For a similar breakdown and musing on the payroll and the tough player choices ahead, click through here to Stephen Rhoads’ piece on RAB, which has a complete, editable that you can play around with.
All offseason long, we’ve been talking and thinking about the looming $189M payroll target the Yankees are aiming for in 2014. This will help them get under the luxury tax and potentially net them a lot of money that they can reinvest into the team. The thing we’ve wondered most is how this will affect the team’s spending going forward. With that “budget” in mind, it seems less and less likely that the Yankees will go for big money contracts, as those contracts could hurt them in 2014. I think we can all agree, though, that if someone () is out there who can help the team, they’ll break the bank for him. But is it possible for them to break the bank AND stay under that $189M mark in 2014? Using the , and assuming a few things, let’s take a look.
Our assumptions will be:
1. will exercise his 2014 player option worth $8M.
2. The Yankees will re-sign and the contract’s AAV will be $18M.
3. The Yankees will re-sign and the contract’s AAV will be $13M.
4. The Yankees will re-sign and the contract’s AAV will be $15M.
5. The Yankees will re-sign and the contract’s AAV will be $9M.
To make life easy, I’m not going to figure any arbitration raises and will leave that out as “room to play with” for the 2014 budget. So, if we assume all those things (which are reasonable), the 2014 payroll for those players (and , , and ) ends up at $135.125M. That’s a lot between eight players, and we haven’t even gotten a second starter or any relievers in there. Luckily for the Yankees, 2014 will be the first year of arbitration for both and , so they may not be too expensive. It’s also possible that another minor leaguer (or two) like Manny Banuelos, , David Phelps, or Adam Warren will be taking up a low-cost spot in the rotation (But what about ? He’ll be a free agent after 2013). If the Yankees want to make that big splash for Hamels, there’s probably no way they get him for under $23M/year, so if you want, you can add that to the figure above and come up with $158.125M.
Assuming Pineda and Nova are still in the rotation at that point, along with Sabathia, Hamels, and one of the minor leaguers (as well as the everyday players listed above), that $158.125M is spread out across 12 players. That means the team would have $30.875M to spread around to the 13 remaining players on the roster. The spots they’d need to fill would be:
-Left Field (which will presumably be , who’ll be in his final arbitration year)
-DH or 3B (depending on what sort of shape is in)
-Backup catcher (which could be filled by or , either of whom will be cheap)
-Most of the bullpen ( will be a free agent, as will , , and ; but will be in his final arbitration year while would be in his second.
-Bench players (Eduardo Nunez will be in his first arbitration year, as will , but I don’t think he’ll make it that far. will be in his second arbitration year; for whatever reason, I think he could still be with the team then).
Giving roster spots to Gardner, Nunez, Dickerson, Roberston, and Wade would probably cost the team around $10M (with Gardner and Robertson making the bulk of it), putting our theoretical payroll at $168.125M. That would leave the team $20.875M to spend on the remaining roster spots. Going position by position, here’s what we’d have:
Position (Filled/Desired)
SP (5/5): Sabathia; Hamels; Pineda; Nova; (Rookie)
RP (2/7): Robertson; Wade
C (2/2): Martin; (one of Romine/Cervelli)
1B (1/1): Teixeira
2B (1/1): Cano
3B (1/1): Rodriguez
SS (1/1): Jeter
LF (1/1): Gardner
CF (1/1): Granderson
RF (1/1): Swisher
DH (0/1):
BN (2/3): Nunez; Dickerson
Total (18/25)
So, the Yankees would need to fill five relief pitching spots, a bench spot, and the DH spot with just under $21M. That is a very tall order, even for a GM of Brian Cashman’s caliber.
Now, remember, this is essentially a pipe dream scenario, since I’m proposing having both Swisher and Granderson back (which may not happen) as well as signing (which may not happen). By no means is this necessarily likely to happen; I just wanted to see if the Yankees could have their cake (Hamels and two great outfielders) and eat it, too (stay at $189M). It’s possible, but is it plausible? I’m not so sure I can say that.
EDIT 10:00 AM: And, as UYF1950 just pointed out in the comments, luxury tax thresholds are based on the 40 man roster, making this scenario even more unlikely. The Yankees are going to have to make a decision in the coming years. Do they want to play the luxury tax game? Do they want to break the bank for Hamels? And if they do the latter, how do they replace the production of the players they let go? The biggest hit will occur in the outfield if/when they let people go. I think it’s safe to say that one of Curtis Granderson and Nick Swisher will not be on the Yankees in 2014 if they want to sign Hamels. If they decide that they just can’t replace that OF production, perhaps they go cheaper with pitching in 2014 and try for someone like Shaun Marcum, Anibal Sanchez, or Brandon McCarthy.
