Payroll Archives - River Avenue Blues

Tuesday Notes: Sabathia, Luxury Tax, Severino, London Series

December 18, 2018 by Mike

The 2018 Winter Meetings are over and, historically, this last week before the Christmas and New Years holidays is a busy hot stove week. Teams and players like to get things settled before the calendar flips to next year. There should be some signings this week. Will the Yankees make any? We’ll see. Anyway, here are some miscellaneous notes to check out.

Yankees paid Sabathia innings bonus

Remember when CC Sabathia forfeited that $500,000 bonus because he threw at Jesus Sucre in his last regular season start? Of course you do. That was the “that’s for you, bitch” incident. Turns out Sabathia didn’t forfeit the bonus at all. According to Ronald Blum, the Yankees paid Sabathia the $500,000 bonus anyway even though he fell two innings short of triggering the bonus. Pretty cool.

“We thought it was a very nice gesture by the Yankees. CC was very appreciative and is really excited to come back next year and hopefully win a championship,” said Sabathia’s agent to Blum. Considering the score (Yankees led 11-0) and the way he was pitching (five one-hit innings), it seemed very likely Sabathia would throw those last two innings he needed to trigger the bonus. I have to say, I didn’t think the Yankees would pay the bonus. Paying out a bonus the player didn’t reach doesn’t seem like a precedent they’d want to set. Glad to see they paid Sabathia. Dude’s been worth every penny.

Yankees get $23,877.11 in luxury tax money

According to Blum, the Red Sox and Nationals were the only clubs to exceed the $197 million luxury tax threshold in 2018. Boston owes $11,951,091 in luxury tax and the Nationals owe $2,386,097. Because the Red Sox exceeded the threshold by more than $40M, they were hit with the maximum possible penalties, meaning two surtaxes plus having their first round pick moved back ten spots. I doubt they mind it after winning the World Series. The $14,337,188 owed by the Red Sox and Nationals is the smallest luxury tax bill since teams owed $11,798,357 in 2003.

The Yankees finished the season with a $192.98M luxury tax payroll. Add in the Sabathia bonus and my calculations had them at $192.99M. I am pretty darn proud to be that close. Go me. Anyway, the Yankees had paid luxury tax every year since the system was put in place in 2003 before getting under this year. Their total luxury tax bill from 2003-17 was north of $340M. According to the Collective Bargaining Agreement, the first $13M of that $14,337,188 is used to pay for player benefits. Half the remainder goes to retirement accounts and the other half is distributed to the non-luxury tax paying teams. So congrats to the Yankees for getting $23,877.11 in luxury tax money this year. Hang a banner.

White Sox wanted Severino for Sale

Here’s a fun retroactive rumor. Brian Cashman recently told Ken Davidoff the White Sox wanted Luis Severino and another unnamed young core Yankee in exchange for Chris Sale during the 2016-17 offseason. I imagine that other player was either Gary Sanchez or Aaron Judge. “Thank God I didn’t do that, actually, because you’d be missing some serious components of our Major League club right now that are under control. We wouldn’t have gotten anywhere if I did anything like that with the White Sox back then,” said Cashman.

In the two years since trade talks, Sale has Severino beat in bWAR (+12.9 to +10.1) and fWAR (+14.2 to +11.5) but not by an enormous amount, and besides, who knows how each would’ve performed had the trade gone down. Their entire career paths would’ve changed in different organizations. Add in the second piece and gosh, I am a-okay with passing on Sale at that price. He’s a great pitcher. No doubt. The Yankees needed more than an ace pitcher at the time though. They needed as much young talent as possible and now they have a ton of it.

Start times for London Games announced

A few days ago MLB announced the start times for the London Series games next June. The Yankees and Red Sox are playing a quick two-game set at London Stadium next year as MLB looks to grow the game globally and make money (not necessarily in that order). The Yankees will be the road team for those two games. Here are the start times:

Saturday, June 29th: 1:10pm ET (6pm in London) on FOX
Sunday, June 30th: 10:10am ET (3pm in London) on ESPN

Morning baseball on a Sunday? Pretty cool. The Yankees have back-to-back off-days prior to the London Series — it’s my understanding MLB has some promotional events scheduled for Friday, so I’m sure Yankees and Red Sox players will be involved — and one off-day following the London Series. They have a ten-game homestand, then they go to London for two games, then they come right back to New York for a road series against the Mets.

