MLB - The Money Trail

On Why The Yankees Deference To The Luxury Tax Is A Winning Formula

In theory, the Yankees and their gazillion dollars could blow beyond the luxury tax without flinching. But their deference to the tax is a winning strategy…

Most Yankees fans and this is just a gut feeling have little or no consideration for the team’s recent insistence on adhering to the luxury tax. In the minds of these fans, the Yankees have all the money in the world, so why not spend it?

The inference being they’re thinking strictly about the Yankees signing both Manny Machado and Bryce Harper as a beginning and then adding on as each whim dictates. To the dismay of some, the Yankees fought mightily to stay under the luxury tax threshold of $197 million – and they won the battle with themselves. The team also won 100 games during the regular season, only to be pummeled by the Red Sox in the playoffs.

This year, the noise is not quite as loud as it was last season, but from time to time both Hal Steinbrenner and Brian Cashman have whispered the Yankees intention to closely monitor their spending to stay beneath the new threshold of $206 million in 2019.

What’s missed in this argument, though, is the assumption that salaries comprise all of a team’s expenditures. What is not realized for a team like the Yankees is their devotion to their minor league affiliates and their corresponding willingness to invest (translate – dollars) in their future. After all, the Baby Bombers didn’t come from just anywhere.

Similarly, the Yankees spend liberally when they travel, staying in the best hotels, rarely if ever flying commercial airlines.

Here’s a look at where the Yankees stand with regards to the luxury tax over the next few years.

Yankess payroll vs. the Luxury Tax (Source: Spotrac:
Yankees Payroll vs. the Luxury Tax (Source: Spotrac)

You’ll notice the window becomes increasingly wide open as the Yankees move forward, with fewer and fewer salary commitments to players currently on their roster. This means their efforts underway now to remain fiscally restrained will have significant benefits shortly.

A report that was written by Brett Borzelli appeared yesterday in Pinstripe Alley, declares the Yankees and  the addition of DJ LeMahieu‘s $12 million salary for 2019 “blows the Yankees by the $206 million luxury tax limit for 2019”. Nowhere in his report, however, does Borzelli provide a source for his figures.

Luis Severino, Cy Young Candidate 2018
Luis Severino, Cy Young Candidate 2018 Photo Credit: New York Post

Spotrac, on the other hand, tracks salaries “for a living” on its website, providing a detailed look at where the Yankees stand as of today.

In 2019, for instance, only Luis Severino is unaccounted for in the Yankee’s expenditure of $191 million to date. Add Severino’s expected raise from the mere $800,000 he made last year to what – seven or eight million – and the Yankees total still falls under $200 million.

Looking again at what Spotrac provides, we see 2020 as an opportunity for the Yankees to spend liberally, and 2021 as a chance to spend wildly – if they choose to do so. In 2020, for instance, only Aaron Judge and Gary Sanchez reach their first year of arbitration and Severino his second, while Greg Bird, Miguel Andujar, Clint Frazier, and James Paxton remain under team control, and already counted in the Yankees projected total of a mere $130 million for next season. All others are either under contract or unrestricted free agents.

We know the story of numbers from experience. They can be “played with” to support almost any conclusion one wishes to reach. But the fact is the Yankees don’t play with the numbers – they live (or die) with them.

Former Yankees Owner, George M. Steinbrenner Photo Credit: New York Daily News
Former Yankees Owner, George M. Steinbrenner Photo Credit: New York Daily News

Bless his heart, but baseball has passed by George Steinbrenner in recent years, recognizing a multitude of ways to win big, other than by outspending the baseball universe. The Tampa, Milwaukee, and Oakland teams, for heaven’s sake, won 90 or more games last year, spending half the money of the average major league franchise.

The difference between these teams and the Yankees, though, is the Yankees window of opportunity is always open, whereas a team like the Brewers needs that one or two extra (expensive) pieces to win it all before their window closes fast.

Luxury tax or not, the Yankees have the players they need to win their 28th World Championship, with a dime a dozen reliever thrown into the mix here and there.

The question this year, though, should be if the 25 players in the clubhouse can get the job done. After all, the Yankees are already over the league average of $115 million by $80 million.

It’s time we move the spotlight from Hal Steinbrenner to the players themselves. No one on the Yankees is underpaid. And with that goes the assumption they can be paid more – because the Yankees are “loaded.”

But don’t let that distract you from the fact the Yankees are paid enough – and have enough to win it all in 2019.

Written by Steve Contursi, Editor, Reflections On Baseball
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