Yankees GM Brian Cashman has his marching orders from his boss – no luxury tax this year! Still, there’s room to add talent – but it’s tricky…
Yankees principal owner Hal Steinbrenner runs his team with an ever-present eye on the bottom line, just like every responsible CEO in charge of a big business.
However, the difference in baseball is that the bottom line is not necessarily attached to profit and loss margins.
Steinbrenner refers to the luxury tax assessed against teams by MLB, which exceeds a pre-determined team payroll amount.
MLB has drawn the line at $210 million for the 2021 season. Steinbrenner stipulates that Yankees total payroll cannot exceed that amount – or else!
While all baseball teams lost money due to empty ballparks in 2020, Steinbrenner claims the Yankees lost more revenue than any other team.
The Yankees And That Damn Luxury Tax
Whether that’s true or not, it doesn’t matter because he’s the boss, and Brian Cashman must work with the number given to him as he seeks to set the Yankees roster for 2021.
However, what’s interesting is that the luxury tax has nothing to do with the so-called bottom line of the Yankees. Depending on the season’s overall revenue, the Yankees can exceed the threshold, pay the luxury tax, and still generate a profit for the shareholders.
Perhaps, that’s why the Yankees, who have passed the threshold and paid the tax several times over the years, are now valued by Forbes at $5 billion. Not bad for a team that Hal’s dad, George Steinbrenner, purchased in 1973 for $8.8 million.
But again, it is what it is, and the Yankees payroll for 2021 will not exceed $210 million without the approval of Hal Steinbrenner.
Yankees Versus The Luxury Tax Threshold
So, on day one of the offseason’s official beginning, when free agents can begin declaring themselves as such, where does the Yankees team payroll stand versus the $210 million thresholds?
Not bad is the quick answer. According to Spotrac, the go-to source for these things, the Yankees look like this:
The bottom line on this chart and the one we want to focus on is the $63 million the Yankees have to play with before reaching the tax threshold.
The chances are great that Brian Cashman will not spend all of it during the offseason. He’ll want to have a number (perhaps $5-8 million) “in the bank” for expenditures during the season to replace injured players outside the Yankees roster, and most especially to add talent as needed at the trade deadline.
So, following the always estimate high when dealing with money, let’s add $2 million that places the available to spend amount to $53 million.
Yankees: How To Put The Puzzle Pieces Together
Here’s where it gets tricky for Cashman and the rest of us armchair general managers.
Start here by remembering that DJ LeMahieu, Masahiro Tanaka, James Paxton, and J.A. Happ are (technically) no longer Yankees. Therefore, they are not included in the figures shown in the chart.
The Yankees have the option to tender a one-year contract to any or all of them at a price pre-set by MLB of $18.9 million.
Almost certainly, the Yankees will not do that with injury-prone Paxton, and they’d think long and hard before extending an offer to Happ.
On the other side, though, the Yankees will definitely reach out to LeMahieu with the hope he will judge the COVID-affected marketplace for free agents as tenuous at best and accept the offer.
To a lesser degree, the Yankees are interested in retaining Tanaka, who, regardless of his disappointing showing in the playoffs this year, has been the Yankees’ most consistent starting pitchers during his tenure with the team.
Tanaka was on the books for $22 million in 2020, and the $19 million would represent a decrease in salary if the Yankees make an offer, and he accepts. Tanaka impresses as the sort who puts his love to pitch a baseball with perfection over money, making it likely he will take the offer.
Yankees Spending For 2021 – Let’s Catch Up
So, potentially, where does this leave us? If the Yankees tender an offer to both LeMahieu and Tanaka and they both accept, in round numbers, that will knock $38 million off our budget, leaving only $15 million left to spend.
Obviously, this is not the position the Yankees want to be in if they intend to pursue the two premier free agents in the Class of 2021, catcher J.T. Realmuto and starting pitcher Trevor Bauer.
Neither is expected to sign with any team for less than $20 million per season on a multi-year contract.
So, now what? The Yankees could skip Tanaka while going after Bauer as his replacement.
That carries the risk the Yankees miss out on Bauer as he signs with another team, leaving them even deeper in the hole of filling a starting rotation.
An alternate strategy the Yankees can pursue is addition through subtraction. That is, are there players currently on the Yankees 40-man roster who can be cut or traded from the team, thereby opening up additional monies to spend?