ESPN Sunday Night Baseball Games moved up

It is a baseball miracle. Last week at the Winter Meetings it was announced ESPN Sunday Night Baseball games will be moved up one hour from 8pm ET to 7pm ET next season. Thank goodness for that. Now all those Sunday night Yankees-Red Sox games might actually end before midnight on the East Coast. The Yankees play a ton of Sunday night games each year and this means we’ll all get to bed at a more reasonable hour those nights.

The change was made because players hate those 8pm ET start times too. At least one team has to travel after the late Sunday game and get into their next city super early the next morning. Now they’ll have that extra hour. ESPN has released a partial 2019 Sunday Night Baseball schedule and already there are three Yankees-Red Sox games on the schedule (June 2nd, July 28th, August 4th). I’m sure the Yankees will play several other Sunday night games as well. They are unavoidable.

Yankee Stadium food safety rates poorly

According to an ESPN investigation, Yankee Stadium ranked dead last among the 30 MLB stadiums in food safety violations from 2016-17. That is a bad thing. Forty-three Yankee Stadium food service outlets were inspected and 34 contained high-level violations, including food that was “adulterated, contaminated, cross-contaminated, or not discarded” properly. Pretty gross! The Yankees and Dan Smith, president of Yankee Stadium food service provider Legends Hospitality, fired back at the report in a statement:

“We treat food safety with the utmost care. We disagree with the ESPN report, whose methodology is unexplainable. We work closely on regular inspections with the New York City Department of Health, whose rigorous participation is welcomed. We also complete our own independent assessments with various consultants and auditors, including food safety companies. If any violation is pointed out, it is addressed and corrected immediately. As a result, in 2018, all of our food stands received an A-level grade, which is the highest level in New York City.”

I suppose I should note the violation level at Yankee Stadium (0.67 high-level violations per inspection) is far lower than the violation level in the surrounding South Bronx area (1.47) so … yay? If at all possible, don’t eat at Yankee Stadium, and I would’ve said that even before seeing this report. The food is expensive and compared to other ballparks around the league, the concessions are seriously lacking. Seriously, how do the Yankees with their new ballpark have such crummy concessions? Folks, eat before or after the game if you can.

Laying out the Yankees’ payroll situation for 2019

October 25, 2018 by Mike

No later than one week from yesterday, the 2018 World Series will end and the 2018-19 offseason will begin. The Yankees have more heavy lifting to do this winter than I think they would like. Blame injuries (Didi Gregorius, Jordan Montgomery) and poor performance (Sonny Gray). The rotation will be a “focus point.” Don’t sleep on the infield and even the bullpen too.

We don’t know how much the Yankees will spend this winter and we don’t know their payroll limit for next season. The Yankees reset their luxury tax rate this season and Brian Cashman indicated he has to seek approval from Hal Steinbrenner to exceed the luxury tax threshold next year. We know the Yankees can support a $240M payroll. They did it just last year. The franchise could almost certainly support a payroll much higher than that. They choose not to. C’est la vie.

Since the Yankees are counting pennies these days, I figured I’d be good to lay out the payroll situation for this offseason and next season. The Yankees operate in the world of the luxury tax. They’re more concerned with luxury tax hits than actual salary, so this is an estimate of the luxury tax payroll. Here’s what the Yankees have on the books for next season:

Masahiro Tanaka: $22.14M
Giancarlo Stanton: $22M
Jacoby Ellsbury: $21.86M
Aroldis Chapman: $17.2M
Arbitration-Eligibles: $45.1M (projected)
Pre-Arbitration-Eligibles: $13M (estimated)
Miscellaneous: $15M (estimated)

That all adds up $156.3M and that, in theory, covers the entire 40-man roster. In reality, it doesn’t even cover the 25-man roster because the Yankees aren’t going to plug three kids making the minimum behind Tanaka and Luis Severino in the rotation. I mean, they could, but I’d bet against it. The luxury tax threshold jumps to $206M next year, so, based on this, the Yankees have $49.7M to spend this winter. That’s a lot! Let’s talk out the payroll.

