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Sherman: Yankees aim to trim payroll by 2014 to escape luxury penalties


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#1 derekson

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Posted 04 December 2011 - 09:17 PM

Yankees aim to trim payroll by 2014 to escape luxury penalties

The Yankees are not going after C.J. Wilson or Mark Buehrle because they do not like the costs especially in 2014.

To understand the Yankees' current thinking, you must understand that no team stands to lose or gain more from the newly agreed upon collective bargaining agreement.

So maybe they will break again this time. But as an organization, they are saying they are driven to have a payroll of $189 million or less in 2014 when that becomes the luxury tax threshold. Because the incentives that come via the new CBA are just too great for them to ignore.

For if they are at $189 million or less for the three seasons from 2014-16, they not only avoid paying one cent in luxury tax, which would rise to 50 percent for them as repeat offenders, but they also would get roughly $40 million in savings via the to-be-implemented market disqualification revenue sharing program. However, only teams under the luxury-tax threshold get reimbursed in this program, which is designed to prevent big markets such as Toronto and Washington from receiving revenue sharing dollars, which in turn will lower how much teams such as the Yanks pay (as long as they are under the threshold).



Personally I don't really buy into this, but Sherman seems pretty convinced. The Yankees would have to make a lot of sacrifices over the next 3 seasons to save a little bit of money on the luxury tax in 2014 and beyond.

Edited by derekson, 04 December 2011 - 09:18 PM.


#2 glennhoffmania


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Posted 04 December 2011 - 09:20 PM

First, I'll believe it when I see it. Second, so much for putting every dollar back into the team, as they claim now. Their costs would go down by about $55m, not taking inflation into account.

#3 jon abbey


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Posted 05 December 2011 - 01:29 AM

It makes a lot of sense for them to try to get under the threshold for one year (as Sherman says later in that piece), as it would reset their tax rate from 50 percent to 17. Whether they can actually do that is a different story.

#4 Trlicek's Whip

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Posted 05 December 2011 - 09:43 AM

It makes a lot of sense for them to try to get under the threshold for one year (as Sherman says later in that piece), as it would reset their tax rate from 50 percent to 17. Whether they can actually do that is a different story.

Exactly right. What's most important is that they state this publicly now, to get in front of this and tilt leverage in their favor for future negotiations with FA's for the next few winters. Especially since this threshold is more of a "brick wall" than drawing a line in the sand saying "we don't ever go over 5 years or include opt-outs," as hypotheticals.

If it looks like they won't be able to reach this goal, they can pivot accordingly.

#5 terrynever


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Posted 05 December 2011 - 11:58 AM

Isn't this being interpreted as a "soft salary cap" for the richest franchises, an incentive for them to back off on FA signings, therefore hurting the Players' Association and the deal they just signed with the owners? Maybe this is good for baseball. Look at what Florida is doing right now.

#6 melonbag

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Posted 05 December 2011 - 04:54 PM

It's already started. The Yanks have declined a vist request by CJ's agent. And now I don't think they'll be serious bidders for Darvish. I also assume this means Banuelos and Montero are pretty much off limits in trade discussions.

#7 quiggy

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Posted 05 December 2011 - 05:03 PM

It's already started. The Yanks have declined a vist request by CJ's agent. And now I don't think they'll be serious bidders for Darvish. I also assume this means Banuelos and Montero are pretty much off limits in trade discussions.


I thought this might actually make Darvish more attractive. We already know that the posting fee has no luxury tax implications- Matusaka got an average of a shade over $8M a year. Will Darvish expect much more?

#8 jon abbey


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Posted 05 December 2011 - 07:00 PM

Agreed, Darvish might fit in well with this goal.

#9 Wingack


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Posted 05 December 2011 - 07:17 PM

Agreed, Darvish might fit in well with this goal.


Gammons was just on MLBN and he said that Cashman is going to play the waiting game this offseason, possibly pulling off a trade for a starter in Januaryish.

That strategy also could payoff in an agressive bid for Darvish.

And perhaps the Yankees could wind up with a rotation of:

CC
Garza/Jurrjens (names Gammo mentioned)
Darvish
Nova
Garcia/Burnett/Hughes/Noesi

#10 jon abbey


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Posted 06 December 2011 - 12:32 AM

Garza is worlds better than Jurrjens, I'm not sure Jurrjens is an upgrade over Freddy Garcia at this point.

