Cubs avoid Luxury Tax
The Associated Press (AP) confirmed today that the Cubs did not exceed the competitive balance tax cap in 2017. The AP obtained the final figures from the commissioner’s office. The Dodgers, Yankees, Giants, Tigers, and Nationals each exceeded the cap in 2017, the Nationals for the first time. The confirmation is nice, as quite a few financial estimates on this site were based on the assumption that the Cubs had stayed under the cap.
By staying under the cap the Cubs obtain the following benefits:
- Cubs will be entitled to second-round draft pick compensation should qualifying free-agents Wade Davis and/or Jake Arrieta sign elsewhere.
- If the Cubs sign a qualified free-agent, they will only forfeit their second highest draft pick and $500,000 of international bonus pool money.
- The Cubs will be treated as a first-time payer the next time they exceed the cap, resulting in lower tax penalties.
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