Dec
04

Report: Yanks eying austerity budget for 2014

By

The Yankees, baseball’s biggest spenders for the better part of two decades, may finally be eying something of a budget, according to a report by Joel Sherman. In a piece on Sunday, the New York Post scribe says that Major League Baseball’s Collective Bargaining Agreement and the other 29 teams’ attempts at keeping the Yanks’ spending under control may finally pay off in 2014 as the New York front office wants to bring its payroll below the luxury tax threshold. If the Yanks are truly intent on reducing costs, the club will not overpay for long-term deals in the near future and may focus on ushering in a new round of young players instead.

Sherman, who noted that this drive toward fiscal control has them lukewarm on top free agent pitchers Mark Buehrle and C.J. Wilson, explained the rational behind the Yanks’ thinking:

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).

And even if they just went under $189 million for 2014 before going over again in 2015, the Yankees would receive serious benefits. They would get about $10 million in the revenue sharing disqualification program. Also, by simply going under the threshold once, the Yankees would go back to having a 17.5 percent tax rather than the 50 percent that begins in 2014 for them if they never go under. Keep in mind that since the luxury tax went to 40 percent for them in 2005, the Yankees have averaged paying $25.75 million in tax annually.

So what’s going on here? How could the Yankees, who enjoy the edge of money with their new stadium, TV deal and various other revenue sources, suddenly become fiscally conservative? There are, in effect, three answers. First, the Yankee sources who are talking to Joel Sherman are being truthful. The Yankees know what they stand to gain by getting their payroll under $189 million in 2014, and they think they have the young pieces to do so. Plus, as Sherman writes, the Yankees say, “The big-name guys are a waste of time. We are not spending that kind of money.”

Next, they could be bluffing. Maybe they’re playing coy now to make a bigger move later in the year. If any free agent player wants to come to New York but the Yanks don’t want to meet that player’s asking price, it’s in the club’s best interest to put forward a plausible explanation for future that is fiscally conservative. Maybe they want to go big on Yu Darvish or Yoenis Cespedes but do not want to overplay their hand now.

Third, they’re laying the groundwork now in order to play it coy next winter. Right now, they have $72 million tied up in three players in 2014 — A-Rod, Mark Teixeira and CC Sabathia. They know that they’ll have to deal with Robinson Cano‘s, Curtis Granderson‘s and Nick Swisher‘s free agencies within the next two offseasons, and they will likely want to retain two of those three if not all three. Plus, the free agent pitchers could include Matt Cain, Cole Hamels and Anibal Sanchez while Mariano Rivera‘s current deal — and perhaps his career — is set to end after 2012 as well. That’s a whole lotta holes the Yanks are going to have to fill with an eye toward the 2014 luxury tax benefits.

Ultimately, then, baseball’s long-term effort to rein in the Yanks’ spending may be coming to a head, at least temporarily. Baseball has incentivized the Yanks to drop their payroll under the luxury threshold for at least a season. In 2007, the Yanks spent $189 million and won 94 games. They’ve spent over $200 million every year since then and will likely do so again in 2012. Change may be on the horizon though, and if it comes, it could benefit the Yanks’ bottom line tremendously as they gear up for another half decade of exorbitant spending.

Categories : News

154 Comments»

  1. Plank says:

    In 2007, the Yanks spent $189 million

    That was their opening day payroll. 2007 was the year they signed Clemens. Their final payroll was 218MM. As it has been every year since 2005

    http://www.bizofbaseball.com/d.....ar_MLB.pdf

    • Plank says:

      As it has been every year since 2005

      It was over 200MM, as it has been every year since 2005.

      • RetroRob says:

        There is, I believe, three numbers that will pop up regarding teams’ payrolls. Opening day, final payroll and the luxury tax payroll. The Yankees will manage to that luxury tax number.

        • Plank says:

          Surely the luxury tax number would be closer to the final (actual) payroll number than the amount the players on the roster in April (opening day payroll.) No?

          • Yes. The luxury tax is based on the final payroll. That was my mistake for not clarifying that. The numbers in the post refer to opening day payrolls. The Yanks would have to stay under $189 million for the entirety of 2014 to qualify for the savings and avoid the luxury tax.

            • Plank says:

              You say there are 3 possibilities in the article. Which one do you think it is? I think it’s just a bluff. They will use this as a negotiating tactic.

              • It’s a combination of the three. I think they really want to keep the payroll under the threshold for 2014 because the savings are pretty substantial, but I think they can use it as a negotiating tactic too. Let’s see what they do when/if Darvish is posted.

            • Jimbo says:

              If the luxury tax is based on the final payroll, why were the Red Sox so keen to wait to announce A Gonz contract last year?

              • Need Pitching says:

                if they announced before the season, the AAV of his extension would have counted toward their 2012 luxury tax. Since they waited, only the AAV of his previous contract counted.