Anyway, I doubt that above scenario, I think at least 4 of 5 Opening Day rotation members are already on the roster, and possibly all 5 (unfortunately).

#11 melonbag

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Posted 06 December 2011 - 12:34 AM

All 5 are on the roster.

#12 soxhop411


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Posted 01 March 2012 - 11:44 AM

RT @eboland11: Hal Steinbrenner confirmed Yankees desire is to get payroll to $189 to avoid luxury tax in 2014


Marc Carig @MarcCarig

"I'm a finance geek. I guess I always have been. That's my background. Budgets matter. Balance sheets matter." - Hal Steinbrenner


Marc Carig @MarcCarig

"If you do well on the player development side, and you have a good farm system, you don't need a $220 million payroll. You don't." - Hal


Marc Carig @MarcCarig

"You can field every bit as good a team with young talent." - Hal Steinbrenner

Edited by soxhop411, 01 March 2012 - 11:51 AM.


#13 maufman


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Posted 01 March 2012 - 12:13 PM

The MFY have about $119mm committed in 2013 to long-term deals and figure to pay out another $28mm to exercise club options on Granderson and Cano. On top of that, they will have nine arb-eligible players, three of whom may be a bit pricey (Hughes, Gardner, and Robertson). Then, they will need to re-sign or replace Rivera, Swisher, Martin and Kuroda.

Soriano, Burnett and Jeter are gone after 2013 (assuming they don't pick up CI's 2014 option). Besides Granderson and Cano, Phil Hughes projects to be their only material free agent that offseason. That's about $70mm coming off the books at once -- plenty of room to bring a couple of those guys back, fill a couple holes, and still trim payroll.

Is $189mm achievable by 2014? Sure, but it's going to take some austerity to get there. If the MFY win 100 games and run away with the division this year, I expect they'll be austere next winter and make a go at it. On the other hand, if they fail to win the division and lose the one-game WC playoff, I can't imagine them being disciplined enough next winter to have any chance of getting under the threshold the following season.

Edit: Here's my source. Numbers on long-term deals might be off a bit, due to variance between AAV and year-by-year salaries.

Edited by maufman, 01 March 2012 - 12:21 PM.


#14 rembrat


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Posted 01 March 2012 - 04:55 PM

Hal sounds like a smart dude. Darn.

#15 Guero

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Posted 01 March 2012 - 05:33 PM

Hal sounds like a smart dude. Darn.

Yeah, but he has to keep his evil twin in check.......HANK!

#16 jon abbey


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Posted 01 March 2012 - 07:43 PM

The 2014 option on Jeter isn't a team option, it's an $8M player option with a $3M buyout.

The first real test of NY's resolve here will be the Swisher situation next winter. It will cost a good chunk to keep him (4/50?), but NY has no real alternatives waiting in the wings.

#17 Sampo Gida

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Posted 01 March 2012 - 08:26 PM

I think the revenue sharing rebates is the primary motivation for wanting to be below the threshold, but thats been discussed elsewhere.

The MFY have about $119mm committed in 2013 to long-term deals and figure to pay out another $28mm to exercise club options on Granderson and Cano. On top of that, they will have nine arb-eligible players, three of whom may be a bit pricey (Hughes, Gardner, and Robertson). Then, they will need to re-sign or replace Rivera, Swisher, Martin and Kuroda.

Soriano, Burnett and Jeter are gone after 2013 (assuming they don't pick up CI's 2014 option). Besides Granderson and Cano, Phil Hughes projects to be their only material free agent that offseason. That's about $70mm coming off the books at once -- plenty of room to bring a couple of those guys back, fill a couple holes, and still trim payroll.

Is $189mm achievable by 2014? Sure, but it's going to take some austerity to get there. If the MFY win 100 games and run away with the division this year, I expect they'll be austere next winter and make a go at it. On the other hand, if they fail to win the division and lose the one-game WC playoff, I can't imagine them being disciplined enough next winter to have any chance of getting under the threshold the following season.

Edit: Here's my source. Numbers on long-term deals might be off a bit, due to variance between AAV and year-by-year salaries.


Rivera will be gone by 2014 and his replacements cost will not be anywhere near what he makes, even if he won't be as good as Rivera. With all the arms they supposedly have in the minors, you would think someone makes the grade as a closer. If not, they can trade for a young cheap arm like the Red Sox did with Bailey.