Of course, this could just be remarkable posturing. I’m not sure where it would get them, but I won’t believe this $189M thing until I see it. While making money is the ultimate goal of any business, the Yankees value winning over just about everything.
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Matt – It’s also a pipe dream because MLB Luxury Tax Threshold is based on a teams 40 man roster as well as benefits and incentives which usually account for about $10MM in and of themselves.
Sorry but your numbers are way off.
Yup cant happen. Imo you will have to “trade” one of canoe granderson for a hamels greinke. So the development of bichette and Williams really is crucial if you want one of the sps. If Williams makes it to Trenton this year and stays productive its possible. If bichette or cave look like legit ml corner bats its possible. But without real development of those guys oligarch unlikely.
Suddenly the Yankees will also need to start smartly playing the service time game. Don’t expect the b’s unless they are no doubt ready. It’ll be fungible fringe guys until the last possible moment
Alex Rodriguez’s early retirement is our only hope.
Great subject to tackle. A few points:
Seems to me the reason they went out and got Pineda is so that they wouldn’t have to chase Hamels. I just don’t see them giving Hamels $23 m per year when they have makings of very talented cost controlled and partly home grown rotation.
–Doubtful they’ll get Boras client Cano for $18 mil. Unless his performace falls off, $22 mil or more seems likeloy.
–Estimates for Grandy and Swish also a bit low IMO.
–I see strong chance for M. Williams to be on 2014 squad. Unlike many prospects, hye is already a very strong defender. If team is serious about $189 cap they can put him in CF and let him develop at ML level. More agressive than they would normally like but would allow them to pass on say Grandy.
So long as there are no major injuries requiring costly replacements I think Yanks can meet $189 mil target. But I would guess they’d pass on Hamels and at least one of Swish/Grandy/Cano.
At some point, Yanks will be wise to simply cut A-Rod. Won’t save them money but they’ve already le tail wag dog in letting go of Jesus so fading A-Rod can be DH. A-Rod will still be there in 2014, I’d guess. After that, hard to imagine he is not a liability even as just DH.
I definitely have absolutely zero interest in the Yankees going after Brandon McCarthy (despite the stellar BB/9) or Shaun Marcum.
There is a 0% chance Nick Swisher is on the 2014 roster.
agreed. No way Swish is back.
I’m not going to say 0%. I think there is a non-zero chance that re-signing Swisher to a three year after 2012 is one of the best options for the Yankees.
Swisher’s skill set is much better than Cano’s or Granderson’s in terms of late age production. I’d rather re-sign Swisher for RF than extend Granderson. In fact if they are dead set on re-signing one, signing Swisher to a 3 year deal and going after Upton to replace Granderson is a better option than anything involving giving Granderson a 5+ year deal.
T.O.can you explain how you can say Swisher’s production ages better than arguably the best LHB in the AL??????
where are you coming from with this one?????
Nick Swisher relies on a high walk rate to generate his OBP which makes up a ton of his value. Even once bat speed starts to slow down a batters eye stays the same. Even Giambi at this point in his career has pretty much the same eye he did when he was in his prime. Swisher’s also a pretty big guy who doesn’t rely on bat speed for all his home run power, he can muscle a ball out of the park when he needs too. So his power drop off should be a slow regression as he gets older, not a sudden and huge drop off once his bat speed starts to go. Even in his mid 30′s I could see Swisher posting a .360 OBP and slugging 20-24 HRs, which isn’t elite but it isn’t bad.
Granderson is a small bodied power hitter who relies on his hands and bat speed for 100% of his power. Once his bat speed drops off his power is going to tank. He’s also a strikeout machine, which as his bat speed drops is only going to get worse. His career OBP is .345, if he’s posting .325-.340 OBP’s, hitting low 20′s in the HR category, striking out 150+ times, playing LF because his speed is declining the amount of value he brings plummets, then he isn’t worth keeping around.
Everything that makes Granderson what he is now is tied to youth and athleticism, which is the first thing to go as you age. With Swisher he isn’t the most athletic or physically gifted player, he’s always had to do the kind of things which tend to age better. Such as getting on base. So yes Granderson is the better player now, but at 35 or 36 I’m putting my money on Swisher being the better player.
If management does get the payroll to $189M in 2014, one thing is for certain, fans must expect a mediocre team — or at least a team that will not make the playoffs. 2015 and beyond will depend on development of prospects to a large degree and free agents to a smaller degree. If the Yankees do not pursue Hamels next off season, that will be an indication they are going to try to get below that $189M mark. That probably also means both Granderson & Swisher are not resigned. Probably also have to let Martin go after 2012.