              • Ed says:

                The luxury tax is based on the average annual value of the contract. If you sign an extension during the offseason, the luxury tax goes off whatever was left of your old contract, plus the extension.

                If you sign an extension mid season, the luxury tax for the current season gets based off your old contract. The extension doesn’t count against the tax until next season.

                Doing it that way let the Red Sox get taxed in 2011 based on his old contract which had a $3m AAV. From 2012-2018, he counts as $22m AAV against the tax. If they signed him during the offseason, it would’ve been about a $20m AAV hit against the luxury tax from 2011-2018.

            • Need Pitching says:

              keep in mind luxury tax limits include player benefits and entire 40 man roster, which I believe adds 10-15M per year to actual final payroll. So the opening day (25 man roster) payroll would likely have to be about 175M and stay there for the entire season. So basically the Yankees would have less than 100M to fill the remaining 21 spots if Jeter exercises his option. I’ll believe that when I see it (unless they are planning a rebuilding phase – I hope not)

  2. RetroRob says:

    The Yankees first cleared the $200 million payroll mark in 2005, and 2012 will be the 8th straight season they’re around $200 million. They were at $209 million in 2005, and $207 million in 2011. As noted, they’ve been as low as $189 as recently as 2007. Their payroll has fluctuated, but basically the growth has stagnated. That’s the luxury tax impact. It seems as if they were waiting for the threshold to catch up to the payroll. The income disqualification now adds even more incentive. I think they’re serious.

  3. Paul from Boston says:

    “So what’s going on here?”

    A family business is recognizing that for every dollar they spend on “inventory”, there’s one less dollar in their pockets. With Big George in the ground, they now have access to all those resources.

    That said, as a season ticket holder, I expect they’ll drop ticket prices, right*? I mean, 3,653,680 million paying fans at $63 on average per ticket, and that’s $230 million right there. Add in TV revenues, and they’re clearing $400 million/year.

    http://www.forbes.com/lists/20.....34613.html

    *Yeah, right…

    • RetroRob says:

      Why would they drop the ticket prices? The charge what they charge because people pay it.

      Even if they hold at $189 million, which of course if a big IF, they are still paying more for talent than any other team. Their goal would be more effective with their resources. You don’t get a refund for that!

      • Paul from Boston says:

        Clearing $200 million a year in profits is obscene. Of course, they also just raised bleacher prices.

        At least Big George re-invested profits back in the team. CBS did not…

        No, I expect the Yankees to pay top dollar for the best players. $189 million means they don’t sign anyone this off-season. A “rotation” that includes Burnett and Hughes and Garcia is disgusting.

    • Mike Axisa says:

      Ticket prices won’t go down until people stop showing up. The payroll doesn’t set the ticket prices, they charge what people are willing to pay.

      • Paul from Boston says:

        “Ticket prices won’t go down until people stop showing up.”

        You mean the Wall Street pigs in the fat ass, all-you-can-eat seats? No, better to hose the bleacher creatures.

        P.s. You all missed my sarcasm. Of course, they’ll never decrease prices. There’s too much money to be made on families and working stiffs.

        • Esteban says:

          Somebody call a waaaaahmbulance. Show how much you care and stop giving the Yankees money. Better yet, organize a group of similar minded fans fir your boycott

          • Mike Axisa says:

            #OccupyYankeeStadium

          • Paul from Boston says:

            Yeah, it’s whining to remember when I got Billy Martin’s autograph as a five-year old leaning over the old dugout. That will never happen again…not in Yankee $tadium.

            • Mike Axisa says:

              Billy Martin hasn’t managed the Yankees in a quarter of a century. Might be time to let that go.

              • CP says:

                I think his bigger point is reasonable though. There is almost no interaction between the fans and the players unless you’re paying for the $1000 a game seats.

                • Paul from Boston says:

                  This. But when you’re getting paid by YES, I guess it’s easy to ignore the bigger point…

                  • We don’t get paid by YES, but thanks for accusing of us ignoring the point because of money.

                    • Plank says:

                      What is your relationship to YES? Do they pay the server costs?

                    • We host it independently of YES, and they pay some, but not all, of our hosting costs. They also assert no editorial control over the site.

                    • Paul from Boston says:

                      If they’re paying your hosting costs, then you’re getting paid. Plus, of course there’s the advertising you run. YES helps drive traffic here…

                    • Plank says:

                      Paul, you think Mike, Ben, and Joe censor what they write because of the relationship?

                    • Chip says:

                      Ben, Mike and Joe’s opinions have been completely the same before and after the YES sponsorship. We’re lucky that we have a group of guys who put time into this forum for us. If the Yankees want to pick up part of their hosting costs for a medium that is sometimes critical to them, then good for them. Seems like something they’re doing for the everyman

                  • Esteban says:

                    Haha nice one. RAB are just shills for the Yankees. Mike, YES flew you down to Dallas in a private plane, right?

