Saturday, January 12, 2019

Looking at the Yankees Payroll After the DJ LeMahieu Signing



So, you guys and girls remember that time I broke it down and explained how the New York Yankees could not only sign both Manny Machado and Bryce Harper off the free agent market, but they could also do it while staying under the luxury tax? Yeah, about that. That didn’t exactly work out and now it seems like it is unlikely that the Yankees sign either of the 26-year old “generational” talents off the free agent market this offseason. I mean, they could, but after crunching the numbers on the payroll does it look completely unlikely? Keep reading…




Guaranteed 2019 Contracts (AAV in Parenthesis)



Giancarlo Stanton - $26 million ($25 million)

13-year deal worth $325 million with a full no-trade clause, an opt-out clause after the 2020 season, and a 2028 team option worth $25 million with a $10 million buyout. Stanton also receives $50,000 for each All-Star appearance, Silver Slugger Award and Gold Glove Award. Stanton also receives $100,000 per MVP Award and $500,000 for each World Series MVP Award achieved throughout the contract. If Stanton does not opt-out after the 2020 season the Miami Marlins will retain $30 million in Stanton’s salary.





Masahiro Tanaka - $22 million ($22,142,857 million)

Seven-year deal worth $155 million with a full no-trade clause.





Jacoby Ellsbury - $21,142,857 million ($21,857,143 million)

Seven-year deal worth $153 million including a team option for the 2021 season worth $21 million and a $5 million buyout. Ellsbury also contains a full no-trade clause written into his contract.





Aroldis Chapman - $15 million plus $2.2 million signing bonus ($17.2 million)

Five-year deal worth $86 million including an $11 million signing bonus paid in equal increments ($2.2 million) annually throughout the length of the contract. Chapman has an opt-out clause after the 2019 season and a full no-trade clause through 2019. Chapman has a modified no-trade clause for 2020 and 2021 if he does not exercise his opt-our clause that keeps him from being traded to a West Coast team.



JA Happ - $17 million ($17 million)

Two-year deal worth $34 million including a vesting option for 2021 worth $17 million if Happ pitches 165 IP or makes 27 starts in 2020.





CC Sabathia - $8 million ($8 million)

One-year deal worth $8 million





Brett Gardner - $7.5 million ($7.5 million)

One-year deal worth $7.5 million






Zach Britton - $13 million ($13 million)

Three-year deal with an opt-out after two years if the fourth-year team option and player option is not picked up by the club after the second year. The contract could be anywhere from two-years and $26 million, three-years and $39 million if the fourth-year option is declined but Britton does not opt-out, to four-years and $53 million. Britton will also receive $1 million if he is traded any time throughout the contract.




DJ LeMahieu - $12 million ($12 million)

Two-year deal worth $24 million





Troy Tulowitzki - $555K ($555K)

One-year deal worth $555K (remaining salary paid by the Toronto Blue Jays) with a full no-trade clause.



Total: $144,397,857 million (145,155,119 million)

All salaries via Spotrac.com



Remember, and I don’t know why there is a difference here, that arbitration salaries are classified as non-guaranteed contracts. That’s why those salaries that were agreed upon by eight of the nine arbitration eligible Yankees players this week are not listed here.




Pre-Arbitration 2019 Salaries – Valued at $555K each (waiver options in parenthesis)

Albert Abreu (3)
Domingo Acevedo (3)
Chance Adams (3)
Miguel Andujar (2)
Luis Cessa
Thairo Estrada (3)
Clint Frazier
Domingo German
Chad Green
Joe Harvey
Ben Heller
Kyle Higashioka
Jonathan Holder (2)
Aaron Judge
Tim Locastro (3)
Jonathan Loaisiga (3)
Jordan Montgomery
Gary Sanchez
Stephen Tarpley
Gleyber Torres (3)
Luke Voit (3)
Tyler Wade


Total: $11,655,000 million (21 players x $555K each)



Without waiver options for the Minor Leagues the players without a waiver option by their name cannot be sent down to Triple-A without first clearing waivers and cannot be sent down without their consent. Also, I am well aware that there are 22 players listed here and the tally only has 11 players on it. I am assuming that one of these 22 players, Luis Cessa please, will be designated for assignment once the DJ LeMahieu contract is official, presumably next week.