1. Wait, only four guaranteed contracts? Really? Really. I was shocked. The Yankees shed Brett Gardner ($13M), David Robertson ($11.5M), CC Sabathia ($10M), J.A Happ ($4.32M) Neil Walker ($4M), Lance Lynn ($2.03M), and Andrew McCutchen ($1.26M) this offseason. They’re all free agents. Tanaka, Stanton, Ellsbury, and Chapman are the only remaining guaranteed contracts on the books. Pretty wild. That’ll of course change once the Yankees start signing free agents and making trades. Those guys becoming free agents have to be replaced.

2. What about Gardner’s option? Yeah, don’t forget about this. Gardner’s contract includes a $12.5M club option with a $2M buyout for next season. It’s a $10.5M decision. I really have no idea what the Yankees will do. Declining it seems like an easy decision given his second half — even if the Yankees want to bring Gardner back, they’d be able to do so at a lower salary than the option, right? — but the Yankees love love love Gardner. Wouldn’t surprise me to see them pick it up, honestly.

Anyway, as far as the luxury tax goes, the Yankees have already been taxed on the $2M buyout. It is guaranteed money and it was lumped into the average average value of Gardner’s contract these last few years. Declining the option has no luxury tax impact next year. The $2M has be paid to Gardner, but it doesn’t get charged to next season (or this season). It’s already been taxed. Here’s what the Collective Bargaining Agreement says about the option being exercised:

Article XXIII(E)(5)(b)(ii): Potential Adjustment to Payroll
Notwithstanding subparagraph (b)(i) above, if the Player ultimately does not receive the Option Buyout, then for the Contract Year covered by that option, no portion of the Buyout shall be included in any Club’s final Actual Club Payroll. In addition, any Club whose final Actual Club Payroll in a previous Contract Year had included that Buyout (or a portion thereof) will receive a deduction (in the full amount of the Buyout included in previous Contract Years) in its final Actual Club Payroll in the Contract Year covered by that option.

In English, that means Gardner’s luxury tax hit for next season would be $10.5M should the Yankees pick up the option. They get to subtract out the $2M buyout from the $12.5M salary because they’ve already been taxed on it. Got it? Good. I’m leaving Gardner out of the 2019 payroll estimate right now because he’s technically not under contract for next season.

3. What about Sonny Gray? He’s a goner. Brian Cashman couldn’t have made it any more clear at his end-of-season press conference. Gray will get traded this winter, he’ll go somewhere else and pitch well, and the Yankees won’t care one bit. The organization’s frustration with Sonny was almost palpable this year. Cashman, Aaron Boone, Larry Rothschild … they’re all over Gray. They’ll trade him this winter and won’t look back.

MLBTR projects a $9.1M salary for Gray next season and that is included into the estimate above because, well, he’s on the roster. He hasn’t been traded yet. Once the Yankees trade Sonny, we’ll circle back and adjust our 2019 payroll estimate. There’s a pretty good chance the Yankees will take back salary in a Gray trade (it might even be a payroll neutral trade) so shedding that $9.1M might not be as cut-and-dried as it may seem.

4. Where’d you get $13M for pre-arb players? I based it on this year’s payroll. According to our math, the Yankees spent $8,889,531.81 on pre-arbitration players and $3,904,834.64 on miscellaneous players (Shane Robinson, David Hale, etc.) this year. I added those two numbers together and rounded up. See how easy that is?

In all seriousness, I’m comfortable assuming next season’s pre-arbitration players will cost a similar amount as this year’s. The league minimum doesn’t increase much ($545,000 to $555,000) and the Yankees had a ton of injury call-ups throughout the year. That last part is important. This estimate includes minor league salaries and injury call-ups and September call-ups and all that. We don’t have to set aside anything for that. To use my favorite Boone-ism, it’s all baked into the cake.

5. What are those miscellaneous costs? The Yankees paid $6M to players no longer on the Yankees this past season. They paid $5.5M of Brian McCann’s salary and they paid half the $1M bonus Chase Headley received when he was traded. That $6M is off the books now. At the moment, the Yankees do not owe any money to players on other teams.

