Yankees Weigh In With Ingenious Luxury Tax Avoidance Plan For 2021

The Yankees and DJ LeMahieu showed what can happen when both sides work together, as Yanks introduce a new way to avoid a luxury tax.

The Yankees and DJ LeMahieu would inevitably put aside their differences, ending a three-month slow dance with a unique contract.

I did a double-take when I first saw six-years in the headline. Say what – the entire issue beforehand was supposed to be the Yankees balking at going for the fourth year. What gives?

Then, it dawned on me. Those son-of-a-gun Yankees have done it again by coming up with a novel way to kill two birds with one stone.

The Yankees, as we’ll see, are still not out of the woods yet to fulfill their goal of staying under this year’s $210 million payroll threshold before the luxury tax kicks in.

But surely, the $90 million spread out over six years (at $15 million per), instead of four years (at $20+ per), gives them new hope of staying under the limit.

Of course, the deal could not have happened with the cooperation of LeMahieu. But what does he care? The total money is the same, and surely he can find a way to manage and live on fifteen million per season.

Here’s the latest chart as tabulated by Spotrac, showing the Yankees payroll for 2021:

Yankees: Digesting The Numbers

The main takeaway from the numbers we see is that the Yankees still need to tweak their payroll, with only $4.8 million remaining (see Est. Tax Space) before they exceed the limit.

Curiously, Spotrac’s account does not include the $15 million allotted to LeMahieu. Still, it does include the $11 million soaked up by the Yankees signing of two-time Cy Young winner Corey Kluber.

The amount allotted to Kluber is in flux as details of his contract have yet to be announced.

It is expected his deal will be incentive-laden with only a portion guaranteed and subject to the Yankees’ total payroll subject to the tax.

But any way you crunch the numbers, while the Yankees have dodged an immediate bullet by extending LeMahieu out to six years, there’s still much work on Brian Cashman’s plate before he can satisfy Hal Steinbrenner’s “request” to stay under this year.

Yankees: The Work Has Just Begun

As a segway, then, consider the following future moves by the Yankees, and note that not all of them pertain to money and the luxury tax.

• The Yankees starting rotation is still a work in progress. Behind Yankee ace Gerrit Cole is only Jordan Montgomery, who at best is a number three. Kluber, assumed to be healthy, will be slotted in behind Cole.

  

But after that, it’s anyone’s guess as to who falls in the rotation. Domingo German, assuming he does proper penance for his sins in the eyes of the Yankees front office, is a good candidate, and Luis Severino is due back from surgery rehab in June, but nothing is firm in either case.

Preferably, the Yankees want to keep their prized studs in the minor leagues for two reasons. One, to allow them a chance to build up arm strength following last year’s cancellation of the minor league seasons.

And two, to have pitchers like Deivi Garcia, Michael King, Clarke Schmidt, and Luis Gil, among others, on hand for call-ups in case of injuries or COVID-19 impacted active roster needs.

Somehow, Brian Cashman needs to find a capable and proven major league starter who can slot in as a number four starter.

Among the latest rumors is someone like Julio Teherán, who, Between 2013 and ’16, Teherán threw nearly 800 innings, made two All-Star games, and posted a 115 ERA+, and is expected to command no more than $2,5 million for his services in 2021.

Yankees: Where To Shed Salary?

• The Yankees, somewhere along the line, will need to pare their payroll by trading a veteran. The most available target would seem to be Adam Ottavino, who is due $9 million for the 2021 season.

  

Ottavino’s value may have dipped a bit during the 2020 season when he went from Aaron Boone‘s pet favorite to the biggest hedge in his bullpen, but the track record is there, and it’s up to Cashman to make a trade happen.

It’ll take a miracle, perhaps, but another way of paring payroll is for Cashman to seek a team willing to take on perennially health-restricted Aaron Hicks and the $10.5 million owed to the Yankees centerfielder.

Ironically, Hicks has yet to raise himself above the level of oft-injured Jacoby Ellsbury – who, by the way, counts as $5 million to the team payroll this year.