                • Esteban says:

                  The bigger point, is that there is a limited number of seats available and if the Yankees want to be profitable and afford their payroll, ticket prices are going to up. Back years ago, hell even in the 90s, attendance at baseball games and Yankees games was much less than it is now. More people are going to the games, not less, and not all of those extra people are Wall $treet fat cat non true fans.

                  • CP says:

                    I’m not saying they’re not true fans. I’m just saying that it would be nice if a kid could get a signed ball, or even just shout hello to a player, without having to pay hundreds of dollars for a ticket. There’s no reason the Yankees ‘need’ to do that, but it would be a good PR move, and wouldn’t cost them anything to allow fans closer to the field during batting practice.

          • “Somebody call a waaaaahmbulance. Show how much you care and stop giving the Yankees money.”

            I, for one, did exactly that.

            And what the shit is with people having this reaction of mocking fans who don’t like how the live-game experience has changed over the years and expressing that disappointment? Somebody call a waaaaahmbulance? How about you fuck right the fuck off.

            It’s like people who automatically sympathize with the ownership side of sports labor disputes. Why do people feel the need to come to the defense of the poor, defenseless, filthy rich organization? Why is it so awful for fans to express their dissatisfaction with an experience they’ve paid a significant amount of their hard-earned money for?

            Have YOU paid for season tickets, or for partial-season tickets? What gives you the right to mock people who have, and who are unhappy with how that experience has changed?

            Some people don’t like the way the in-stadium experience has changed, both because of financial and in-game experience factors. Fucking deal with it.

        • Mike Axisa says:

          So what are they supposed to do, raise the prices of the seats no one sits in? It’s supply and demand. The bleachers sell, so those prices go up. If you don’t like it, don’t buy the tickets.

          • Paul from Boston says:

            How about they turn those seats back into something a real fan can afford? Instead, it’s the fat pigs and their Vegas-style buffets.

            • Mike Axisa says:

              So you’re saying the more money you have, the less of a fan you are? Fandom is inversely proportional to disposable income?

              • Paul from Boston says:

                Real fans show up for games…

                • Esteban says:

                  The Yankees averaged 45,107 in attendance in 2011. Someone is showing up. As long as they do, causing high demand for the tickets, there is no reason for the Yankees to lower prices.

                  • I am not the droids you're looking for... says:

                    You are citing paid attendance I believe which for the Yanks usually over states actual gate attendance (you now, people who actually show up) by a few thousand fannies. Went to a score of games last season and it was the case every single game. The best seats are almost never particularly full of butts. This is dramatically different than in the prior YS during and after the dynasty years. I can’t quantify the difference bc I don’t have access to that data. But anyone with eyes can easily see the difference.

              • mbonzo says:

                I think theres a point there. Not that people who don’t sit there are “true fans”, but a lot of parties that buy those sits are businesses that use the seats for business purposes. These tickets are usually given to out-of-town customers, who are there as tourists more-so than fans.

              • Brian S. says:

                Those highly paid fans are less likely to get drunk and call Youkilis a bunch of obscenities. Those are the real fans.

            • NJ_Andy says:

              Good point. Fat pigs CAN’T be real fans.

            • Real Fan™ is right up there with True Yankee™

            • Mister Delaware says:

              Or why not allocate the entire section behind home plate to NYC school children and poor families.

            • Esteban says:

              What does that even mean? Those tickets around homeplate are gonna be more money even if they don’t include the amenities that the Legends seats do. Dude, this is really just basic economics. High demand, limited supply= higher prices.

          • Esteban says:

            Yankees should be taking losses and setting ticket prices at levels that Paul from Boston thinks are fair. That’ll get them far.

            • johnnybk says:

              If you start mixing baseball and politics its only a matter of time before you don’t like baseball anymore. I once happened upon some stories of how George ran his ship building company and had to drill a hole in my head to forget it and keep rooting.

              My point- its simple supply and demand, don’t start worrying about if theyre making too much money or if theyre being irresponsible citizens for pricing out the working class. Its babeball, enjoy it.

            • RetroRob says:

              Wow, stepped away from the thread and come back to all of this…and not a note from Ted Wilson, or Nelson, or whatever his name is.

    • bonestock94 says:

      That’s not net income, you can’t just add up their revenue streams and assume that’s what they bank. That’s absurd.

    • Ted Nelson says:

      Revenues are half the story, and costs are the other half.

  4. JobaWockeeZ says:

    Looks like Cash is gonna have to be creative. Should be fun to watch. And there’s no way they’ll afford Swisher, Granderson and Cano. Granderson and Cano are musts, Swisher isn’t nearly as valuable. They can keep Swish if we want a 2008 type rotation though.

    Let someone else overpay him.

  5. Fin says:

    Hmm, I’ll believe it when I see it. They are going to need alot of these prospects to pan out for them to do it.