That $15M estimate for miscellaneous expenses is tied up in two things: Stanton’s award bonuses and benefits. Every club chips in toward player benefits and this year that amount was $14,0444,600. That counts against the luxury tax and the number increases a little each season. Stanton has $325,000 in potential bonuses in his contract and those also count against the luxury tax payroll. Add the bonuses with the increased benefits expenditure and you get $15M or so.

* * *

Based on all that above, the Yankees have about $50M to spend this winter before hitting the $206M luxury tax threshold next season. It could be more depending on the Gray trade and it could be less depending on Gardner’s option. Hal could always approve a higher payroll as well and I hope he does because there are some premium free agents out there. The Yankees have money and the window ain’t getting any more open. If they’re not going to exceed the luxury tax threshold now to sign some top free agents, when will they?

The Yankees avoided the luxury tax in 2018, and now we’ll find out exactly how much they’re willing to spend

October 16, 2018 by Mike

Winning the Wild Card Game and getting bounced in four games in the ALDS hardly qualifies as a successful season, but, as far as ownership is concerned, the Yankees accomplished a very important goal this season. The Yankees stayed under the $197M luxury tax threshold and reset their tax rate, and saved tens of millions in the process. It’s not quite a clean slate financially, but it’s about as close as the Yankees can get.

Over the last year or so the general assumption seems to have been that once the Yankees reset their luxury tax rate — they’ll be taxed 20% rather than the maximum 50% should they go over the $206M threshold next year — they would go back over the threshold and spend lavishly. They’re the Yankees and they should rank near the top of the league in payroll, right? Right. It’s been assumed they’ll do it again. Will it be reality? No one really knows.

“I don’t want to speak for (Hal Steinbrenner), but my general feeling from him and for us has been not wanting to line the pockets of others to let them utilize that excess against us,” said Brian Cashman at his end-of-season press conference next week. “It was mission accomplished in terms of the payroll this year, and taking away advantages that teams have been getting from us because we were exceeding those thresholds.”

Luxury tax money does wind up in the pockets of other teams — a chunk is taken off the top to help fund player benefits and half the remainder is distributed evenly to teams that didn’t play luxury tax — and, based on Cashman’s comments, the Yankees don’t like giving money to other teams. They already pay tens of millions (probably hundreds of millions at this point) into revenue sharing. They don’t want to give them more through luxury tax.

“I’ve been saying you can have a world championship caliber team and not have a $200M+ payroll, and I think we’re finally getting to a point where that’s coming true for us,” said Hal Steinbrenner to Billy Witz at last November’s owners’ meetings. Hal’s been saying that for years. Whether it’s sincere or simply posturing, the “we don’t need to spend $200M to win a championship” line has been repeated ad nauseum for a few years now.

Cashman’s and Hal’s comments all point to payroll not increasing significantly next season. Again, they could be posturing. The Yankees have to make players and agents and teams think they are working on a fixed budget to maintain negotiating leverage, otherwise everyone’s going to try to take them for a ride. The fact they adhered to a budget this year increases their leverage. Sticking to a budget is not just talk anymore. They did it.

My quick math has $55M in free agent contracts coming off the books this offseason and, during a radio interview last week, Steinbrenner said “my family has always been willing to take money that comes off the payroll and put it back in,” which didn’t happen this year. Last year’s payroll was $226.4M for luxury tax purposes. This year it’s around $193M. That is roughly $33M that came off the payroll last year and was not put back into the roster.

The Yankees can put that $55M back into the roster this winter — some of that $55M will go to arbitration raises — and still come in well under next season’s $206M luxury tax threshold. The team has money to spend and I expect them to spend it. Manny Machado? Patrick Corbin? Bryce Harper? I don’t know. But that money is going somewhere. The question is whether just that money is spent, or money is spent on top of it to bring the Yankees over next year’s threshold.

“We’re going to leave no stone unturned. Every single option that comes across my desk I’m going to be considering. I don’t know who that is or who that isn’t. We haven’t begun that process yet,” said Hal last week. Cashman indicated payroll addition decisions are made on a case-by-case basis, which makes sense. It seems that, if the Yankees are going to go back up over the threshold next year, Cashman will have to make a convincing case, which he’s done in the past, most notably with Mark Teixeira.

