Nov
15

With Lee, Yanks would have to increase payroll

By

When it comes to the Yankees’ budget we hear, for the most part, vague statements. Last winter Brian Cashman kept saying that ownership gave him a number he had to stay under. This year Hal Steinbrenner has said that 2011 payroll will be on par with 2010. But does that mean the 2010 Opening Day payroll, or the final number that included Kerry Wood and Lance Berkman? With the work the Yanks have to do on the roster I’d hope it’s the latter. But we just don’t know. What we do know — or at least what we can reasonably assume — is that if the Yankees sign Cliff Lee this off-season, the team payroll will increase considerably by 2014.

If you head over to Cot’s you can see every team’s payroll obligations through 2014. For the most part you see one, maybe two players per team in that column, if any. What’s most common is an option buy-out. Most teams do not have significant commitments four years into the future, and for good reason. Even one bad contract can significantly hamper their flexibility. The Yankees are in a different position than every other team. They can make these commitments, knowing that there will be money in the checking account.

The only question the Yankees face is of how far they’re willing to expand future payroll. If they play their cards carefully they can probably sign Cliff Lee and still come in with a payroll under $210 million. That will include big contracts for Mariano Rivera, Derek Jeter, Alex Rodriguez, CC Sabathia, and Mark Teixeira. They’ll shed some of those contracts in the next few years, but they won’t shed all of them. In fact, if they sign Lee to a five-year contract worth the same $23 million Sabathia earns annually, they will have $96.5 million committed to four players in 2014. That does not bode well for payroll flexibility.

What’s worse, in 2014 those four players will be at the tail end of their primes, if they haven’t already exited. Alex Rodriguez will be 38; Mark Teixeira will be 34; CC Sabathia will be 33; Cliff Lee will be 35. We’ve seen players put up superb numbers at those ages, but those are the exceptions. While all four of the above are exceptional players, I think it’s a bit optimistic to think that they’ll all be producing at elite levels in 2014. Even if they are, they’ll still cost nearly half of what the Yankees have paid for the entire team in recent years. Should that then cause them to back off Lee?

If the Yankees plan to stand firm and not raise payroll significantly above $200 million, they probably need to give serious thought to the Lee question. To put it into perspective, the Yankees currently have roughly $140 million committed to eight players (plus Marte, who is dead weight) in 2011. That’s $17.5 million per player, with 17 more spots to fill. In 2014, with Lee in tow, they’d be committing $24.125 million per player, with 21 more spots to fill. I’ll leave that without commentary as to let it sink in.

If the Yankees do sign Cliff Lee this off-season, they’ll have made one thing clear: that they’re going to raise payroll, perhaps by a significant amount, over the next four years. With those four mega contracts running through 2015, at the earliest, the Yankees need more money in order to put players around them. Good players do not come cheap. Unless the Yankees’ farm system produces a string of stars in the coming years, there isn’t much of an alternative.

Categories : Front Office
  • http://twitter.com/Carlosological Carlosologist

    Before, I was parading around the idea of giving Lee 6/140 to come and pitch for us. Now, 6/120 seems like a better figure. The 3M difference in the AAV adds up to 12M by 2014. That should give us some breathing room by then.

    • Chris

      You know what will have an even bigger impact on financial flexibility? Winning. The estimates I’ve seen for 2009 were roughly $80M revenue for the playoffs – about $10M per game.

      • OldYanksFan

        Do you have a link to support the $80m figure?
        I’d like to see how that breaks down.
        Myself, I’d seen numbers in the $25m area.
        If it were truly $80m, which is equal or more then many team’s entire payroll, I would think you would see more teams, especally the Red Sox and typical 2nd place teams, spending that extra cash to maybe push them over the top.

        Anyway, it’s certainly an important number (whatever it is), and one that has o factor into Yankee decision making.

    • vin

      I think something along the lines of 5/110 or 6/120 makes sense. I keep hearing/reading people throw around crazy numbers like 24-25 per year, and 7 year deals. I just don’t think Lee’s other suitors can approach the 5/110 level.

      Also, this circumstance is different than the CC contract. He was an absolute necessity that offseason. Cashman had put all his eggs in the Sabathia basket, and whiffing on him would have been awful (even if it meant outbidding all other teams by a mile).