It occurrs to me that expanded playoffs go hand in hand with the revenue sharing rebates and luxury tax making the threshod a defacto hard cap. Teams like the Red Sox and Yankees can still make the playoffs with a 90 W team as opposed to needing 95 W in the past. That can save you 20 million on FA's assuming an incremental win costs 4 million. Meanwhile, 85 W teams may spend a bit more on FA in the hopes to get to 90 W and a playoff spot (whereas they would not spend as much if they needed to get to 95 W for a chance at the playoffs).

For the Yankees to contend and stay under the tax threshold the next few years, they need some help from their farm to fill holes at SS, C, RF, SP and Cl (at least 3 of 5 positions). They should also sign Gardner to an extension and not go Y2Y to keep his AAV down.

They might need the occasional bridge year and may not win the division as often as they are used to w/o the huge advantage in payroll they have had over the past decade.

#18 maufman


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Posted 02 March 2012 - 08:36 AM

The 2014 option on Jeter isn't a team option, it's an $8M player option with a $3M buyout.

The first real test of NY's resolve here will be the Swisher situation next winter. It will cost a good chunk to keep him (4/50?), but NY has no real alternatives waiting in the wings.


If Nova pans out as a decent innings-eater and Robertson steps into Rivera's spot, there's room to overpay a right fielder (Swisher or someone else) and still get to $189mm by 2014.

If you can avoid dead-weight payroll, $189mm is plenty. So the issue isn't so much an overpay here or there, but a big contract going south -- if Sabathia or Teixeira goes on the shelf for a season, for example.

#19 jon abbey


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Posted 02 March 2012 - 05:04 PM

Cashman talks about this at length and in detail here:

http://yankees.lhblo...everybody-else/

#20 jon abbey


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Posted 11 March 2012 - 01:04 AM

Interesting piece by Sherman about ways that NY could structure big deals to help pull this off, the A-Rod one is particularly fascinating IMO (if he's right):

http://www.nypost.co...8BeWfuTfEvFlI/0

#21 derekson

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Posted 11 March 2012 - 02:19 AM

Extending Cano and Granderson now to get the AAV benefits makes sense, but I think trying to do anything crazy with the back end of ARod's contract will cause issues from the Commissioner's office. It's similar in spirit, if not degree, to the 50 year deals or whatever crap teams tried to pull in the NHL to evade the salary cap, and I don't think it'd fly.

Edited by derekson, 11 March 2012 - 02:19 AM.


#22 Sampo Gida

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Posted 11 March 2012 - 03:00 AM

Jeter has an 8 million player option for 2014 that kicks in at 8 million (14 million AAV). They could sign him (should he plan on exercising the player option) to a 9 million deal (Jeter would probably want a 2 year deal). In any event, they would save 5 million for tax purposes if they can give Jeter a new deal for 2014.

Redoing A-Rods deal won't fly IMO unless they add more years and dollars.

#23 jon abbey


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Posted 11 March 2012 - 09:01 AM

A-Rod's deal is pretty unique with those incentives, though, and you could argue that guaranteeing 50-60 percent of them benefits him. Dunno, this is not an area I'm much of an expert in.

#24 jon abbey


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Posted 20 August 2012 - 01:05 AM

Bumping this thread...

The first real test of NY's resolve here will be the Swisher situation next winter. It will cost a good chunk to keep him (4/50?), but NY has no real alternatives waiting in the wings.


This is still the case, and now Kuroda has made himself an issue also, looking like an ace combined with the loss of a year of development for Pineda/Banuelos/Campos as well as Betances looking like a bust.

Russell Martin will also not be an easy decision to let go despite his sub-.200 BA. He hits HRs, takes BBs, and seems to manage the pitching staff pretty well (plus Kuroda obviously feels very comfortable with him, they have years of history together in LA).

The only guys who have emerged this year as potential contributors for 2013/2014 have been Phelps (but I'm sure NY would feel more comfortable with him starting 2013 as the 6th starter, the role Freddy Garcia had this year) and Mark Montgomery, a reliever at AA now who now has a ridiculous 140 Ks in 85.2 IP (34 BBs) over four levels since the start of 2011 along with a sub-2 ERA. They need a lot more help than that from the minors if they want to take a genuine shot at getting under $189M while continuing to contend.