The Steinbrenners own the Yankees and are free to run the team however they want. They can set payroll limits, introduce new uniforms, change the team colors, whatever. They can do whatever they want. At the same time, the Yankees staying under the luxury tax threshold does not benefit fans at all. Ticket prices aren’t coming down or anything like that. The fan experience will be enriched exactly 0% by avoiding the luxury tax. Could it lead to the Yankees spending more in the future? Sure. But they could’ve done that anyway given their revenues.

The window of contention will never get more open than it is right now. The Yankees have an excellent young core and most of those players are in their cheap pre-arbitration years, leaving money to spend elsewhere. This past season the Yankees cut payroll and won 100 games anyway. Will they continue to toe the line between contention and austerity? Or will they put their newfound payroll flexibility to use? The luxury tax plan has been in the works for years and this offseason we’ll finally see what things look like on the other side.

Yankees’ luxury tax payroll situation for 2018

October 1, 2018 by Mike Leave a Comment

Updated: 10/1/18

Estimated 2018 Yankees’ luxury tax payroll: $192.5M
2018 luxury tax threshold: $197 million

The 2018 regular season is complete. The Yankees were, as expected, one of the best teams in MLB. They finished 100-62 with a +182 run differential despite a barrage of injuries that sent Aaron Judge, Gary Sanchez, Clint Frazier, and Jordan Montgomery to the disabled list for long stretches of time. Others like Didi Gregorius and Aroldis Chapman have missed time as well. Overall though, the Baby Bombers are pretty rad.

One number has been hanging over the Yankees all year: $197M. That is the luxury tax threshold for the 2018 season. Ownership and the front office are adamant the Yankees will get under the threshold this year — they’ve paid luxury tax every year since the system was put in place in 2003 — which would reset their luxury tax rate. Right now the Yankees are taxed at the maximum 50%.

As the season progressed the team’s payroll situation evolved due to call-ups and midseason additions. Every change to the roster changed the luxury tax payroll. Because getting under the $197M threshold this year is an important stated goal, we did our best to keep track of the payroll situation with this intermittently updated post. Here’s where the Yankees stand as of October 1st.

????????

On September 10th, the last time I updated the payroll situation, I had the Yankees with a $197.1M projected luxury tax payroll for the season, which was over the $197M threshold. Now I have that at $192.5M after the season. Let me explain.

1. Most bonuses were not accrued. Most notably, CC Sabathia fell two innings short of a $500,000 bonus because he was ejected for throwing at Jesus Sucre last week. That was the whole “that’s for you, bitch” episode. Here’s a recap of bonuses we know definitively the Yankees will not have to pay out:

Lance Lynn: $1M each for 170 and 180 innings pitched (finished with 156.2 IP total)
Andrew McCutchen: $25,000 for All-Star Game (Giants would’ve paid this anyway)
David Robertson: $15,000 for All-Star Game; $25,000 for All-Star Game starter
CC Sabathia: $500,000 each for 155, 165, 175, and 185 innings pitched (finished with 153 IP)
Giancarlo Stanton: $50,000 for All-Star Game
Neil Walker: $125,000 each for 425, 450, 475, and 500 plate appearances (finished with 398 PA)

That is $4,615,000 worth of possible bonuses right there, with most of it being tied up in Lynn’s and Sabathia’s innings. That’s a lot of money! When you’re counting every penny to stay under a hard payroll cap, these bonuses have to be considered. They can sneak up on you.

I included many of these bonuses in the last payroll update because they are real dollars that have to be considered, but now that the regular season is over, we know they won’t be paid out. That’s why our luxury tax payroll estimate dropped from $197.1M to $192.5M since our last update.