  6. Eric says:

    Nice post Ben, this could be a big story to follow going forward. I would be curious to see if the Yankees try to use some creative contract structuring to try to circumvent this (not sure if that’s allowed), perhaps by backloading the contracts of future signings or restructuring current deals for guys like A-Rod and Teixeira so their effect on the 2014 payroll is less.

    Or is luxury tax calculated based on the AAV of the current contracts? In that case, a lot of the creative accounting wouldn’t really work.

    It’s possible the Yankees might just say screw it and keep paying the ridiculous luxury tax rather than hurt the team by slashing payroll for a year, but this sounds like potentially way too much money to ignore. I imagine they will at least try to see if they can trim some of the fat in the payroll by cutting back on some free agent signings and using the farm.

    • Here’s the thing about “hurting” the team: The Yanks should be able to construct a winning team for $189 million too. The big problem is that nearly 40% of that is already tied up in only three players. That A-Rod deal continues to be a problem.

    • Plank says:

      but this sounds like potentially way too much money to ignore.

      If they were to do this in 2014, they could do two things:

      Pocket the money that year and every subsequent year.

      Use that money and the lower luxury tax going forward to improve the club.

      If the first one is the goal, it’s gonna be a much different team and team philosophy. If the second one is the goal, it seems like it’s not the best way to build a winner.

  7. I think this makes guys like Brett Gardner even more valuable. Probably Austin Romine too, unless they actually think Montero is going to be a big league catcher. I know extending Martin for a few years at a few million was talked about, and still might be the right move but using a Romine/Montero might be an easy way to cut a few million. Just a thought.

    • Plank says:

      They may need to trade away Gardner in his final year of arb if they are gonna chop payroll like this.

      I’m only kind of joking.

      • Luckily defense isn’t a huge consideration in ARB cases. Yeah the Martin thing might sound a bit ridiculous but just a quick thought on a way to trim away something where the cheap option doesn’t necessarily have a huge drop off (granted Romine and Jesus still have a long way to go to be on Martin’s defensive level)

        • RetroRob says:

          Yeah, someone like Gardner will be undervalued by arbitration. UZR scores aren’t included. Of course, it’s quite possible in three years that Gardy is trending down as goes north of thirty and the Yankees may want to move on past him for other reasons.

        • Eric says:

          Romine may be just as good if not better than Martin defensively.

  8. BK2ATL says:

    I read Sherman’s article this morning and I’m glad RAB brought it over here to be discussed. This line of thinking is very plausible in how the Yanks have been playing the FA market so far this year, and probably next year’s as well. Not to say, this FA class of SP deserves much consideration. Wilson, Buehrle, Jackson? Seriously??? No thanks.

    It appears that we’re set to go in big on Darvish and possibly Cespedes or Siler, possibly re-sign Andruw Jones and Eric Chavez, and be done with the FA market for the next few years.

    Darvish is the one FA signing worth the shot. If he works out, whoa!!!! We’d be set for the better part of the decade, pitching-wise. If he doesn’t, we’ll have a lower-cost 3rd or 4th starter, with better control and confidence than AJ.

    Cespedes and/or Siler provide future insurance behind Swisher and/or Gardner, until we get a better understanding of where Mason Williams is. Heathcott is a name, but hasn’t done much to move past being that.

    Cashman’s reluctance to part with Montero (at this point) or Banuelos and Betances (possibly) shows that they plan on allowing the farm system to replenish the team for 2013-going forward rather than the FA market in order to stay as close to that $189 million target as possible. They will build/maintain the rotation and bullpen on the cheap.

    There won’t be any Danks or Cain or Hamels in pinstripes. Kemp’s already locked up long-term, so that wet dream is also over.

    Looks like Swisher will have 2012 to audition for his next contract, here or elsewhere. We have 2 more years of AJ and Jeter. Mariano’s contract expires after 2012. Soriano after 2013.

    By 2014, we’ll have to lock up Cano and Granderson. Maybe they can convince CC, Tex and A-Rod to restructure their deals at that point to ensure some luxury tax flexibility. $72 million to 3 players in 2014….gonna be an interesting ride leading up to that year. We did our major FA spending on them and AJ. Who knows?

    We won’t be able to make many major moves in the future. These international FA plays appear to be the best way forward, and least cost-effective from draft, prospects and financial perspective. But they have to be made this offseason.

  9. awy says:

    “suddenly become fiscally wise”

    really? you’d think the more money they spend on the team and ensure winning the more their franchise value etc rise. i fail to see how a constraint like the lux tax makes you fiscally wise.

    miserly != wise durr etc

  10. CMP says:

    Signing Darvish or any other free agent this year or next year shouldn’t have a huge bearing on getting to $189 million or under for 2014.

    Darvish salary is only expected to be around $10 million per year with the rest of the posting money not counted as payroll.

    2nd, they could front load or back load any new contracts they negotiate to have a lower value just for 2014 so that seem to be a somewhat easy problem to circumvent.

