The Yankees have already blown past the luxury tax threshold for 2020. Next year promises to be the same or worse unless contract extensions are offered…
Yankees principal owner Hal Steinbrenner has given the green light to his GM, Brian Cashman, to do what you have to do to get this Number 28 behind the team – now!
Cashman responded on behalf of the Yankees by taking the premier free agent for 2020 off the board, signing Gerrit Cole to a nine-year deal for $324 million.
The Yankees also signed all nine of their arbitration-eligible players to generous one-year contracts, subject to renewal next season.
The bills are now coming due, and if the 2020 season ended today, the Yankees would owe the league $21,752,786, payable upon receipt per Spotrac).
Moreover, the Yankees have a negative balance of $-49,803,714 above the threshold, meaning any additions to the payroll without substantial subtractions will only further increase the tax owed.
Yankees: A Caution Light Is Coming
Yes, the Yankees are known for their ability to print money and act like the Evil Empire as they have done this winter. But Hal Steinbrenner is a serious businessman, and his main job is to maximize profits for his stockholders.
Steinbrenner will not permit Cashman to extend this year’s spending spree to develop into a trend, and Cashman fully understands and will support his boss as he has for the last decade.
What’s needed is not a crash diet beginning next season, but a plan that controls spending over the next several years.
The Yankees can and will lead the majors in payroll – but they will know in advance and as best they can – what the hit will be year-to-year.
One way to do that is by establishing a list of their core players who are soon to be beyond team control by offering each player a multi-year contract.
The Positive Impact Of Extensions
Now, let’s look at the impact on both sides of the contract extension question for next year (2021).
Again using data supplied by Spotrac, you’ll notice the Yankees have only eight players under contract for next year. You’ll also note these eight players consume $120,500,000 toward next year’s luxury tax threshold set at $210 million.
This leaves the Yankees with $89,500,000 to spend on their remaining roster. And it’s with those unsigned players where we need to key in on to extract the benefit of contract extension offers.
Do the Yankees (really) want to roll the dice twice more with Aaron Judge in the arbitration process? Judge already received a 1000 percent raise this year to $8.5 million, which he readily agreed to.
But what if he decides to challenge the Yankees in the future by demanding $30 million two years from now.
And don’t be thinking – aw, he’s a good guy and he wouldn’t do that. Remember, baseball is not a sport; it’s a business and a livelihood for players with a limited lifespan in the game.
Remember, too; we’re not talking about reducing payroll as much as controlling payroll as best the Yankees can and within the “confines” of having to pay so many talented stars.
Yankees In Or Out Of Control?
One way or another, Judge, Sanchez, etc. are going to be paid handsomely for their services. The question is do the Yankees want a budget in front of them with guaranteed salaries over four or five years for as many players they can?
This, so the team knows in advance when each year’s free-agent class presents itself, the Yankees can target the ones they not only want but the ones they can afford?
All this becomes moot, of course, if Hal Steinbrenner opens the cash floodgates again for 2021 and beyond. I don’t see that in the picture, though.
No matter what it looks like this year, Hal is not George. This is a one-shot deal – and if this team fails to bring home the bacon – the option next year is not to spend more.
Instead, it’ll be to spend less, much less and even up to and including a tear-down. And we’ll see the Yankees trading away players making the big bucks, but who are not producing.
A Sidebar Before We Go
In the meantime, though, get ready in Baltimore, Kansas City, and Detroit.
The Yankees will be sending you a Christmas present as a reward for your tanking ways when they remit their luxury tax check to the league following this season’s World Series.
Which, by the way, reminds me. Tanking is just as much as sign-stealing when it comes to cheating. In fact, in some ways, it’s worse when MLB allows these teams to put a Double-A team on the field for their fans.
And MLB shouldn’t need Mike Fiers as a whistleblower to shine a light on this problem. They’re doing it in broad daylight…