2. There are still several bonuses possible. Playing time and All-Star Game bonuses were not reached this season. We know that now. There are still several awards bonuses lingering, however, and these will count against the luxury tax payroll. Here’s a breakdown of the bonuses that are still possible:

Andrew McCutchen: $25,000 each Gold Glove and World Series MVP; $125,000 for MVP; $75,000 for MVP second place; $50,000 for MVP third place
David Robertson: $25,000 for Gold Glove; $50,000 for Sporting News All-Star; $75,000 for ALCS MVP; $100,000 each for MVP and Cy Young; $90,000 each for MVP and Cy Young second place; $80,000 each for MVP and Cy Young third place; $70,000 each for MVP and Cy Young fourth place; $60,000 each for MVP and Cy Young fifth place
Giancarlo Stanton: $50,000 each for Gold Glove and Silver Slugger; $100,000 for MVP; $25,000 for ALCS MVP; $50,000 for World Series MVP

That is $800,000 worth of outstanding bonuses. Some of these we can say will not be triggered with reasonable certainty. McCutchen is not winning an AL Gold Glove or the AL MVP award. Robertson’s not winning the AL MVP and/or AL Cy Young, or even finishing in fifth place. The chances of Robertson and Stanton being named ALCS co-MVPs, and McCutchen and Stanton being named World Series co-MVPs, are small. So on so forth.

These bonuses are still out there though and can be accrued, so we might as well include them in our estimate. At this point, that $800,000 in possible bonuses is insignificant anyway. The Yankees have plenty of room under the $197M luxury tax threshold. Enough that they could even pay Sabathia that $500,000 bonus he missed because of the ejection as a thank you without putting the luxury tax plan in danger. That’s not going to happen, of course. I’m just saying.

3. The Yankees added salary at the trade deadline (duh). Boy, were the Yankees active at the trade deadline or what? They made six trades in the week leading up to July 31st and five had a direct impact on the 25-man (and thus 40-man) roster, which means they had luxury tax implications. They then made two more trades prior to the August 31st postseason eligibility deadline. Here’s a recap of the trade deadline activity:

Dillon Tate, Josh Rogers, and Cody Carroll for Zach Britton. (RAB post)
Brandon Drury and Billy McKinney for J.A. Happ. (RAB post)
Chasen Shreve and Gio Gallegos for Luke Voit and $1M in international bonus money. (RAB post)
Caleb Frare for $1.5M in international bonus money. (RAB post)
Adam Warren for $1.25M in international bonus money. (RAB post)
Tyler Austin and Luis Rijo for Lance Lynn. (RAB post)
Abi Avelino and Juan De Paula for Andrew McCutchen. (RAB post)
Cash or a player to be named later for Adeiny Hechavarria. (RAB post)

(Frare was not on the 40-man roster. That trade had zero impact on the luxury tax payroll.)

Prior to all those trades, the projected luxury tax payroll sat at $184.1M. Now it’s up to $192.5M. So yes, the Yankees did take on salary at the deadline, though perhaps not as much as you’d think. Trading away Drury, Shreve, and especially Warren offset some of the salary gains, plus the Twins and Giants paid half Lynn’s and McCutchen’s remaining salary, respectively.

As for Hechavarria, he is making $5.9M this season, but the Associated Press reports the Yankees were only responsible for the pro-rated portion of the $545,000 league minimum, or roughly $88,000. The Rays and Pirates are paying the rest. The Lynn and Warren moves were essentially payroll neutral. The Yankees really only took on salary with Britton, Happ, and McCutchen at the deadline.

4. The call-ups are complicated. Pre-arbitration-eligible players on split contracts — the majority of the players on the roster, basically — get paid one salary at the Major League level and a different salary in the minors, and their luxury tax hits are pro-rated. The MLB season is 186 days long and say, for example, a player spends 100 days in MLB and 86 days in the minors. His luxury tax hit is then 100 days of MLB salary plus 86 days of MiLB salary.

It’s important to note only minor leaguers on the 40-man roster count against the luxury tax payroll. Jace Peterson, Shane Robinson, David Hale, Stephen Tarpley, and Justus Sheffield were never on the 40-man and in the minors, so their minor league salary is irrelevant for luxury tax purposes. Guys like Thairo Estrada and Albert Abreu are on the 40-man though, so their minor league salaries count against the luxury tax payroll. It’s not much, but every dollar counts.

The Yankees called up eight minor leaguers after rosters expanded on September 1st and several of them weren’t called up until mid-September. September call-ups have a relatively small impact on the luxury tax payroll. They count against it, for sure, but each call up equals less than $100,000 added to the bottom line. Those guys were never going to make or break the luxury tax plan.