#25 jon abbey


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Posted 20 August 2012 - 03:15 AM

Here are the spots they have covered currently for 2014:

C: ????/Stewart (arb 1)
1B: Teixeira ($23.1M)
2B: ???? (Cano will be a FA after 2013)
SS: ???? (Jeter has a $8M player option with a $3M buyout)
3B: A-Rod ($26M, hopefully he can still play third the majority of the time)
LF: Gardner (arb 3)
CF: ???? (Granderson will be a FA after 2013)
RF: ???? (Swisher will be a FA after 2012)
DH: ????

SP: Sabathia ($23M)
SP: Nova (Arb 1)
SP: Pineda (hopefully)
SP: ????
SP: ????

RP: Robertson (Arb 3)

The rest of the bullpen and the bench besides Stewart, who knows.

That's a lot of holes to fill in two offseasons, and like I said above, it doesn't seem like there will be too many reinforcements ready by them from the minors. Mason Williams and Gary Sanchez seem more likely for 2015 than 2014, Banuelos certainly could be ready for 2014.

#26 terrynever


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Posted 20 August 2012 - 08:58 AM

Sherman advances the 2014 case with this column, emphasizing how Swisher's strong season might impact Yanks' decision on Granderson. He seems to think the Yanks can sign two of three -- Cano and then Swisher or Granderson.

http://www.nypost.co...FbwBo9DEsSwIX2H

#27 armyguy25

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Posted 23 August 2012 - 08:01 AM

Here are the spots they have covered currently for 2014:

C: ????/Stewart (arb 1)
1B: Teixeira ($23.1M)
2B: ???? (Cano will be a FA after 2013)
SS: ???? (Jeter has a $8M player option with a $3M buyout)
3B: A-Rod ($26M, hopefully he can still play third the majority of the time)
LF: Gardner (arb 3)
CF: ???? (Granderson will be a FA after 2013)
RF: ???? (Swisher will be a FA after 2012)
DH: ????

SP: Sabathia ($23M)
SP: Nova (Arb 1)
SP: Pineda (hopefully)
SP: ????
SP: ????

RP: Robertson (Arb 3)

The rest of the bullpen and the bench besides Stewart, who knows.

That's a lot of holes to fill in two offseasons, and like I said above, it doesn't seem like there will be too many reinforcements ready by them from the minors. Mason Williams and Gary Sanchez seem more likely for 2015 than 2014, Banuelos certainly could be ready for 2014.


You need to factor in the $10 million or so in insurance and health costs that every team must pay and that counts against the cap for luxury tax purposes. All told, it leaves the Yanks about $30-$40 million to build over half a team. Basically, unless the Yanks have some surprise breakoouts and have numerous SIGNIFICANT performing per-arb players, this team just isn't going to be good in 2014. They'll have 10 or so "name" players, 15 no names, and of the "name" players, at least half will be around the 35 (or older) mark. Not encouraging.

Also, don't forget the performance bonuses in ARod's contract, which wiull count towards the cap if triggered.

#28 Wings

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Posted 23 August 2012 - 08:52 AM

What are the chances Mo makes a comeback and the Yankees pay him what he feels he's worth? I think that has to be taken into consideration doesn't it? At almost 15 million will he accept a big discount or will the Yankees even want him at all?

#29 RedOctober3829


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Posted 23 August 2012 - 09:03 AM

What are the chances Mo makes a comeback and the Yankees pay him what he feels he's worth? I think that has to be taken into consideration doesn't it? At almost 15 million will he accept a big discount or will the Yankees even want him at all?


As much as the Rivera-Red Sox talk was last time around, there's no way Rivera plays for anybody else but the Yankees. He's going to retire a Yankee.

#30 terrynever


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Posted 23 August 2012 - 09:11 AM

What are the chances Mo makes a comeback and the Yankees pay him what he feels he's worth? I think that has to be taken into consideration doesn't it? At almost 15 million will he accept a big discount or will the Yankees even want him at all?

If Mo comes back at all, it will only be for the 2013 season. He will not impact the 2014 Luxury Tax debate for the Yankees.
Rivera did not want to finish his career on the injured list and has said he wants to come back next season but even that is not a certainty, as he admitted last week he will check with his family before committing to 2013.