If a few of the prospects develop by 2015 and there are some younger quality free agents available (for a moderate number of years) then I guess I would be willing to have 2014 be a frustrating year.
It is definitely possible to pull this off… It will just take a lot of planning, starting now, and use of AAV to their advantage. Here are a couple of ideas on how to get started. Pineda and Nova will both be arb eligible for the first time in 2014. It is reasonable to expect (though there is a lot of projection and a lot that can change) that they will both receive near the league minimum in ’12 and ’13 and roughly 5 mil in ’14. If they roll that into a 3 year extension that is a total of 6 mil over 3 years even though each will actually be paid 5 in ’14. This is a potential savings of 3 mil per player.
Robertson will be arb eligible for the 3rd time in ’14, depending on whether or not he is the closer by then his number could soar… reliever projections can vary a lot, but it would be worth it to consider locking him to a 3 year contract. Total value of 8-9 mil with a salary of 4-5 in ’14. This could also possibly save another 2 mil.
A similar thing could be done with Gardner…
Granderson and Cano are also guys who are at the end of team friendly deals with 2 years left (indluding options). Cano has been known to want an extension. Tacking 4-5 years to the end of their current contracts at a fair market rate would decrease the potential AAV by close to 2 mil per player. For example Granderson has 2 years totaling 23 mil. If you add 5 years at 18 mil (90 total) to the end it changes the ’14 AAV from 18 to 16.1
I think that it is possible to have a total payroll of 200 to 205 MM (or maybe more?) while keeping the AAV under 189 in ’14. They may need to sacrifice swisher to bring in another pitcher this offseason, but I think this creates an avenue to 189.
It would be a shit in philosophy, as the Yankees have always preferred to pay more through arbitration but keep flexibility with players through team controlled years.
Extending Cano now would be a wise, though not likely to happen move. Extending Granderson now should be completely out of the question. He’s coming off a career year on the wrong side of 30. I say thanks for all you’ve done Grandy but walk away when 2013 ends.
I agree with you on Granderson – I was just looking at ways to take players on the current roster and lower their potential AAV for 2014. It was mentioned that Pineda and Nova have great chances to be super 2 players. The theory I mentioned still works for them the numbers just go up some.
I think the reason they made the Pineda trade is because they think he will be the number 2 starter and they won’t need to sign Hamels, Cain or anyone else next offseason – making 189 much more likely…
UYF1950 correctly pointed out above that your numbers are way, way off because you did not base them on a 40 man roster. He also correctly pointed out that all teams are charged aprox. $10m per year for benefits & retirement fees. This also goes against the luxury tax.
It was also pointed out that your estimates for Cano ($18m) and Granderson ($15m) are low. You would need to add about $10m to the LT ($5m each) to be in the ball park.
No where have you accounted for ARod’s $6m HR incentives. These escalators are paid and charged against the LT in the year that they are earned.
You are very likely estimating low on what Pineda will earn in 2014. He spent every day of 2011 on the Mariners’ 25-man roster. Most likely he will do the same with the Yankees in 2012. He most likely will qualify as a Super-two and be arb. eligable after 2012. The new CBA expands the Super-two rate from 17% to 24%. Pineda will no doubt be going into Arb. 2 in 2014.
What does all this mean? Well, some very rough calculations say that we can afford to keep Cano, probably in the $22m-$23m range. If we want to keep Granderson too, I think it can be done, but will mean going absolutely dirt cheap everywhere else. Anyone making any kind of money at all, like at the back end of arbitration, we would not be able to afford. No way can we also keep Swisher. No way we can keep Martin. And there is absolutely no way we can sign ANY big contract for a FA like Hamels.
If ownership is really serious about this, it might very well mean some lean years. Depressing.
People keep saying lean “years”, as if the Yankees want to be under 189 million from now to the end of times. They only have to be under the one year for the reset, then they can go right back to 200+ million and still have gotten enough benefit for it to have been a good idea. So at worst you’re looking at one year of possibly not being as strong a team as possible. 2013 still looks strong, then they re-fill with free agents or trades in 2015.
Wrong, read the CBA as the real money potentially saved grows going forward.
Yes they would save more by staying under after 2014, but they only have to be under 189 million for 2014 in order to reset the “repeat offender” clause for luxury tax. Which resets the tax from like 50 to 17%, which is really all the Yankees are looking to do.
So once again the Yankees just have to stay under for the one year, then they can go back over for 2015 and beyond and still save enough money for it to be a good idea.