Yankees On The Bubble: Gardner And Tanaka

• Missing from the Yankees’ current roster is Brett Gardner, and with the current fiscal restraints on the team, it’s anyone’s guess if there will be room for him when all is said and done.

Having said that, though, there is a myriad of reasons for the Yankees to sign Gardner to another one year (and most likely a final) stint with the only team he’s ever played for.

Having Gardner in that corner locker in the Yankee clubhouse, where anyone entering, rookie or otherwise, passes by for a quick “Hey, we’ll get ’em today” from a Yankee mainstay who has been through countless wars, is incalculable in dollars.

So, in keeping with the newly created monetary strategy set forth by the Yankees with LeMahieu, why not offer Gardner a ten-year contract for $10 million – at $1 million per year?

I’m not kidding. Added to his pension upon retirement, a cool million a year until he’s 47 should sound mighty attractive.

• This brings us to another Yankee warhorse, Masahiro Tanaka.

Tanaka has all but said he’d just as soon pack his bags, calling it a day in America, returning to his homeland in Japan to finish out his career, rather than pitch for a team other than the Yankees.

In normal non-pandemic times, Tanaka would be a no-brainer for the Yankees to pursue and ultimately sign their most consistent pitcher since he donned the pinstripes.

In my view, Tanaka falls very much within the purview of LeMahieu in the sense that he’s willing “to talk.”

Only 32, Tanaka is a pro’s pro, dedicated to perfection in his chosen art. His past salaries are up there and subsequently beyond the reach of the Yankees this year.

But we can be reasonably sure that Tanaka has most or all of the $155 million collected from the Yankees in his bank account. Therefore we’re talking about a man who loves to pitch a baseball – and he – like LeMahieu is ready and willing to deal.

Let the actuaries figure out the numbers, but again a “long-term” deal that apportions the total money forward should not reduce the chance to have one of the premier pitchers in baseball on board with the Yankees this season – and probably – even beyond.

Gleyber Torre On One-Year Probation

• The Yankees’ signing of LeMahieu, who is slated to be the starting second-baseman for the team, leaves open several strategy questions left open for the team in 2021.

One, this means Gleyber Torres is (as of today) the Yankee’s starting shortstop following a season in which his all-around play left much to be desired, with an accent on his play at any team’s need for strength up the middle defense.

Torres will play every inning of every game on the Yankees schedule in 2021 – at shortstop.

Hope beyond hope says 2020 was a blip on the radar, and he will once again resume the career he was skyrocketing towards, and the one everyone said he was bound for.

But in the back of Cashman and the Yankee’s mind, there has to be a question concerning a need to have an insurance policy in place.

Yankees fan favorite Didi Gregorius is a possibility, as is free-agent Andrelton Simmons, formerly of the Angels.

My guess is the Yankees will fold their tent on this one, hoping for the best from Torres this year, but with an eye towards 2022 if Torres falters again when the likes of Carlos Correa, Corey Seager, Trevor Story, and Javier Baez pop up on Cashman’s radar, and Torres looms as trade bait.

Yankees: Heavy Lifting Done, But More Work To Be Done

The Yankees finally rolled up to make themselves relevant in the march to the 2021 season.

LeMahieu is gold, and Kluber is the snake in the grass the Yankees are hoping will emerge to drive once again hitters crazy with his rising four-seamer and diving curveball.

But given Hal Steinbrenner’s not so gentle “urging” to keep his payroll under the luxury tax limit, Brian Cashman, the longest-tenured Yankees GM, is once again challenged to prove he can get the job done.

Between you and me, though, and as we get closer to whatever the MLB 2021 regular season portends to be, I can’t imagine the Yankees being anything other than “The Yankees.”

At fifty cents on a dollar for exceeding the tax threshold, is it possible that Steinbrenner will close his checkbook rather than pay, for instance, five million on a ten million excess in return for Tanaka?

As said beforehand, let the actuaries get their sharpened pencils and calculators out.

But make no mistake – this all has everything to do with the Yankees 2021 season.

 

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