Edited by terrynever, 23 August 2012 - 09:12 AM.


#31 armyguy25

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Posted 23 August 2012 - 07:07 PM

Jeets will likely finish top 6 in MVP voting this year, pushing his 2014 option to $10 million. While $2 million isn't a huge amount, the Yankees are already on a razor thin margin for 2014 if they want to be under the cap.

#32 jon abbey


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Posted 24 August 2012 - 12:04 AM

Jeets will likely finish top 6 in MVP voting this year, pushing his 2014 option to $10 million. While $2 million isn't a huge amount, the Yankees are already on a razor thin margin for 2014 if they want to be under the cap.


Not that I would put anything past awards voters, and i know sometimes they like to try to reward career achievement more than they should in a yearly award, but this would be ridiculous, as in the real world (not the one that looks solely at batting average and total hits), he is having one of the worst few seasons of his career, and is nowhere near even the most valuable Yankee (Cano-5.4 fWAR to Jeter's 2.8).

#33 Guero

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Posted 24 August 2012 - 02:21 AM

If they do indeed go forward with keeping the 2014 payroll below cap thingy......I expect 2014 to be a very lean year with them missing the playoffs. I'm sure, as a fan, I won't like it much. Fact is, they've had an incredible run that has made a lot of fans forget about all those years where they weren't automatic locks to the post-season.

I hope while doing this cap thing, they take inventory and stop wasting resources. Don't go giving Granderson 150 million. Don't keep Martin around and pay him 7 million. Don't trade real prospects for name brands.

Hopefully by then they will see enough from farm players that will be able to fill certain spots on the diamond. Cashman's theory of stocking arms hasn't exactly paid off the way I think he planned. They've had a dearth of position player developed, and the plethora of arms hasn't produced much to show for it.

#34 armyguy25

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Posted 24 August 2012 - 11:19 AM

Not that I would put anything past awards voters, and i know sometimes they like to try to reward career achievement more than they should in a yearly award, but this would be ridiculous, as in the real world (not the one that looks solely at batting average and total hits), he is having one of the worst few seasons of his career, and is nowhere near even the most valuable Yankee (Cano-5.4 fWAR to Jeter's 2.8).


I agree it would be silly if Jeter got consideration, I just think he will, based on how I view the awards voters voting patterns. He had a smoking hot first month, and so much was made of that month, that I think the knee jerk reaction is to just assume Jeter is having a great year, when (even though he's heated up recently) his season except for the first month has been rather pedestrian. Also, the awards voters DO put a higher priority on BA then they should, and his BA is pretty good this year. And as for Cano, noone is saying Jeter is more valuable then him. Cano will finish top 3, and may even win it.

He definitely isn't having one of his worst seasons though. I count 7 or 8 seasons that are worse then this one, offensively speaking, and offense is what makes up about 95% of voter weighting.

#35 jon abbey


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Posted 24 August 2012 - 11:35 AM

He definitely isn't having one of his worst seasons though. I count 7 or 8 seasons that are worse then this one, offensively speaking, and offense is what makes up about 95% of voter weighting.


Well, I can't predict voter behavior (which does at least seem to be getting slightly more clued-in over recent years), but OPS+ seems like the best single catch-all offensive stat, and by OPS+, 2012 ranks 10th among his last 15 seasons. And that doesn't count his dreadful, even worse than typical defense, which I was including in my initial statement (going by fWAR, which includes UZR).

#36 jon abbey


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Posted 10 January 2013 - 05:04 PM

Bumping this for something else, but to finish the above discussion, Jeter finished 7th in the MVP voting in the end, so no contract hike, thankfully.

But I'm bumping for this interesting quote:

"Ken Davidoff spoke to Hal Steinbrenner at the MLB owners meetings. Steinbrenner left what could be seen as a little bit of wiggle room in the Yankees plan to limit spending in 2014.
“Is our goal 189 next year? Yes,” Steinbrenner said. “But only if I’m convinced if the team I see, that we’ve put together, is a championship-caliber team. … I believe that you don’t have to have a $220-million payroll to win a championship.”"

http://www.nypost.co...H#axzz2HUSUmqL3

#37 Sampo Gida

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Posted 10 January 2013 - 09:48 PM

A bit of sanity amidst the madness. It must be dawning on them that the lost revenue potential dwarfs the savings in luxury tax and revenue sharing rebates (which will only only be 50% in 2014).