All courtesy of Spotrac.com





 2019 Contracts for Arbitration-Eligible Players (MLBTR Projections in Parenthesis)

Dellin Betances (Arb 3) – $7.125 million ($6.4 million)
Greg Bird (Arb 1) – $1.2 million ($1.5 million)
Sonny Gray (Arb 3) – $7.5 million ($9.1 million)
Didi Gregorius (Arb 4) – $11.75 million ($12.4 million)
Aaron Hicks (Arb 3) – $6 million ($6.2 million)
Tommy Kahnle (Arb 2) – $1,387,500 million ($1.5 million)
James Paxton (Arb 3) – $8.575 million ($9.0 million)
Austin Romine (Arb 3) – $1.8 million ($2.0 million)
Luis Severino (Arb 1) – $5.1 million (projection, potentially heading to arbitration hearing)



Total: $44,437,506 ($53.2 million)

Let me be the first, well probably the 1,000,000th, to say that I find it to be absolutely ridiculous that the Yankees are pinching pennies (at all) with ace Luis Severino. It has been reported that the Yankees offered $4.4 million while Severino asked the Yankees for $5.25 million. The Yankees are really going to squabble over $850K? Seriously? Especially with the obvious fact that the Yankees could see a contract like Sonny Gray moved in a deal now that his potential new team, cash-strapped teams like the Milwaukee Brewers, Cincinnati Reds or San Diego Padres, know exactly how much salary they would be taking back in a potential deal. This isn't the beginning of the end of Severino inside a Yankees uniform like some have made it out to be, but damn it's not a good look either. 





Retained Salaries per Spotrac


Brett Gardner – $2 million buyout of his 2019 team option

Alex Rodriguez – $4 million in deferred salary



Total: $6 million

  

Why in the world is this team STILL paying Alex Rodriguez?





The Final Tallies


2019 Total Yankees Salaries As of 1/12/19
$223,490,363 million




2019 Luxury Tax Threshold According to MLB.com
$206 million

And now it makes sense that the Yankees would argue with Luis Severino over $850K? Maybe? Not really, as you add payroll every time you purchase a contract and add someone to the 40-man roster throughout the season. The Yankees are over the luxury tax threshold, but just barely (if at all… remember, Luis Severino’s salary is still a projection) Especially when you consider just how likely it is for Sonny Gray to be traded, as we mentioned earlier, now that the team and 5th starter CC Sabathia has a clean bill of health, all things considered. So, do the Yankees have the money to add much more? Do the Yankees have the ability to add a reliever in Adam Ottavino? An infielder in Manny Machado? An outfielder in Bryce Harper? The luxury tax and the penalties for going over the luxury tax may have the answer for that.




EDIT: According to Fangraphs you have to include an extra $17 million to your luxury tax to cover medical expenses, travel expenses, etc. according to the Collective Bargaining agreement. Either way, the Yankees are over the luxury tax threshold. 


For teams that are exceeding the luxury tax threshold for the first time, which the Yankees are after resetting their penalties by getting under the luxury tax threshold last season, the penalty for every dollar spent over the $206 million luxury tax threshold is a 20% penalty up to $20 million. To use even numbers, for every $10 million the Yankees go over the threshold the team must pay an extra $2 million to the league in penalties, obviously meaning $20 million would force the team to incur $4 million in penalties. If the team exceeds $20 million over the cap, but spends under $40 million over the luxury tax threshold, the penalty grows to 32% after a 12% surtax. Exceeding $40 million over the cap penalizes a team 62.5% (42.5% surtax on top of initial 20% tax) on every dollar as well as costing the team 10 places in the Rule 4 MLB Draft. The top six picks are protected, but a team with a 7th overall pick or later would see their highest selection in the MLB First Year Players Draft moved back 10 places. If your team falls in the top six of the MLB Draft, which the Yankees do not, they would see their second highest pick in the draft moved back by 10 places instead.


So, a hypothetical deal worth $30 million annually in salary for either Harper or Machado would cost the Yankees an extra $9.6 million in 2019 alone. Signing both to a pair of $30 million annual salaries would end up costing the Yankees $85.5 million in 2019 instead of the $60 million that most Yankees fans see, thus making it like the Yankees are signing three generational talents instead of just two. That’s also not counting the fact that the tax penalties get tougher each year the Yankees are over the cap and the fact that New York will slide 10 places in the draft.