    I know the MLBPA won’t allow players to renegotiate to lower the value of existing contracts but I wonder if they would allow someone like ARod to make let’s say $35 million in 2013 and 2015 and cut his 2014 salary to around $10 million?

    • Ed says:

      The luxury tax is based on the average annual value of the contracts. The only thing that would help would be if you could get A-Rod to agree to something like a 1 year extension for $1m. The tax going forwrd would only be based off the remaining contract years, so you’d kick out the front loaded part of the contract and reduce the AAV of the remaining years. And with a low salary like that, they could afford to just release A-Rod rather than actually play him during the extension.

      Of course, I’d imagine Selig would throw a fit if they tried something like that.

      • I am not the droids you're looking for... says:

        Exactly. I mean why not give him another 10 years at the league minimum in that case? It’d cut his AAV by 2/3 or so! There’s the roster spot to consider but still, sign me up! No way the league goes for this.

    • Ted Nelson says:

      A guy like Darvish or Yoenis has the potential to be a cheap producer, but also the potential to be dead-weight on the payroll… so it really goes both ways.

  11. Bo Knows says:

    Well in truth the team is one crazy Arod salary away from that threshold.

  12. Eric says:

    Actually, it looks like luxury tax is based on the average annual value of the contracts rather than the 2014 cap hit. That gives the Yankees less flexibility because restructuring/backloading contracts (unless you’re reducing overall value) is not going to reduce their value for luxury tax purposes. That would mean that getting to $189 would require real reductions in payroll rather than contract manipulation.

  13. awy says:

    that arod contract looked like it was some dude telling the yankees about the expected value part of arod’s production without mentioning the demand side. the bloody market wasn’t going to give him 300m or whatever but hey, let’s give him his production value. it’s pretty neat if every contract works like that.

  14. Kevin D. says:

    Good. Keep our young players.

  15. Need Pitching says:

    So for Luxury tax purposes using AAV, ARod would count for 27.5 (possibly 6M more if he gets a HR milestone, 714 seems like a possibility for 2014), CC 24.4, and Tex 22.5
    Total so far: 74.4M – 80.4M for 3 players
    If Jeter exercises his option, add at least 14M (more if he somehow reaches any of his escalators)
    88.4M – 94.4M total for 4 players
    Factoring in benefit and 40-man cost, the Yankees 25-man roster could only be about 175M or so to stay under the threshold, so they would only have about 80M – 87M left to play with for 21 roster spots
    Resign Cano (likely 20M+/year) and they would only have 60M or so left for 20 spots.
    It’s hard to envision a scenario where the Yankees would be able to avoid the luxury tax and be a legitimate contender in 2014, without major contributions from a whole lot of prospects

    • Chip says:

      So let’s take a look at what holes we would have to fill

      C – Montero/Romine/whoever
      1B – Tex 22.5M
      2B – Cano ~20M
      SS – Jeter Who the heck knows, I’ll go with the 14M idea
      3B – A-Rod 27.5M
      LF – Gardner 3rd year arb, we’ll either have to trade him away or pay something like……..8 million? Complete guess
      CF – Granderson is a free agent so we either pay the 18M or hope a prospect pans out here
      RF – No idea whatsoever, huge hole here

      SP – CC 24.4M
      SP – Nova? First year arb eligible so we’ll give him…….3M
      SP – ??
      SP – ??
      SP – ??

      RP – Robertson in his third year of arbitration could be quite expensive but I’ll be conservative and say 5M (due to possible lack of saves)
      RP – ??
      RP – ??
      RP – ??
      RP – ??
      RP – ??
      RP – ??

      So we’re at 142.4M with Granderson at 18M and Cano at 20M. Let’s give another 10M to right field. That leaves us with 22.6M (assuming 175M for the 25 man) to fill out the entire bullpen and three starting pitching spots. Hughes, Joba and Logan are free agents. So you’re putting a lot of hopes and dreams on prospects filling out that rotation and bullpen. You might be looking at a rotation of CC, Banuelos, Nova with Warren/Marshall/Betences/Phelps/Noesi/whomever for your last two spots.

      You know what, that *might* not be a bad team. It depends highly on how the starting pitching works out and how some of the big money guys age. Right field could be a black hole but really we have no clue. Maybe we sign a Matt Cain type and have a prospect/platoon to play left and right with Gardner in center rather than sign Granderson. That could give us a rotation of CC, Cain, Nova, Banuelos and whomever. Maybe you resign Joba to close and fill the rest of the bullpen out with failed starters and prospects.

      • Plank says:

        Also, it’s very possible Jeter, Arod, or both won’t be able to field their positions.

