SF Giants will have modest level of financial flexibility this offseason

The SF Giants will look to add a lot of pitching this offseason, and they will have some flexibility to do so. According to Cot's, they will enter the offseason with roughly $184.4 million committed against the Competitive Balance Tax (CBT), or about $60 million below the CBT threshold of $244 million.

SF Giants will have modest level of financial flexibility this offseason

There are two sets of books in baseball. The first is the internal accounting, which tracks the team's cash inflows and outflows. The second set of books is the CBT accounting, which is measured by MLB and tracked by each team. This takes the team's contracts and accounts for the average annual value of those contracts.

There are soft restrictions to this type of spending. Teams can surpass the CBT threshold, and pay a tax on the overage. That tax varies based on how much they surpassed the threshold, and how many years in a row they have done it.

There is also a steeper penalty when a tax-paying team signs a player who rejected a qualifying offer. The Giants felt the brunt of this penalty when they signed Willy Adames to a seven-year deal. Adames had rejected a qualifying offer from the Milwaukee Brewers, so the Giants lost their second-and-fifth-highest selections as well as $1 million in international bonus spending.

The Giants reset that penalty this season, with a luxury tax payroll that came well below the CBT threshold of $241 million.

The Giants have approximately $138.4 million in guaranteed contracts committed against the CBT. These contracts include Adames, Rafael Devers, Matt Chapman, Jung Hoo Lee, Logan Webb, and Robbie Ray. Ray is the only player who is not under contract after the 2026 season.

San Francisco also might have five players eligible for arbitration this winter. Patrick Bailey and Ryan Walker might have just missed the service time cutoff to be eligible to begin the arbitration process one offseason early, but we will have an update when that date is made public. The total projected value of these contracts is $9.9 million, and it is not a given that the Giants tender contracts to all five players.

The pre-arbitration pool is the next group. Cot's estimates that the Giants will spend $14.5 million on pre-arbitration players on the 40-man roster. Lastly, Cot's has a true-up for the Jorge Soler trade of $1.8 million.

The Giants will begin the offseason around $60 million below the CBT threshold. That number could change a little depending on what they do with their arbitration-eligible players, but that is a reliable starting point. It should be noted that they may not use all of the space below the CBT threshold. They have the flexibility to spend, and should have the motivation to spend due to the increase in attendance in 2025. That said, the looming lockout could obstruct those plans.

While the Giants could target one of the top names on the market, that could pretty quickly eat into the flexibility they have built. They have several needs to fill, and will need to be creative to fill some of those needs.