      The Yanks don’t need Lee as much as they did CC. And I honestly can’t see the Rangers or Nats shell out that kind of cash for him. The Yanks can play a bit more hardball with Lee and his agent than they did with CC and his representatives.

      I bet Cashman is willing to pay top dollar for Cliff Lee, but not top dollar PLUS 10-20% like he did for CC.

      • Avi

        “The Yanks don’t need Lee as much as they did CC.”
        I disagree. There are NO good starters available as free agents this year or next. Pettitte has already said this is his last year IF he comes back.
        Greinke ain’t comin here.
        If the Yanks don’t sign Lee you’re looking at potentially only Hughes and Burnett (hurts me to type his name) as starters under contract for 2012. CC can opt out after 2011 and in my opinion will.
        Signing Lee is as much or more about 2012 and 2013 than it is about 2011.

        • vin

          If they didn’t sign CC, do you think they would’ve won the WS in ’09? Or made the ALCS this year?

          CC made them relevant again. Lee puts them over the top.

          Remember, going into the ’08-’09 offseason, the only starters were Wang (coming off injury), Joba, and Hughes. They needed to convince Andy to return, and still get 2 more starters. They didn’t want to enter the year with both Joba and Hughes in the rotation. They needed a backup plan in SWB, and Phil was the guy.

          • Avi

            I don’t argue that the CC signing was critical, just that signing Lee is equally so.

            • vin

              If they don’t sign Lee, then I still think its reasonable that they would be favorites to win the pennant.

              • Avi

                Again, it’s about 2012 and 2013 prob more than it is about 2011.

        • Rob

          “CC can opt out after 2011 and in my opinion will.” Why in he|| would he do that? He’s not going to get any more money to opt out. No offense, but you obviously have no idea what you’re talking about.

  • ultimate913

    Lee would be here from 11 – 15. Same for Sabathia. Texeira till 16. A-Rod till 17. I wouldn’t mind 3 years of mediocore Yankee seasons because of these old players, waiting for their contracts to expire, while the Yanks go crazy on the IFA front and sign many prospects.

  • Monteroisdinero

    So-in a different world-if we could only have Jeter OR Lee next year? Your choice?

    • Thomas

      Lee by a wide margin.

      • OldYanksFan

        Miles and miles of wide margin.

    • Slugger27

      i think the question should be “would you prefer lee at 5/110 or jeter at 3/57″

      in both cases the answer in my opinion is lee, but i think the salary as well as the ramifications of the salary should be posed in a question like this.

    • ultimate913

      The value of Lee as SP + Nunez at SS >> Nova as SP and Jeter at SS. So, Lee.

      • Slugger27

        without salary entering the picture, this is correct.

        the difference between jeter and nunez at SS is probably around 2 WAR… its all but a certainty that lee’s performance is more than 2 WAR over whoever his replacement would be, and probably closer to 4-5 WAR

      • http://www.secondavenuesagas.com Benjamin Kabak

        That also is a false hypothetical though. I highly doubt Ivan Nova will be the team’s fifth starter if they fail to land Lee. The equation is really Lee + Nunez >> [unknown starter better than Nova] + Jeter.

        • ultimate913

          Speaking of unknown starter, we are still waiting for that post revealing what pitcher Joe came up with that would be a good fit for the Yankees.

  • The Three Amigos

    As risky as it sounds I think the Yanks are banking on their farm system going forward, which is why they are OK with getting Lee. They will continue to fill the bench and bullpen with farm hands and I presume the backend of the rotation will be used as well. With CC, Lee, AJ, Hughes the #5, 6 and 7 starters will come from the system.

    This is why Montero (DH, C, 1B), Romine (C), Laird (bench/ super sub), etc. will be very important going forward. Cheap talent so we dont need to overpay for OF, C and DH.

    • Monteroisdinero

      I guess my boys Cervelli and Golson don’t qualify for bench/super sub but they are cheap.

      • http://theyankeeu.com Matt Imbrogno

        I think Cervelli is on the Melky plan: he’ll be a Yankee while he’s cheap, but as soon as he starts to get even remoetly expensive, he’s gone.

        If the Yankees stick w/Golson in ’11, I think that’d be his last shot. He can defintiely hang with the big boys defensively, but he’s shown literally nothing with the bat.