      • Need Pitching says:

        Shot in the dark roster: (I still don’t believe they will get under the 175, but for fun)
        C: Romine – (still pre-arb)
        1b: Tex 22.5
        2b: Cano – 22.5? (Seems like if he keeps it up, a Tex-like contract might be in the offing)
        SS: Nunez? 3M? (I just can’t bring myself to contemplate a 40 yo Jeter starting at SS)
        3B: ARod 27.5 (at 39, hopefully he ages gracefully)
        LF: Gardner??? 8M????
        CF: ???? (Can’t imagine in the austerity plan they shell out big extensions to both Cano and Granderson)
        RF: ??? doubt a Swisher extension fits the austerity plan either
        DH: Montero (still pre-arb) (or ARod DH, Montero C, CoJo 3b?)
        Bench
        Jeter: 14M (worlds highest paid and least useful bench player)
        SP: Sabathia 24.4, SP: ManBan (still pre-arb) SP: Nova (1st Arb 3-5M) SP: Noesi (Super 2???) SP: Phelps/Warren??? (Pre-arb)
        Pen: DRob (arb 3), Bettances (pre-arb), ?), ?, ?, ?, Logan (need somebody to complain about after Cash signs him for 3 years/ 12M)
        I think this roster would leave roughly 35-40M left to find a couple of big OF bats and fill out the bench and bullpen
        This could actually be a good team IF the big money old guys are still somewhat productive and pretty much every prospect works out great (both probably unlikely events)

      • JobaWockeeZ says:

        If they are stuck to this cap then Jeter can’t have 14 million. That’s way too much for someone who’s gonna enter his 40s. With Swish gone they may just very well get what they thought 2010 Gardner was projected to be. Low power, .340 OBP high UZR player.

        That’s about 15-20 million more to play with.

        • Plank says:

          Jeter has a player option that can be worth that much based on certain criteria.

        • well you know says:

          I believe the $14M comes from the average value of Jeter’s contract.

          15-16-17 plus his $8M player option for 2014 equals $56M. Divide that total by four and you get $14M charged to 2014.

          In the unlikely event he hits any of the criteria for his incentives, the $14M would go up. But that’s already a minimum hit (assuming he picks up his option).

  16. Plank says:

    The worst part of this is that every rumored trade or signing from now until when this austerity plan is proven to be mathematically impossible will either be shot down or given false gravity in every discussion on every blog.

    • Chip says:

      You really think any of us will believe it until we see it?

      • Plank says:

        I really do. There are already people on here talking about the ramifications of this new philosophy. Plus, it’s like seeing a negative. Until there are enough guaranteed contracts for 2014, it will be possible. That will probably take a while.

  17. Fin says:

    the flip side of the coin is…while there is alot of money to be made if they can perform this miracle and get to 189 million, how much will they loose if they send an 85 win team out there? We know people dont show up for bad Yankee teams. The stadium is a bitch to get to, and its expensive.
    I dont know the answers, but I know with the new stadium the Yankees need to draw large crowds everynight and they wont do that if they let the team slip trying to get to that number. When you’re charging the prices the Yankees are, its tough to justify to your fans that you’re reducing payroll. It would be a PR nightmare. Its one thing loosing for a couple years, while trying to win, its another loosing becasue you decided to reduce payroll as one of the wealthiest franchieses in pro sports.
    Its intersting to talk about but I dont see them even trying to get to that 189 million.

    • Eric says:

      A bitch to get to? Yeah, it’s not like there’s a subway station right there or Metro North station a short walk away or anything.

      • thenamestsam says:

        A bitch to get to might be an exaggeration, but it’s not exactly centrally located. For lots of people it’s a relatively convenient but extremely long ride. And NY fans are front runners who are used to seeing a strong contender. Those dream rosters people are drawing up for 180 million could be good…or they could be absolutely awful. Going to a payroll that low could definitely hurt attendance.

  18. Januz says:

    There is a lot to think about before we get to 2014. First, after 2013, Burnett’s and Soriano’s contracts come off the books, that is a huge savings, I do not think Swisher’s contract will be on the books either. Next, well run teams (Like businesss) think ahead and know how to budget (I think we have been seeing this with the past two Drafts, such as signing guys for lower than most people expected (Like Dan Camarena). If Brian Cashman thought this team would turn into the Mets, I am sure he would have jumped ship (Like Theo Epstein). Instead, he came back and I am sure, has a master plan which included resigning CC for a reasonable number. Next, if you look at some of the guys they have signed from the Amateur Ranks, some of them will be in The Bronx, by 2014. The two “Killer “B”‘s are obvious, but what about Mason Williams, Gary Sanchez, Bryan Mitchell & Brett Marshall? (These guys are cheap and cost effective). Finally, most of us agree that the Arod contract was a mistake, but that was done by Hank (Compare that to Cashman with CC) (Guess why he is nothing but a figurehead these days?). The thing they are doing right is not digging a bigger hole by signing guys like Wilson who are closer to Burnett than Sabathia in productivitity. I think things will be ok.

  19. bonestock94 says:

    I actually like the sound of that, it will further reinforce the importance of the farm. Lately, watching big time prospects is more exciting to me than signing mercenaries.