Have a feeling this is a prelude to a signing/trade that involves dollars spent in 2014 .

#38 armyguy25

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Posted 10 January 2013 - 11:18 PM

They're already so deep in this (basiclly punting 2014, even 2013 is holing for a bit of a wish and a prayer) that I cant see them backing iut now. The most telling thing for me is the lack of outrage from the media and fanbase. For the most part, the Yankee marketing dept have done good here. Most people understand why they're doing it, and accept it (if grudgingly). They're are no fan revts on the horizon. So if you have this sort of tacit acceptance of a larvely unpopular move, why on earth would you not take it while you're apparently getting a freebie from the fans? Likely a big part of that is here is a clear endgame, an obvious light T the end of the tunnell (2015). I think I read sonewhere that if they dont reset the tax, the cost will be $50 million/year for as long as they are over the cap. Not even the Yankees will pay that for the foreseeable future with no end in sight (2014 represents the best chance...if they dont do it then, I dont know when they can do it) when they have a clear path to that goal within sight.

I expect the Yanks to stay the course. There were a lot of moves this offseason that needed to be done that didnt get done because of this. I cant see them change course now.

Although if Hal is absutely telling the truth, then the plan is as good as scrapped. There is no realistic scenario that has NY as a "championship team" for 2014. Not that they cant squeak in, but on paper, before he seaso starts (which is when this decision will need to be made) it will be imposible for them to cobble together anything close to resembling a "championship caliber team"

#39 StuckOnYouk

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Posted 10 January 2013 - 11:43 PM

God I just wish they would make the threshhold limit a hard cap and put an end to this Yankees bullshit once and for all.

If they miss the playoffs in 2013 there is a 0% chance they stay under the 189 threshhold. If they make it, maybe 50/50 at best. Maybe.

#40 Edelpeddle

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Posted 11 January 2013 - 12:36 PM

It should be interesting to see what they do with Jeter next offseason. That could be the litmus test for their payroll limit.

#41 Saby

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Posted 11 January 2013 - 06:48 PM

Yeah, from a Yankee perspective, you almost wouldn't want Jeter to have an amazing year that could translate into a big multi-year contract.

#42 Sampo Gida

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Posted 11 January 2013 - 07:13 PM

They're already so deep in this (basiclly punting 2014, even 2013 is holing for a bit of a wish and a prayer) that I cant see them backing iut now. The most telling thing for me is the lack of outrage from the media and fanbase. For the most part, the Yankee marketing dept have done good here. Most people understand why they're doing it, and accept it (if grudgingly). They're are no fan revts on the horizon. So if you have this sort of tacit acceptance of a larvely unpopular move, why on earth would you not take it while you're apparently getting a freebie from the fans? Likely a big part of that is here is a clear endgame, an obvious light T the end of the tunnell (2015). I think I read sonewhere that if they dont reset the tax, the cost will be $50 million/year for as long as they are over the cap. Not even the Yankees will pay that for the foreseeable future with no end in sight (2014 represents the best chance...if they dont do it then, I dont know when they can do it) when they have a clear path to that goal within sight.

I expect the Yanks to stay the course. There were a lot of moves this offseason that needed to be done that didnt get done because of this. I cant see them change course now.

Although if Hal is absutely telling the truth, then the plan is as good as scrapped. There is no realistic scenario that has NY as a "championship team" for 2014. Not that they cant squeak in, but on paper, before he seaso starts (which is when this decision will need to be made) it will be imposible for them to cobble together anything close to resembling a "championship caliber team"



The Yankees have willingly paid the tax and revenue sharing for years and done well. Whats changed? The tax went from 40% to 50%, that's all. So instead of paying 12 million in luxury tax in 2014 if the payroll is 220 million they pay 15 million. They have paid as much as 26 million in luxury tax in previous years when the tax threshold was much lower.

Obviously, it is the revenue sharing rebates that are driving this, but they have paid full revenue sharing dollars in the past and still done well as an organization.