Except for forBrett Gardner, who is a free agent, the table below shows seven players to whom the Yankees are committed to paying $10 million or more for next season:
Giancarlo Stanton Is Untradeable – Who Said So?
At the top of the list, Gerritt Cole is untouchable. The proverbial elephant in the room, though, is Giancarlo Stanton, who the Yankees will pay $29 million next year unless he exercises the option in his contract to opt for free agency. Stupid of him if he does.
Everyone assumes that Stanton, because of the outlandish contract granted to him so generously by Jeffrey Loria, the Miami Marlins owner before Derek Jeter‘s team came in, is not tradeable.
That is not true. More accurately said, Stanton, is difficult to trade at this point in his career.
To consummate a trade to another team, Brian Cashman will need to summon all the creativeness he has, plus the Yankees will probably need to offset a portion of the monies owed to Stanton over this decade.
There are four teams in California in Stanton’s home territory, and they all have the resources to take on Stanton’s wages.
The Dodgers come to mind first, but their interest in Mookie Betts trumps everything, and who can blame them. Still, like the Yankees, they are a money-making machine, and there’s no reason to think they weren’t thinking dynasty after their win last night.
The Angels still lack that one dynamic force in their lineup to complement Mike Trout. Depending on what happens with the Astros and the potential of losing Michael Brantley and George Springer (both free agents), plus the shakiness of Justin Verlander‘s career, the AL West is a division that can easily be up for grabs.
The Padres and Giants both made credible efforts to make the playoffs this year, and each will be knocking on the door again next season, if only as a Wild Card team competing with the Dodgers in a power-packed division.
Given Stanton’s history with injuries and loss of playing time, a trade now is not as likely as it will be once the season has begun, and teams have had a chance to see Stanton in action – or inaction. But again, if Cashman makes the push now, ya never know.
On Down The Yankees 2021 Salary Commitments
Of the others on the Yankees list of high-paid players, there does not appear to be any chance of movement. Luis Severino is in his bounce-back year from injury, Aaron Hicks is overpaid no matter what the Yankees say, and Aaron Judge is still the Yankees’ face.
Aroldis Chapman has been a disappointment in the playoffs two years straight now, surrendering home runs that resulted in Yankees losses. But if the Yankees are going to part with Chapman, there has to be insurance they can wade through the complicated scenario presented by Zack Britton‘s contract, retaining him for 2021.
Yankees: Put It All Together And What Do You Have?
Put it all together and what you have is one big mess and a jigsaw puzzle for Brian Cashman to solve, and there isn’t much time to play around.
This is why you hear talking of the Yankees going status quo next year, making no significant changes other than bringing LeMahieu and Tanaka back.
With a full season of fan attendance (God willing), the theory is that revenues will spike up to normal levels, leaving the Yankees with money to spend in next year’s outrageously robust Class of 2022 Free Agents.
But the Yankees do not standstill. Nor can they afford to given the fact they are still seeking the elusive 28th championship, which gnaws at the soul of ownership, the players, and most significantly, Yankees fans.
Yankees Owner Hal Steinbrenner – The Decider
For anyone seeking a light in the tunnel, the good news is Hal Steinbrenner is not rigid in the goal he sets for Brian Cashman. Unlike, for instance, the departing Wilpons in the Mets organization, Steinbrenner is always willing to listen.
Steinbrenner has been stung as much as anyone by the Yankees futility in reaching the playoffs but falling short each time, even to the point of being one out from a World Series appearance.
But it’s up to Cashman to convince Steinbrenner that by adding this player or that player, the Yankees will be over the threshold.
So that the chances of a parade down Broadway next November are decidedly increased, so the luxury tax is damned, and let’s go for it.
Brian Cashman – You’re Up
In any event, this is why, as they say, Brian Cashman gets paid the big bucks to make the many decisions presented beforehand.
For this writer, though, the two caveats I identify are DJ LeMahieu and J.T. Realmuto as must-haves. The experiment with Gary Sanchez has run its course and must be declared finished – kaput. As for LeMahieu, his stats speak for themselves as the Yankees MVP.
As of today, it’s open season for hunting in the MLB marketplace, and I, for one, can’t wait to see what moves the Yankees make or do not make during this year’s version of the Hot Stove League and the upcoming deadline dates.
What’s in your Yankees stocking this Christmas?