A hypothetical deal with Adam Ottavino though, projected to earn $10 million annually over three-years according to MLB Trade Rumors, would only cost the Yankees a total of $12 million though and would allow the team to keep their current position in the 2019 MLB Draft. That’s before considering that the Yankees could potentially move at least $7.5 million in Sonny Gray’s salary, thus costing the Yankees less in terms of luxury tax penalties by signing Ottavino.


In closing, Ken Rosenthal and many other insiders may not be counting out the Yankees just yet, but the numbers don’t lie. Aside from the possibility of signing RHP Ottavino, a signing I am a huge supporter of, it looks like the Yankees heavy lifting this offseason, barring a major trade, is over. The Yankees may grab Ottavino to finish off the bullpen, or they may head into spring training with the team as it is currently assembled, but one thing seems really clear though, given the history of Hal Steinbrenner as the Yankees principal owner, neither Machado nor Harper will be donning pinstripes in 2019.

Grab your pitchforks, Yankees fans, this is going to be a wild month of January and February when these two 26-year old players sign elsewhere. Be ready. 






8 comments:

  1. Financial costs clearly reveal the dilemna. Great job explaining the Yankee situation. The costs are more than money but draft pics. Thank you.

    ReplyDelete
  2. With the exception of 6 players we don't that well any way.Spend the money, Machado and Harper.
    Really DJ LaMahieu over Harper.
    Cashman and Hal must be crazy, hey Hal they are not lining up to play for the Yankees like they used to and here you have 2 that are wanting and you pass three if you count Corbin though I can't see giving him 140 million or a 100 million on 6 years but Harper has proved he is consistent and AL East tested
    So you gamble with the mental aspects of Andujar all winter and then you go out and pass on Machado .Andujar's nerves must be shot with all that phooey.
    Choosing CC has trouble written all over it.When we need him he seems to go missing.
    I am glad to see you finally give Betances some respect though you didn't for DRob.When Cashman decides he does not respect you he treats you like dirt.
    See Williams, Posada, Roy White and. Randolph.
    When your rival makes fun of you at their WS celebration about destroying you 16-1 you spare no expenses.
    Hal you must be some kind of deaf not to hear it or about it.
    This team will win it as of now the product will not be better than last year with DJ over Machado while waiting on Didi.

    ReplyDelete
  3. FYI

    I had to add to the post. Every team has to claim "benefits" on their luxury tax (medical expenses, travel expenses etc.) at the tune of $17 million. Add that to the $206 million and change and the Yankees are way over the cap.

    ReplyDelete
  4. Such disappointment. Opportunity abandoned again.

    As the great Yankee Juggernaut prepares to fit out, and sail south
    next month for Florida.
    Talents like Harper, and Machado now stand on the pier, and wave good bye.
    Really ! Again ! Why not, who needs them at that cost.

    George would have had one of them bagged by Christmas.
    "A gift to his loyal fans", as he would say. And he meant it.

    That's how they won. Acquire the best, and pay them.
    What we have now is insane.

    Harper, or Machado changes this line-up into a killing machine...on
    day one.
    Embrace your F....'G luxury tax savings as the Sox roll down
    Commonwealth Ave...Again !
    Idiots.
    George, you taught them, but they did not listen. Sad.



    ReplyDelete
    Replies
    1. Agree, patrick. It's insane to me how it looks like the Yankees won't get AT LEAST one of Machado or Harper. I can see passing on Corbin, although I would have liked him over Happ in my rotation, but I cannot justify AT ALL passing on Machado and Harper.

      Delete
  5. The Big Fat...IF.
    As of right now, IF the Phillies sign only Harper, as is reported,
    that leaves only the White Sox....now offering just over $200 million
    for Machado. As is reported.

    IF all of the above has gravitas, do the Yankees re-enter the chase ?

    ReplyDelete
  6. I can't imagine not putting an offer, and not beating 200M of that's the offer.

    Unless we end the season with a trophy, Yankee fans must avoid YS3, refuse to buy merch and stadium food, and turn off the yes network. Hit the rat Bastards where it hurts

    ReplyDelete

Sorry for the Capatcha... Blame the Russians :)