  • motoman

    By then Cano will have a monster contract too. Plus you have to figure Hughes will have a big contract along with another top starter, top outfielder and a closer. Cashman has to hope they win again quickly because he has indeed mortgaged the future.

    • Slugger27

      well, by then andy, jeter, mo, posada will all be off the books… likely swisher too, and burnett

      id imagine its been a long time since the yankees didnt have significant money locked up in 4+ year commitments. i dont think signing lee necessarily means the payroll will see a significant increase in the future. the payroll has been more or less the same since 2004-2005, so i think the yankees have shown they know how to really spend big but not constantly increase the payroll year after year after year.

      • ultimate913

        and Granderson and Igawa.

        • king of fruitless hypotheticals

          and Igawa.

          nothing to add, but that sounded so nice…

  • Chuck

    Im sure God would help out the Yankees. But he does not exist.

    • Slugger27

      i laughed.

      (no idea if that was what u were going for)

    • http://www.secondavenuesagas.com Benjamin Kabak

      What?

    • http://youcantpredictbaseball.wordpress.com bexarama

      what is this I don’t even

    • http://theyankeeu.com Matt Imbrogno

      Your location wouldn’t happen to be “left field” would it?

    • Avi

      Please explain. I’m sure you meant something..

    • FIPster Doofus

      Every post by this Chuck guy has been some variation of “God doesn’t exist.” He is clearly unfamiliar with He who wears No. 42.

    • All Praise Be To Mo

      Jesus takes offense to this statement. He is angered and is now forced to hit a homerun that will land through your car windshield.

      • David

        I’d be thrilled if teh Jesus hit a home run ball through my window. Especially if it’s a pennant winning hit

    • http://mystiqueandaura.com Steve H

      Do you not watch the 9th inning of Yankee games?

    • Stratman9652

      So I’m curious as to why someone spends thier time posting stuff like this just to get a reaction. Is the satisfaction of getting responses really that rewarding? I just don’t get the trolling thing.

      • radnom

        I like to imagine that Chuck took his time to carefully plot out this response while leaning back in his deep brown leather chair listening to the crackling of his fireplace.

        “Ah, this will inspire some thought amongst the message board”

        thinks Chuck as he smiles to himself as he takes a sip of single-malt scotch, reveling in his own cleverness.

    • Matt Goldfarb

      Is that you Knoblauch?

  • Avi

    If the Yankee payroll continues to grow at the rate it has over the last ten or fifteen years then $96M committed to four players in 2014 will be just fine.
    The Yankees haven’t shown any signs that their enormous overhead (payroll) is becoming burdensome, so I wouldn’t worry.
    Also it seems the front office (Randy Levine and co) have done a great job increasing revenue. Starting with the Yes network, the new stadium, their deals with Manchester united, the Yomiuri Giants and even deals like the one they made with Steiner sports (memorabilia).
    The Yankees are a gold mine and Levine is doing a great job mining it.

    • nathan

      Their deal with Manchester United?? What deal is that.

      • Avi

        joint marketing deal. look it up

        • steve

          that would be joint marketing deal with the dallas cowboys….I think!

  • nathan

    Well, I tried to forget I am a Yankee fan for a minute and imagined that 4player/96M commitment for 2014. Yikes.

    I am opposed to signing Lee not because of payroll but because he is 32 and we will definitely be receiving the down years of his arm. The ballooning payroll is just an additional reason. I really hope the Yanks think well before they act. One thing is guaranteed our ticket prices are going to go up for the next several years. (Imagine where it would be without the depression).

  • Mister D

    First, if the economy improves we’ll see salaries and payrolls rise across baseball, so a $25m contract may not be AS inflated in 4 years as it seems now, nor will it be as much of a problem if the payroll escalates. Admittedly that’s a big if.

    Second, we have even more of the current payroll locked into a similar number of players now. I expect by 2014 we will have lost Pettite, Jorge, Mo and AJ. I am hoping Jeter, if he’s not retired, will be ready for another, and likely cheaper, contract, if he’s even still playing.

    Odds are Swisher and Granderson will be gone, and hopefully we’ll have some young position players ready to step up.

    So while I grant that we have some unseemly contracts (one very notable one), and this plays a big part in my desire not to sign Lee this season, I don’t necessarily see it as any worse in 2014 than in 2011.