5. The disabled list provides no relief. Jacoby Ellsbury’s salary didn’t go away for luxury tax purposes just because he’s injured and didn’t play. The Yankees are recouping some of his salary through insurance, though that doesn’t help the luxury tax situation. Players on the disabled list still count against the luxury tax payroll. It’s like they’re on the active roster. Ben Heller underwent Tommy John surgery and missed the entire season — he didn’t throw a single pitch during the regular season — yet his full salary counted against the luxury tax payroll. Such is life.

6. The Yankees accomplished their goal. The regular season is over and, with the exception of that $800,000 in outstanding possible bonuses, the luxury tax payroll is final. The Yankees are at $192.5M according to my estimate, which is well below the $197M threshold. Keep in mind this is only an estimate and not an official number. I was within $500,000 of the last reported number, however, so I’m feeling pretty good about things. The Yankees are under the threshold.

So what does that mean, exactly? It means their luxury tax rate has been reset. They’ve been taxed at the maximum 50% for years and years and years now. They won’t pay any luxury tax this year, and, if they go over the $206M luxury tax threshold next year, they will be taxed only 20% for every dollar over the threshold. There are also surtaxes for excessive spending:

$20M to $40M over threshold: 12% surtax
$40M+ over threshold (first time offenders): 42.5% surtax and first round pick moves back ten spots
$40M+ over threshold (repeat offenders): 45% surtax and first round pick moves back ten spots

Last season the Yankees paid $15.7M in luxury tax based on a $226.4M luxury tax payroll. The total payout was $242.1M. This year it is $192.5M. The Yankees went to Game Seven of the ALCS last year, raked in all that postseason revenue (six home dates), received their hefty portion of the league’s BAMTech sale to Disney this year, and slashed payroll nearly $50M. Seems unnecessary, but ownership’s gonna do what ownership’s gonna do.

If you have any questions about the luxury tax payroll, or if you notice an error, shoot me an email at RABmailbag (at) gmail (dot) com.

Saturday Links: Donaldson Trade, A-Rod, Luxury Tax Payroll

September 15, 2018 by Mike

The final homestand of the 2018 regular season continues later today with the middle game of the three-game series against the Blue Jays. That’s a 4:05pm ET start. Here are some links and notes to check out in the meantime.

Yankees among teams upset about Donaldson trade

According to Ken Rosenthal (subs. req’d), the Yankees are among the teams to reach out to MLB to voice displeasure with the Josh Donaldson trade. Specifically, they are unhappy Donaldson was deemed healthy enough to be placed on trade waivers, only to have the Indians place him right back on the disabled list right after the trade. Rosenthal says the Red Sox and Astros also weren’t happy with the deal. The teams that might face Cleveland in the postseason, basically.

Players have to be on the active roster or on a minor league rehab assignment to be placed on trade waivers. Donaldson had been out since May with a calf injury, then conveniently started a rehab assignment a few days before the August 31st postseason-eligibility deadline. He cleared waivers, was activated, then was traded and put right back on the disabled so he could play more rehab games. Fishy. That said, the Yankees (and Red Sox and Astros) would’ve done the same thing in a heartbeat. Don’t like it? Then you should’ve claimed Donaldson on trade waivers to block a deal. (Donaldson went unclaimed, so he was free to be traded anywhere.)

A-Rod hoping for Hall of Fame call

We are three years away from Alex Rodriguez’s name appearing on the Hall of Fame ballot, and, when the time comes, he hopes to get into Cooperstown. Can’t say I’m surprised. A-Rod spoke about about his Hall of Fame hopes during a recent feature with, uh, Cigar Aficionado? Cigar Aficionado. Here’s a partial transcript of the video:

“There’s rules, and you have to follow the rules. I made those mistakes, and at the end of the day I have to live by those mistakes. Whether I get in or not — and let’s be clear, I want to get in, I hope I get in, I pray I get in — if I don’t, I think I have a bigger opportunity yet again. And the platform of my mistakes, the good the bad and the ugly, has allowed me to have a loud voice to the next generation, to say when in doubt, just look at my career … The other message is, maybe I’m not a Hall of Fame player, but I get a chance to be a Hall of Fame dad, a Hall of Fame friend.”

