The Yankees, despite all the posturing, realize the truth of the matter is they can’t afford either Harper or Machado. Really. And here’s why…
The Yankees have been one of the teams half-way in publicly – but mostly out internally – on free agents Bryce Harper and Manny Machado. This despite pleas from fans like myself who would love the fun of seeing Harper taking shots at the short porch in Yankee Stadium over 500-600 at-bats a season for the next eight to ten years.
But the underlying reason the Yankees are not fully engaged, though, and it will astonish most Yankees fans, is the team can’t afford to sign either one of them. Before I explain, let’s back up a bit to say that any team worth $4 billion (Source: Forbes April 2018) surely has all the money it needs to spend on Harper, Machado, Greg Kimbrel, Dallas Keuchel, and any other unsigned free agent you wish to add, but that’s not the point.
There is this thing called the luxury tax which continues to bring teams like the Yankees, Dodgers, Cubs, and eventually maybe even the Red Sox down to earth. And that’s because with the tax in place, signing a high caliber and costly free agent means a team is not just paying the player, but the league as well when the total expenditures come due at the end of a season. This is just not good economics for any team operating as a business entity.
Now, here’s the problem the Yankees are facing. Let’s say they sign either Harper or Machado to an eight-year $280 million contract. And let’s even say that the deal is front-loaded, with a team opt-out after the fourth year and a player opt-out after the fifth year, meaning the highest salaried years will come in years one thru four, and gradually decrease annually from there.
With an average annual salary then of $35 million, the Yankees would agree to pay out $40 million for each of the first four years, and $30 million each of the final four years. Admittedly, the Yankees can afford to do that. Except, they can’t, at least without jeopardizing everything they’ve worked for over the last three years.
Take a minute to study the Yankees projected player payroll for 2019-2023. Do you see what I see, and what the Yankees are most likely looking at as well?
The Truth Ends Here
Throughout those five years, and this assumes the Yankees keep these players, Luis Severino, Gary Sanchez, and Aaron Judge reach free agency (2023), Giancarlo Stanton will have been paid $142 million, with still another $118 million left on his contract thru 2027. Meanwhile, Dellin Betances, Didi Gregorius, and James Paxton will have previously gone through free agency, with the chance the Yankees wish to extend any or all of them for an additional outlay.
All of this, while Mr. Harper or Mr. Machado are drawing from the well for $40 million each year.
And it’s not just the upcoming free agency of these players the Yankees have to worry about and plan for. Beginning next year, Severino, Judge, and Sanchez each have three years of arbitration the Yankees must deal with. Again, the math tells the story.
For 2019, each of these players will make a little more than $2 million. Now, what do you think their salaries will be at the conclusion of year three arbitration? Let’s say (conservatively) that each of their salaries doubles from year to year. This would mean in their “walk-year,” each will make $16 going into free agency.
If it turns out that way, all three agents will have been fired, because I’ll be astonished if Aaron Judge isn’t drawing $25-30 million per year by then. Nevertheless, you see the problem facing the Yankees.
The Yankees are, at the moment, penny-rich. And soon, they will be dollar-poor. 2019 is a freebie, and they are floating comfortably below the luxury tax for now. Much to the chagrin of some fans, it will stay that way.
I’d give a year’s pay to know what George Steinbrenner would do if faced with the same situation, over a reign in which he never encountered the luxury tax at full throttle. Remember too, though, the contract The Boss gave to Reggie Jackson was a five-year, $3 million in 1976. Nowadays, $3 million doesn’t even buy a left-handed specialist for the bullpen – for one year.
We can be sure Hal Steinbrenner and Brian Cashman have a plan moving forward. We don’t know what it is, but they’re giving us a little peek with their stance on Harper and Machado. More layers will be unveiled after this season when we see what happens with Dellin Betances and Didi Gregorius. And even more, after James Paxton‘s last year of arbitration passes by at the end of this season.
Just remember this though. It’s not a cash-flow issue, now or ever for the Yankees. Instead, it’s more a question of where to draw the line on the payroll as it relates to what it takes to win a World Series or two. And will busting the bank open ensure the Yankees ripping off two or three titles in a row?
For me, I respect what they are trying to do. And besides, as this column spoke to yesterday, we already have enough to get the job done in 2019…