    • OldYanksFan

      The economy is going to improve?

      • Mister D

        Someday, yes.

        Before 2014…?

        Ask again later.

  • Bart

    Perhaps there is an internal plan to trade Burnett to a National League team, with the Yankees picking up a portion of the remaining contract. This would be similar to the Contreras trade to Chicago several years ago.

    • Ro

      It seems like you and I are the only two people who have considered this. Both the Nationals and Brewers are absolutely starved for some acceptable front line pitching. Two ways this could work. You send Burnett along with salary relief. Call it $9mm. In this market AJ at 3 and $40mm is not bad considering the rumors Pavano should be able to get $33m for 3. Or the second way which includes Joba. That would offset sending money to either team. As for an in return? I have no idea. Regardless, I truly believe these are conversations that the Yanks are having internally. Cashman can be a shrewd negotiator, and I definitely think something like this is possible with him.

      I wouldn’t expect something like this to happen until after Lee picks a team. I’m actually surprised this is something that hasn’t been discussed more here at RAB…

      • Mister D

        Pavano outpitched AJ the last 2 seasons.

        And AJ has a no trade clause, so unless he is getting shelled in NY, I don’t see him greenlighting a change in scenery. Then again, if he was getting shelled, who would want him?

  • swo

    I’m sure the Yanks are hoping for some favorable changes from the 2011 Collective Bargaining Agreement. Perhaps a raising of the luxury tax threshold? Reduced revenue sharing proportionate to the amount that clubs refuse to spend improving their ballclubs? Either of those could potentially ease the burden of that 2014 commitment.
    I doubt the Yanks spend this offseason according to what they think will happen at the CBA next offseason, but I have a feeling they’ll try their best to make something substantial happen there.
    It’s impossible to know what the rest of the team is going to look like in 2014, but we have to hope that the progress made by the farm this past season will continue at least somewhat. Guys like Montero, Banuelos, Adams, and Heathcott are pretty darn important to the Yanks’ future from a payroll standpoint, nevermind a production one (even if they end up as trade bait).

  • Jon B.

    I think what we’re talking about falls into the hilarious category that deserves some perspective.

    At around half of their payroll, the Yankees would have 1/6th of their roster set. It’s not a great ratio, of course, but it’s probably akin to how other teams do it — their “stars” make up a disproportional chunk of their roster and the other positions need to fill in with good-not-great players.

    What do they have left to spend? Over $100MM. More than 21 other teams (70%) spent on their entire payroll, based on 2010 Opening Day costs from Cot’s. If you give a miniscule $5MM leeway on that amount, you can add another two teams and bring it up to 76.7% of baseball that the Yankees leftovers outspend. Woe is the Yankees! They’d better raise payroll!

    I suppose outspending the world by leaps and bounds is the “Yankees way” but suggestions that they need to raise payroll to sign Lee and fill in the rest of the gaps makes me facepalm. If they do, it only speaks to the idiocy of the contracts they’re doling out to begin with. If the Yankees can’t compete with a payroll “just” twice as high as 76% of the rest of the teams in baseball, then perhaps the solution isn’t raising the payroll; perhaps–just perhaps–the problem is they do a really poor job constructing their team and that’s what needs to change.

    Blasphemy, I know.

    • John Doe

      How would you construct the team this off-season?

  • OldYanksFan

    I am bothered that people have given up on Joba so quickly.
    Many pitchers that are now beating us, took a few years to come into their own. There is talk of de la Rosa, yet Joba’s numbers are quite a bit better then his. Since a decent #3/#4 guy costs well over $10m, it seems nuts not to give Joba every opportunity to succeed.

    What happens if we sign Lee but NOT Andy, therefore freeing up $11m+ and go to battle with CC, Lee, Phil, AJ and Joba/Nova? Joba, our one-time future Ace is no longer fit to be a #5 guy?

    Talking about the future with our farm is great, but what does it matter if the Yankees can’t afford to give young pitchers the time and environment they need to reach their potential?

    And again I’ll remind you, that as a Starter, Joba has similar, if not better numbers then Phil.

  • steve

    to Avi, that would be a joint marketing deal with the dallas cowboys……I think!