Barry Bonds and Roger Clemens have made some gains on the Hall of Fame ballot in recent years, though they’re still well short of induction, and neither guy served a year-long performance-enhancing drug suspension like A-Rod. Rodriguez hits the ballot in 2021 and he can remain on the ballot ten years. That’s a long time — he can potentially remain on the ballot until 2031 — and lots of minds can change. Right now, I don’t think he’ll get in. Come 2031? Who knows.

Should A-Rod ever make the Hall of Fame, he’d have to go in as a Yankee, right? He played more games with the Yankees (1,509) than the Mariners and Rangers combined (1,275). Same deal with homers (351 vs. 345), though not WAR (+54.2 vs. +63.6). Also, Rodriguez won two of his three MVPs in New York and also his only World Series ring. Yeah, he’d had to go in as a Yankee. No question.

Yankees on track to stay under luxury tax threshold

According to Ronald Blum, the Yankees are indeed on track to stay under the $197M luxury tax threshold this season. I’ve been doing my best to keep tabs on the team’s luxury tax payroll situation all season, and I’m glad to have some confirmation. I had the payroll at $191.8M (without bonuses) in my last estimate. Blum’s source in the commissioner’s office has the payroll at $192.1M. I’m quite proud my estimate is within half-a-million bucks.

The Yankees will have to pay out some playing time bonuses (CC Sabathia’s innings, Neil Walker’s plate appearances, etc.), plus Chance Adams was called up two days ago, and that adds to the luxury tax payroll. Even with all that, they have plenty of room to get under the threshold. Blum says the Red Sox ($238.4M payroll) and Nationals ($203.9M) are the only teams over the luxury tax threshold this year. The Dodgers, like the Yankees, trimmed payroll this year to get under the threshold.

Report: Yankees have seventh highest Opening Day payroll

March 27, 2018 by Mike Leave a Comment

According to Ronald Blum, the Yankees will open the 2018 regular season with the seventh highest payroll in baseball. That will be their lowest Opening Day payroll rank since way back in 1992, the final year of George Steinbrenner’s suspension. The Yankees ranked first or second in payroll every year from 1994-2017.

Here are this year’s top seven Opening Day payrolls, according to Blum:

Red Sox: $223M
Giants: $203M
Cubs: $183M
Dodgers: $180M
Nationals: $180M
Angels: $170M
Yankees: $167M

That $167M Opening Day payroll will be New York’s lowest since 2003. Also, I should note these payroll figures are based on actual salaries for the projected Opening Day 25-man roster (and disabled list). These are not luxury tax payrolls. Actual payroll and luxury tax payroll are different things. The Yankees’ luxury tax payroll sits at approximately $178.7M, well-below the $197M threshold.

The Athletics and White Sox have the lowest Opening Day payrolls at $71M. Mike Trout will be the game’s highest paid player this year at $34.08M, just ahead of Clayton Kershaw ($34M). Kershaw was the highest paid player in baseball the last three years. The average salary is approximately $4.45M this season, which is about the same as last year. That’s ominous for the players.

Morosi: Yanks want to set aside $10M for midseason additions

January 25, 2018 by Mike Leave a Comment

According to Jon Morosi, the Yankees want to set aside $10M for midseason call-ups and additions. The team is $22M under the $197M luxury tax threshold right now, but they have to earmark some of that $22M for in-season additions. Now we know how much they’re setting aside. Before it was a mystery.

Luxury tax hits are pro-rated when you add a player during the season, so while saving $10M might not seem like much, it is pretty significant. Acquire a player with a $15M luxury tax hit at the halfway mark of the season and you’re only absorbing a $7.5M luxury tax hit, for example. It doesn’t work quite that neatly in real life, but you catch my drift.

The Yankees have a deep farm system with lots of young players on the cusp of the big leagues. That’ll help keep the costs of their in-season additions down. Being able to call-up a league minimum player to fill-in for a few weeks is better than getting a cast-off from outside the organization who might be making real money. That $10M could go pretty far.