  20. David, Jr. says:

    This is a bunch of baloney (bullshit?), aimed at people like Scott Boras.

    One of the wealthiest sports franchises in the world, located in one of the wealthiest markets in the world, is going to tell its fan base that it isn’t going to go all out to compete for championships? That despite the fact that their revenue stream easily supports a payroll of at least 250M? And despite the fact that doing so would inevitably cause attendance declines?

    Anybody that believes this should buy shares in the Brooklyn Bridge.

  21. Monteroisdinero says:

    That Dickerson/Golson platoon in right is looking more po$$ible. I love these financial/payroll threads as my handle says it all.

    • David, Jr. says:

      Exactly what they need to finish third or fourth in the division.

      • JobaWockeeZ says:

        If they finish third with a 190 million dollar payroll then all the arguments saying that they rely on overpaying the competition will be true.

        It would actually be pathetic if they couldn’t field a wildcard competing team with 190 million.

      • Monteroisdinero says:

        Swisher’s .250 average and pathetic arm…..that’s what wins the division for us? I think you overestimate him.

        There are many ways to win.

        • Batting average? Really? You’ve read this site for too long to still cite batting average in an argument about a player’s value and productivity.

          • Not to mention that Golson is a career .260 hitter in the minors.

            • Plank says:

              You can use your “facts” all you want. Did you see him throw out Torii Hunter at third base 2 years ago? Let’s see a stat measure that!

              /no i’m not serious’d

            • Monteroisdinero says:

              A double team by the RABbis! Wow-the Swisher love is gushing. I would not give him a multi year 15M/year contract for his 32-35 years.

              He is not worth it in the context of the rest of our offense and our need for starting pitching.

              Swish will be good this year because it is his chance for the money. I just don’t want the Yanks to be the team to pay it.

  22. 28 this year says:

    What if the 2014 deadline is wrong? The Yanks could target 189 over any of 2014-2016 for the savings. I doubt they see this as a permanent move, I think its just for a one time savings that really adds up and maybe it becomes a cyclic affair. It just seems weird because the Yankees have too much tied up in a few guys right now. I am all for giving everyone one year, league minimum extensions to knock down their luxury tax payroll. I mean, the Red Sox used ways to game the system and they were looked at as being smart but obviously if the Yankees act clever, the media goes nuts.

  23. David, Jr. says:

    Other reasons/signs that this is just a bunch of “for consumption” baloney:

    Cliff Lee – everything around it indicated that would have opened the bank vaults for him. If you gave up significant assets for him, what would you then do, cheap out and lose him?

    CC – rich extension.

    Jeter – far over over market. A total gift.

    Soriano – ditto.

    In view of all of the above, and in view of their revenue stream and value, does it make sense that they for example would now cheap out on Robinson Cano, “hold the line”, and lose him, leading to perhaps a five year decline?

    Of course not! This is a sack of b.s. Whoever in the Yankee organization that “sold” it to Sherman likely received congratulations: “Way to go! How in the world did you sell that to the dunceman?”

    • No one said they’re going to hold the line on Cano or cheapen out. And nothing you’ve said contradicts what the Yanks are saying. They were willing to pay for Cliff Lee because he’s actually good. They’re not willing to do the same for second- or third-tier talent like C.J. Wilson, and the new CBA — which clearly wasn’t in place or even on the horizon when Lee was a free agent — is why.

      • David, Jr. says:

        They are going to need to pay their own elite level talent market prices in order to retain them. Cano is a prime example of that. If they hold to a payroll level of 189M, they likely won’t be able to retain them and compete at a championship level.

        Just because of this Sherman article, I don’t view the Yankees as “saying” that they are going to do this, and I don’t believe that in fact it will happen. Watch what the payroll ends up at and look back at the Sherman article.

        • BK2ATL says:

          I definitely can see them locking up Cano And Granderson long-term, IF they each continue to produce. There just won’t be any more CC, A-Rod (Hank), Tex, Soriano (Hank) and Jeter (legacy) contracts.

          The days of the AJ Burnett contracts, the John Lackeys, the CJ Wilsons, the Mark Buerhles, the Edwin Jacksons, that is the questionable contract for questionable talent group, as potential Yankees’ matches are pretty much over.

          I think they will try to implement austerity measures to get the salary as lean as possible. If they can’t hit that luxury tax threshold, they’ll just eat the damage, but it won’t be for a lack of trying.

          They won’t go cheap just for the sake of going cheap. They’ll keep Cano and Granderson, Robertson, etc. IF they are producing as they currently are or better.

        • Ted Nelson says:

          I would really check the math more carefully… several of their own “elite players” they need to retain are still arb-eligible or pre-arb by 2014. They only need to experience average returns from their prospects to hold the line and still be competitive.

    • Ted Nelson says:

      I don’t think they need to let Cano go to “hold the line.” See my comment below.