  • Troy v

    I love the fact that the Yanks go out and get the best player when they have an actual need and at the same time i understand they shouldn’t go out and get the top free aagent every year…but i believe they should stop bidding against themselves…one of the ways they can bring down payroll is to always wait for the market to be esablished by at least one other team and to only add what is necessary to get a player…they should only add a little more to agquire a player…they also should negotiate without sentimentality with their own veterans…Like in the case of CC Sababthia the only bid that was made was 5 years 100 mill why didn’t the Yanks just add one more year with an extra mill(6 years 21 mill a year)…and how much lower would the Arod contract be if they would have allowed other teams to bid on him and then just added enogh years a nd salary to resign him…maybe they get a 32 year old Arod 7 years 140 mill…If they start to apply the Teixeira tactic in every situation they would probably come out spending alot less money…sometimes if they really want a player the bidding for that player will cause him to get way more than he is worth ie Burnett but in general the Yanks should save alot of money in the long run…this could even be applied to Derek Jeter…let him hit the open market and establish his vaule when all the bids are in then the Yanks can drop their bid….it could save them millions and contract years.

    • Mister D

      RAB reported months after the deal that the Angels were much closer than people assumed, with a $140m deal on the table: http://riveraveblues.com/2009/.....-cc-12155/

      ARod was just idiotic, but there’s a reason that idiot is no longer involved in team decision making.The idea that Jeter could be planning on using that mistake to force the Yankees to make an equally idiotic deal for him is hopefully just the fevered dream of the backpage gossip mongers.

      • Troy v

        OK good point…i stand corrected…Thanks

    • Mike

      Not every polayer wants to play in teh brightlights of NY. Lee is a dowb home AK boy, and his wife already hates New Yorkers.

      If the Yankees want to pry him from the Rangers, they will have
      to pay OVER market value, just as they did with CC.

      And don’t count out the Angels or White Sox with Lee. It is not just a two team race. Othew teams can go toe to toe with the Yanks.

      They should let Jeter go. If he was not a Yankee, on the open market, he would get three years $6 – $7 million each year TOPS.

      Sentiment does not win ballgames.

  • http://delisional.com UHHH!.

    nice article. no mention of Pett or Posada or Mariano coming off the books within the next 2 years.. neat. Maybe have some facts to consider before typing up nonsense about payroll that you purposely try to inflate.

    BTW, the yankees signed Arod to absurd amounts of cash, but he brings in money, and when the milestones start getting close, even more so in metchadise. Need I remind you that the payroll is roughly 15% of the annual revenue of Yankees Global Enterprises? Yep, that’s right, there payroll is still less than what we pay for our mortgages (percentage wise)

    • Troy v

      Uhhh…i would just like to know where you got the info on the Yanks payroll being just 15 % of their global revenue…? Because that changes all my thoughts…

  • http://delisional.com UHHH!. Pl

    nice article. no mention of Pett or Posada or Mariano coming off the books within the next 2 years.. neat. Maybe have some facts to consider before typing up nonsense about payroll that you purposely try to inflate.

    BTW, the yankees signed Arod to absurd amounts of cash, but he brings in money, and when the milestones start getting close, even more so in metchadise. Need I remind you that the payroll is roughly 15% of the annual revenue of Yankees Global Enterprises? Yep, that’s right, there payroll is still less than what we pay for our mortgages (percentage wise).

    Seriously dude, list ALL the facts if you are going to talk dollars and cents. You can’t just choose to leave off HUGE salaries that are coming off the books as soon as next year and thereafter.

    Are you a politician?

    Also, some of these comments are ridiculous about not needing Lee. Do you even know who is on the roster? How you can say that we don’t need anoterh quality arm iWe need one desperately and if Andy retires.. we’ll need to replace him as well.

    SO far (Not in starting order)

    CC
    Burnett
    Hughes
    #4 is who if not Lee
    #5 is who if not Pettitte ????

    do tell me your secrets how you figure we don’t need Lee desperately? ? ? ? !!!