As for this being the best time to reset the tax by dropping payroll to 2004 levels(an inflation adjusted payroll cut of almost 50%), I have to disagree. If they sign Cano, which they have to do to remain competitive they will have over 110 million committed 5 players, and that does not include Jeter who will make at least 9.5 million if he does not demand a new contract. So that's 120 million for 6 players. That leaves 69 million for the next 34 spots on the roster to get themselves a CF'er, DH, a couple of starters and a closer to play alongside the stars which are an aging 3Bman with bad hips, a 39 yo SS, a declining 1B man, a 39 yo RF'er, and Cano/CC.


I would argue this is the worst time to cut payroll. After all, it was Hank who hamstrung the team with that ridiculous A-Rod contract which is the main reason for them being over 189 million today. It probably kills him when he looks back on it that A-Rods deal has not only cost him 30 million AAV, but will cost 15 million in luxury tax and another 30 million is lost revenue sharing rebates (my estimate). A-rod will need to hit 100 HR a year to cover his cost, which is about 75 million a year if you look at it that way. That may be what's driving Hank although we can not know for sure.


So Hank is faced with a dilemma, to cut payroll to 189 million and save 45 million in tax and revenue sharing rebates and risk losing far more than this in revenue if the team is not competitive, or going over the threshold to field a competitive team and accept the fact that bad hips A-Rod is costing him 75 million a year for a contract he is responsible for.

Not too late for the Yankees to improve the team though. Mike Napoli is still looking for a contract.

Edited by Sampo Gida, 11 January 2013 - 07:15 PM.


#43 EvilEmpire

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Posted 12 January 2013 - 12:52 AM

So Hank is faced with a dilemma, to cut payroll to 189 million and save 45 million in tax and revenue sharing rebates and risk losing far more than this in revenue if the team is not competitive, or going over the threshold to field a competitive team and accept the fact that bad hips A-Rod is costing him 75 million a year for a contract he is responsible for.

Not too late for the Yankees to improve the team though. Mike Napoli is still looking for a contract.


There is no guarantee that spending over the threshold gets them into the playoffs anyway. Even with the team constructed the way it is now, flaws and all, there is a good chance they will be competitive in 2013. If that is the case then they would be looking at potentially one tough year in 2014. I don't know how much revenue they risk, but I doubt it will be that much. Whatever hit the brand takes rebounds once they start spending again with a potentially better crop of FAs available in 2015. Going over budget just to pay for a couple of above average players isn't going to save this team if there are problems this season.

#44 terrynever


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Posted 12 January 2013 - 03:50 PM

The Yankees have willingly paid the tax and revenue sharing for years and done well. Whats changed? The tax went from 40% to 50%, that's all. So instead of paying 12 million in luxury tax in 2014 if the payroll is 220 million they pay 15 million. They have paid as much as 26 million in luxury tax in previous years when the tax threshold was much lower.

Obviously, it is the revenue sharing rebates that are driving this, but they have paid full revenue sharing dollars in the past and still done well as an organization.

As for this being the best time to reset the tax by dropping payroll to 2004 levels(an inflation adjusted payroll cut of almost 50%), I have to disagree. If they sign Cano, which they have to do to remain competitive they will have over 110 million committed 5 players, and that does not include Jeter who will make at least 9.5 million if he does not demand a new contract. So that's 120 million for 6 players. That leaves 69 million for the next 34 spots on the roster to get themselves a CF'er, DH, a couple of starters and a closer to play alongside the stars which are an aging 3Bman with bad hips, a 39 yo SS, a declining 1B man, a 39 yo RF'er, and Cano/CC.


I would argue this is the worst time to cut payroll. After all, it was Hank who hamstrung the team with that ridiculous A-Rod contract which is the main reason for them being over 189 million today. It probably kills him when he looks back on it that A-Rods deal has not only cost him 30 million AAV, but will cost 15 million in luxury tax and another 30 million is lost revenue sharing rebates (my estimate). A-rod will need to hit 100 HR a year to cover his cost, which is about 75 million a year if you look at it that way. That may be what's driving Hank although we can not know for sure.


So Hank is faced with a dilemma, to cut payroll to 189 million and save 45 million in tax and revenue sharing rebates and risk losing far more than this in revenue if the team is not competitive, or going over the threshold to field a competitive team and accept the fact that bad hips A-Rod is costing him 75 million a year for a contract he is responsible for.

Not too late for the Yankees to improve the team though. Mike Napoli is still looking for a contract.

I don't think Hank has much to do with anything when it comes to team finances. Hal runs the club through the title of managing general partner. Hank is co-chairman. His role in the A-Rod extension got him banished to the sidelines.

