starters and use two of them in the bullpen. But Garza got hurt, Baker had a setback and then Fujikawa got hurt. It was nice that they were able to still fill out a rotation full of MLB quality starters, but the resulting emptiness in the pen is the biggest reason the team is below .500 right now.

So all told, I expect the Cubs to be a slightly better team going into 2014 than they were going into 2013, but still probably not ready to challenge for a playoff spot unless they get fairly lucky with pitcher health or have a lot more money to spend than I anticipate.

2015 and beyond

Projecting a baseball team more than a couple of years into the future is dirty, almost pointless business. There's too much variance and volatility. The Cubs clearly have a plan of using the Epstein/Hoyer front office's ability to scout and develop amateur talent to give them a long-term edge. They hope that by the latter part of the decade, the renovations to Wrigley Field will allow them a to retain their large financial edge over the rest of the division, but how much that means remains to be seen as MLB finds ways to level the competitive playing field each year.

Going into the season, the Cubs had their farm system ranked as high as 5th and as low as 14th in the rankings I saw, with most in the 9-12 range. Farm systems are naturally cyclical. You rise in the rankings when your best prospects are nearest to the majors, then fall off quickly when they are promoted and leave the prospect rankings. The Cubs have most of their best prospects in A ball or lower this season, so they should be in line to move up the rankings next year.

Mostly, it's been a disappointing year so far for the team's top prospects, so maybe that rapid ascent could end up slowing, but this is still easily a better than average system. Going down the top prospects:

Javier Baez got a ton of hype in the spring, but his performance in high-A Daytona shows exactly why he has both incredible talent and an incredibly high chance of being a bust. Six home runs and a .239 Isolated Slugging is eye-popping power for a SS. Unfortunately, it comes attached to a 29.3% K-rate, a 3.4% BB rate and a .272 OBP. This is like if Corey Patterson had somehow managed to have an even worse approach at hte plate. Strikeout rates like that are huge, blinking red warning signals that a prospect can't handle the quality of pitching he's facing and is going to get even more exposed at higher levels. Let's hope that's not the case and Baez can adjust. (Also, he's on pace for about eight billion errors at SS, but that's normal for a young player at that position).

Jorge Soler, Baez's teammate in Daytona, is doing everything you'd ask of him (other than keep his temper under control, having had one high-profile incident that got him a brief suspension). He's hitting for power, he's drawing walks, he's making solid contact consistently. He's giving every indication that he will be able to handle AA at some point late this season, and may get a callup by late 2014.

Alberto Almora hurt his wrist in spring training and is just now getting close to making his season debut.

Arodys Vizcaino is still rehabbing, as mentioned, and still hasn't thrown a competitive pitch.

Dan Vogelbach is showing solid numbers at the Midwest League (low-A).

Pierce Johnson is striking out more than a batter an inning at Peoria, and he's not hurt, which is about all you ask of a starting prospect his age.

Juan Paniagua is still stuck in the Dominican Republic with visa issues, and it's becoming increasingly concerning that the U.S. government is concerned enough about his identity paperwork that they won't let him in the country.

Brett Jackson is still showing all the flaws that he did last year. I think he's pretty close to a fully official bust at this point. Christian Villanueva has been disappointing at AA. Josh Vitters had an early injury and is just getting back.