The rest of the story behind Theo’s Plan and making Cubs history
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When Theo Epstein took over the Cubs’ baseball operations a little more than five years ago, he cautioned everyone within earshot that his rebuilding plan would not follow a linear progression.
He couldn’t have known how right he was.
Or how little that would have to do with the quality of his baseball decisions and baseball luck.
The story of The Plan that Epstein’s front office executed to secure the holy grail of American sports — and secure Epstein’s reservation for a place in the Hall of Fame — has already been told and retold as a tale of baseball genius, scouting acumen and faithful adherence to The Plan that Epstein laid out the day he walked through the door at Clark and Addison.
But winning, as quickly as they did, that elusive championship celebrated by overflow crowds all weekend during Cubs Convention, had as much to do with altered plans and creative use of resources that were far more limited than -expected when Epstein accepted the job in the fall of 2011.
Epstein wouldn’t comment on internal accounting and financial details. But over the last five years sources have told a consistent story of Epstein’s surprise soon after taking the job to learn that the effects of franchise debt and resulting bank covenants would severely restrict what he anticipated were big-market resources that he could use from the start to rebuild the big-league team and restructure the organization.
Whether he was misled during the hiring process, the financial solutions he orchestrated were as important to building the World Series champs from a business standpoint as the lopsided trade for Jake Arrieta and the Kris Bryant and Kyle Schwarber drafts were from a baseball standpoint.
Between those solutions and owner-friendly terms in the new collective-bargaining agreement, the Cubs are in a particularly strong position to sustain the success of the last two years as they head to spring training in a few weeks to work on a repeat — regardless of the scope of the eventual 2020 regional TV deal long considered the eventual “game changer” for the process.
“The only thing that took awhile to understand was the amount of headwinds we faced due to revenue sharing, taxes, and how certain elements of our capital structure was put together,” Epstein said as the Cubs prepared for their visit to the White House on Monday. “That meant we had to be really thoughtful how we allocated dollars the first few years.”
That meant no chance to compete for big-ticket pre-prime free agents the club targeted, such as Yu Darvish and Yoenis Cespedes. Organizational sources said it also meant counting dimes and nickels from the overall baseball budget the first two-plus years of the process to choose how much to allot to scouting, technology, international free agents and big-league players.
For example, when they traded Carlos Marmol to the Dodgers in 2013, they deferred some of the money promised to the Dodgers so they could retain enough in that summer’s budget to finalize the multimillion-dollar international signings of Gleyber Torres and Eloy Jimenez — ranked by Baseball America as the top prospects in the Yankees’ and Cubs’ systems, respectively.
Barely three months earlier Forbes listed the Cubs as baseball’s top revenue-earning team.
“Our ability to leverage our market size into financial advantages is more difficult than I expected,” Epstein told CSNChicago.com then.
That reality led the Cubs to hire Rick Renteria when they replaced Dale Sveum as manager after the 2013, on the strength of Renteria’s player-development background.
But the challenges in the beginning might have led to strengths in the end, Epstein said.
“Just the fact we had some financial obstacles in the first couple years ended up serving us really well,” he said. “It created a forced discipline and real single-mindedness in bringing in young players, that would have existed anyway. But it allowed us to be exclusive in our focus.”
The front office didn’t bother discussing top big-league free agents during those years — focusing more on free-agent sign-and-flip guys (think Scott Feldman, who turned into Arrieta), trades for minor leaguers (Addison Russell, Kyle Hendricks, Carl Edwards Jr.) and on amateurs (Bryant, Schwarber, Jimenez).
Of course, none of that would have led as quickly to a championship if not for Epstein’s work with chief financial officer Jon Greifenkamp and then-business development VP Alex Sugarman to get financially creative with the budget.
They devised a baseball-operations piggy bank after the 2013 season to allow unused money from the budget to rollover without violating the debt-related covenants — a first for the Cubs and a mechanism traditionally considered irrelevant for big-revenue clubs.
That turned into the ability to frontload a long-term offer and sign Jon Lester the following winter when — in a stroke of good fortune — the Yankees swamped their $120-million bid to sign free agent Masahiro Tanaka. After committing $20 million of that year’s budget to the bid, they banked that money and used it for most of Lester’s first year.
That coincided with manager Joe Maddon’s sudden availability and hiring. Between the moves that winter and surprisingly quick development of rookies such as Bryant and Russell that led to winning. And, consequently, a spike in revenue.
It didn’t immediately mean a payroll increase to accommodate the likes of Jason Heyward and Ben Zobrist. But after discussions with Greifenkamp’s department in November, Epstein was able to secure an increase with the promise of big on-field projections for 2016 and of combining two offseasons of spending into one.
It all added up to the 5 million fans who lined downtown streets on Nov. 4 for a Cubs parade 108 years in the making.
As the Cubs embark on their title defense, they do it relatively flush with payroll flexibility, thanks in large part to all the revenue increases, the built-in decreasing impact of the debt restrictions and modest luxury-tax thresholds in the new CBA.
Epstein might not have been shocked to think of a five-year timeline for a title when he took the job. But it’s doubtful he could have predicted the path he would take.
“The timetable worked out better than we could have imagined,” he said. “As an organization we were good, and lucky, and everyone worked together when we had an opportunity to get aggressive and take the final step.”
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