Again you are wrong and have no clue what you are talking about. Starting next year (2013) if a team is under the luxury tax threshold they would receive a rebate of 25% of their revenue sharing dollars paid. If they stay under the each year going forward the rebate goes up to 50%, 75% and then 100% so the Yankees could save well over 100 million dollars by being under the tax threshold.
Saving tax dollars is chump change compared to the real money saved by being under the tax threshold for 2013-16.
I’m not wrong, you are simply missing the point. I have never denied that being under through 2016 wouldn’t create bigger savings, in fact I have acknowledged that it will. However just by being under 189 million for 2014 the Yankees would go from paying 50% luxury tax down to 17.5%. Since the Yankees started paying 40% luxury tax in 2005 they have averaged 25 million in luxury tax per year, the difference in rising up to 50% and dropping down to 17.5% is huge. That is the main goal for the Yankees, they may very well want to stay under for longer, since if they stayed under for 3 years they would pay no luxury tax and could save a total of 100 million dollars. However like I said twice already just being under for 2014 creates enough savings by reseting the repeat offenders label to make it worth the Yankees time.
You are very rude btw, which I don’t appreciate, and I was never rude to you.
John Q. – You correctly pointed out about the omission of A-Rod’s “milestone incentives” from the writers calculation. It is possible however that A-Rod doesn’t hit that incentive in 2014.
The 1st incentive kicks in with Mays 660 HR’s. It’s probably unlikely but not impossible that A-Rod will hit that one sometime late in 2012 or early 2013 season. He needs 31 for that mark. The next incentive in the “Babe” at 714. He needs 85 to get there. He may get there in the 2014 season if he does it should be very late in that season. It’s probably more likely that he will hit it very early during the 2015 season.
A lot of when he is likely to hit the Babe’s milestone depends on this year and how many he enters the 2013 with. At least that’s my opinion.
I really doubt Swisher get re-signed. They can probably find cheaper, younger options for RF through trade or even free agency if they go with BJ Upton in CF or Delmon Young in RF. I also really hope Granderson isn’t on the team come 2014. If he is it will be with a freshly signed contract extension, one we will all be regretting after a few short years. I’d prefer to go with BJ Upton in CF and Granderson in RF for 2013, or trade Granderson before 2013 starts and get a corner outfielder in return.
Yeah, it would have to be a big discount to his true market value for it to work for the Yanks. It will probably be his last big contract opportunity, so why would he do that? So this is probably the last year for Nick, which will be sad.
IF the YANKEES are to get to the $189MM Luxury Tax Threshold their payroll needs to look something like this IF Derek Jeter is in the line up in 2014:
C……………..Austin Romine………………………$500,000
1B……….…Mark Teixeira……………….$22,500,000
2B……………Robinson Cano…………………..$20,000,000
SS/DH…….…Derek Jeter……………….…….$8,000,000
3B/DH…….…Alex Rodriguez…………..$27,500,000
LF……………Brett Gardner………..………….$7,000,000
CF……………Center Field Player TBD..$16,000,000
RF………….Right Field Player TBD…..$10,000,000
DH/Util Inf.….DH Player TBD………$2,000,000
SP1………….CC Sabathia……………..………$24,400,000
SP2………….Michael Pineda………….…..$3,000,000
SP3………….Ivan Nova…………………………..$3,000,000
SP4…..….Manny Banuelos..…..………$500,000
SP5….Comp. To Hughes or Garcia…$5,500,000
CL…….David Robertson……………$5,500,000
SU…….……Set up man (Joba)…….$5,000,000
RP……Cory Wade..……….……..$600,000
RP…….Adam Warren…………..…….$500,000
RP……………Dellin Betances….…….$600,000
RP……………Relief Pitcher TBD….$1,000,000
RP………Relief Pitcher.TBD….$1,000,000
C – Bu…….Francisco Cervelli……$1,500,000
Util.-SS….Eduardo Nunez……….$1,800,000
Util.-OF….Chris Dickerson……….$1,500,000
Util.-OF Prospect/Rookie (ie:Justin Maxwell)…….$500,000
15……………Balance of 40 Man Players……….$2,000,000
………………Player benefits…………….………$10,000,000
………………Incentives, etc…..………………….$6,000,000
TOTAL Payroll………………………………………….…… $188,400,000
In some of the cases the names make no difference it’s the salaries for the position thatare critical to staying within the Luxury Tax.
Can’t the yankees simply backload contracts? isn’t that what a lot of teams do and have done this year already? If they sign a FA or two to fill holes in 2012/2013 they can just heavily backload it to make the 189 mark.
No, back loading does nothing. MLB uses AAV (Average Annual Value) to calculate a teams Luxury Tax.
I see.