  • Troy v

    This may sound crazy but….how about the Yanks only slightly over pay for Jeter and go year to year with him…this would allow the Yanks to have player and contract flexibility…if Jeter is only worth 7.5 mill on the open market at best then paying him 10 mill for a year should be good and why not give him declining mutual options like 7.5 mill in 2012 and 5 mill in 2013…this way if any high impact ss become available they can go with that ss…Jeter’s importance to the Yankees declines greatly after he reaches 3000 hits and they shouldn’t bog themselves down with him…if they want to show some sort of appreciation to Jeter they could pay him 5 mill a year for many years(maybe 8 or 10) as deferred money after his player contract is up with them…again this gives them player and money flexibility…and maybe they could bring down Arod’s contract by paying him deferred money and adding interest to the deferred contract…if his salary was reduced by 10 million a year for 7 years(70 mill) they could pay him 5.5 mill a year over 14 years that would add 7.5 mill more to his contract but greatly reduce payroll over the next 7 years and if they then made a conscious effort to get considerably cheaper talent at 3rd base from the time they move Arod off third they could actually bring down payroll despite the fact that they would be adding more money to Arod’s already rediculous contract.I believe Cliff Lee will have a greater impact over his contract than Jeter and Arod over that time so in my opinion both players should be brought to earth…and niether should be the cause of the Yanks not signing him…

  • Leo

    I have been on many sites and must commend u guys for being quite knowledgable.

    Anyway, I would love to trade aj for zambrano. May help both teams rid a headache.

    Cc
    lee
    Andy
    Hughes
    zambrano

  • Mark L

    If $215 million is our limit — Based on my own calculations through Cot’s, if Jeter returns at $13 million per, Mo at $14 million per, Andy at $10 million — we can give Cliff Lee $23 million per season and still have $4-5 million left to rummage through the bargain bin to fill the remaining 4-6 roster spots.

  • http://delisional.com UHHH!. Pl

    Leo:

    Thats not nice to instigate. This article is rubbish and the facts are just flat out wrong.

    and the day the moron clubhouse cancer Zambrano puts on pinstripes is the same day that kids will be dressed in costumes with sacks of candy and only that. Man please.

    • Troy v

      UHHH…where did you get the info on the Yankee budget being just 15 % of their global revenue…just asking because Mike Lupica of the N.Y. Daily News has put out multiple articles that the Yanks actually lose money in some seasons…

  • Matt Goldfarb

    Declaring a fiscal loss and having a payroll that is 15% of global revenue are two totally different things.

    Read some basic accounting.

    Don’t forget it’s in the interest of a business to declare fiscal losses (by reinvesting money in the business) so that they don’t have to pay taxes.

    I also think that this was 1 year where this happened (when they were like 16 games behind the BoSox in June) ’06?

  • Endlessmike

    Why don’t the Yankees get rid of Jeter and use the $20 million on Lee and get some utility SS. Jeter is already becoming a problem alreay by being a overrpaid SS/mascot. And watch when the Yankees want Jeter move to LeftField.

    And the Yankees could of gotten two draft picks.Just like A-Rod the Yankees are overrpaying when they don’t have to.

  • Ryan

    Although the Yanks payroll is ridiculously high, you have to think that it could be easily be much higher. Consider that Yankees were easily fielding 200 million dollar teams in the old stadium, but now with the new stadium the Yankees are doubling their money. If George were still running the team, I bet he would increase payroll a significant amount. Although, I don’t really think any free agents make sense for the Yanks except for Lee & Soriano.

  • virginia yankee

    The payroll boundary conditions are as fluid as required to field a WS capable team — the franchise is worth north of $1B and likely growing. The better argument is constructing the entire team — the fixation on Lee, I believe, is unwarranted IF THE LARGER ISSUE is wholesale obsolescence due to age related loss of offense, defense and pitching prowess including increasing nagging injury related downtime. The impact of this factor has already hurt Posada, ARod, Rivera, this and earlier seasons and at the same ages Damon, Matsui when with the team. Pettit’s stellar season — on a CY YOUNG pace, was undone and when added to Vasquez/Burnett dropped the Yankees out of the DIV lead. “NO BIGGIE” – still WC but really RED SOX injuries made tat possible. ‘

    “Them’s the Breaks” — but can we count on other key competitors “fail” in ways that make up for Yankee failure to field a competitive team.

    The one place where the Yankees appear to have developmental depth is in pitching – rather than clog up the rotation with another expensive aging Pitcher the depth is a tremendous risk hedge. USE IT. USE THE BIG $s for position young players who can give, hopefully, 15 years service, like Jeter, Posada.