#45 Sampo Gida

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Posted 12 January 2013 - 06:22 PM

There is no guarantee that spending over the threshold gets them into the playoffs anyway. Even with the team constructed the way it is now, flaws and all, there is a good chance they will be competitive in 2013. If that is the case then they would be looking at potentially one tough year in 2014. I don't know how much revenue they risk, but I doubt it will be that much. Whatever hit the brand takes rebounds once they start spending again with a potentially better crop of FAs available in 2015. Going over budget just to pay for a couple of above average players isn't going to save this team if there are problems this season.


There are never any guarantees but you fill the holes you can and hope for the best. From where I sit, the team has a serious issue offensively with the departure of Martin, Ibanez and Swisher and with Arod on the sidelines for most of the season, and Jeter coming off a serious ankle injury at 38 is a question mark in terms of what he produces. One of the holes can be partially filled with a 2+ WAR player the last couple of years who kills Red Sox pitching and whose acquisition would hurt one of their main competitors (Red Sox). They filled one hole with Youk although you cant count on him being healthy, and Ichiro might be an adequate replacement for Swisher if age does not catch up with him anymore than it has, but DH/C look weak as well as backup for Teixeira..

You don't need an All Star at every position but the difference between replacement level and above average is more than 2 W. Just because you cant spend 25 million a yr for a FA does not mean you go to the other extreme and spend 0. The Red Sox are a good example and in a similar position in terms of waiting for prospects. Like the Yankees they have a decent core if healthy and are filling the holes with average/above average players on short term deals rather than waving the white flag. Maybe it works, maybe not, no guarantees.

As for revenue risk. If you have 600 million in gross revenues, even as little as a 10% drop , not hard to imagine, costs you 60 million. That does not include the revenue drop due to lower ratings at YES. Also, didn't the Yankees (YGE) get 420 million as part of the deal with News Corporation (420 million?) just to agree to keep the team on YES till 2042? They should have the cash to go over budget. Budgets are not made in stone, every company has provisions for revisions if needed.

As for conceding 2014 and expecting minimal damage, that's fine. But if 2013 is an abortion as well, the damage over another lost season in 2014 will be more severe, so its best to do whatever is needed to W while you still have Hughes, Pettitte, Granderson, Rivera and Cano.

#46 Sampo Gida

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Posted 15 January 2013 - 02:28 AM

I don't think Hank has much to do with anything when it comes to team finances. Hal runs the club through the title of managing general partner. Hank is co-chairman. His role in the A-Rod extension got him banished to the sidelines.


Thanks for the correction and information. Anyways, substitute organization for Hanks name, I doubt any single person had enough power then to commit 250-300 million dollars without support from others, maybe even Hal.

Edited by Sampo Gida, 15 January 2013 - 02:29 AM.


#47 terrynever


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Posted 16 January 2013 - 04:54 PM

Thanks for the correction and information. Anyways, substitute organization for Hanks name, I doubt any single person had enough power then to commit 250-300 million dollars without support from others, maybe even Hal.

Exactly. It was an organizational move, even if Hank was out front at the time. I suspect Hank still has input into various club matters. Cashman runs the baseball end of things but obviously cannot do anything outside the budget unless he gets approval from the organization, meaning Hal and Hank and Levine and one or two others. It's weird to see this kind of organizational structure after enduring The Boss's wild maneuvering from the top for the first 20 years of his ownership.

#48 keninten

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Posted 16 January 2013 - 09:41 PM

Cashman runs the baseball end of things but obviously cannot do anything outside the budget unless he gets approval from the organization


How much does Cashman run it? The Soriano signing always made me wonder. I`ve always felt it was Levine running things. The Yankees version of Lucchino.

Edited by keninten, 16 January 2013 - 09:42 PM.


#49 jon abbey


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Posted 17 January 2013 - 09:51 PM

I think since Hank forced A-Rod on him, Cashman has almost total power over personnel decisions up to a certain payroll point. The only exception is the Soriano signing
and Cashman disavowed that one immediately, strongly and publicly (and was wrong, a bit surprisingly).

#50 mabrowndog


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Posted 25 January 2013 - 01:13 PM

Yanks & David Robertson avoid arb on a 1-year, $3.1M deal.






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