  24. Jose M. Vazquez.. says:

    I could understand the Yankees’ stance on austerity. Like I have been ranting, who likes to regale other people who may have more money than you. At the least the poorer owners are millionaires. Perhaps now, if the Yankees are serious about this they can build a new core. This seems possible only if our youngsters are given the chance to perform. If they do nothing else this Winter I would not complain. I have said we can win the East with what we have right now. Add a Noesi and later in the season a Banuelos or Betances and we will be fine.

  25. mike says:

    im actually glad if the 2014 scares the Yanks from getting involved with these “good players at inflated prices” in the FA market right now.

    i get annoyed where our ticket /cable/experience (theoretically) costs more to support teams other than the NYY where the fans are not interested or passionate, and allows those teams to make idiotic signings (see Reyes-Marlins) because they can bet on the Yanks largesse. Then , the media tells us that its an unfair competitive advantage because the market cannot support the team…..

    get under the cap for 2014 (OR WHENEVER) then come roaring out of the gate in 2015- as per the Yanks, i would announce it publically and from the hilltops, just to annoy and influence the smaller market teams :)

  26. viridiana says:

    Getting under cap for 2014 is doable as something lik $65 mill (rough estimate including arb numbers for Joba, Phil) comes off books with Cano, Grandy, AJ, Sori, Joba and Phil. I would imagine they sign only one of Cano or Grandy. After that, with six or seven yougnsters on payroll, target can be met.

    My concern is 2015 and beyond. Can fully support goal of reducing luxury tax payments with slight austerity in 2014. But it it extends beyond that, it’s a problem, especially as Yanks’ sources of amateur talent dry up with new CBA. Free agent spending beyond 2014 will be necessary but if Yanksd hold on to most of current top prospects I do brelieve they can find proper balance.

  27. mt says:

    The savings are pretty tremendous so I can see Yankees for one year (only 2014, 2014-2016 is too long) saying we will put a wild card qualityteam on field – There will be some ticket slippage but not huge. (I also think this strategy is more likely if they win a World Series in 2012 or 2013; they can benefit from the good vibes from that).

    The good news is that Burenett and Soriano will be gone; bad news is
    that Jeter and Arod contracts (with home run bonuss)are killers) – they will be getting substandard production from the $41 million or so tied up in those two. (I still have hope Tex can be above average (somewhat) in 2014. I don’t see how they sign both Cano and Granderson to long-term contracts and hit this $189 million so maybe they pick Cano and let Grandy walk. They will have to fill all the other positions with sub-$1 million players (it also hurts that $10 million of benefits and the whole 40 man roster has to be taken into account.) I would be excited to see how this would pan out with the Killer B’s and some of the pther young pitching but not so much with a young cheap outfield.

    That 2014 Jeter player option is an absolute killer for this scenario. I think he only gets paid $8 million in 2014 – but if he sticks around, they have to put the full $14 million AAV against it.

    So if they trade a cheap high ceiling guys like Montero or Banuelos for Cain or Hamels, you know that this “strategy” was all a smoke screen because even if Cain or Hamels do not sign again with Yankees whnen their free agency happens, they will have to find someone else (James Shields, Price?) at free agent prices to fill that void, blowing opportunity to get to $189 nmillion.

    If they are following this strategy, that is why someone like Danks makes so much sense – yes, maybe have to trade Betances and or Romine (Yankees do have other catchers) but can still hold on to low cost/ high ceiling Montero/Banuelos and they can let Danks walk in 2013 and fill in with (hopefully more ready) younger pitcher.

    Also in a perverse way, if they truly go for this strategy, given they do have Burnett, Hughes, and Garcia for the next one-two years, they should really use the 4th and 5th spots to find out what this young pitching can do in big leagues over next two years before 2014 hits. If individual pitchers stumble you still have Hughes and Burnett as back-ups in 2012 and 2013. Not sure Hughes and Joba will be around in 2014 since they will be free agents.

    As a fan would only like this payroll cap in 2014 if they then ratchet up spending in 2015 and after since any money they spend on payroll in those later years will become cheaper due to lower luxury tax rates. I think one year of “going more young than usual” is OK. (which sounds funny when they will still have ancient Jeter and Arod around).

    • Ed says:

      That 2014 Jeter player option is an absolute killer for this scenario. I think he only gets paid $8 million in 2014 – but if he sticks around, they have to put the full $14 million AAV against it.

      That’s not how it works. The tax goes off the AAV of guaranteed money. Right now, the contract guarantees him $51m over 3 years (including the buyout), so they’re getting hit at $17m/year on the luxury tax.

      If the contract changes due to an option being picked up or declined, or bonus clauses being hit, or whatever else, it changes the calculation going forward. They calculations account for the tax hit already incurred. The remainder will be adjusted up or down as appropriate.

      Assuming Jeter hits no escalators and the 2014 options is worth $8m, the total value of his contract will be $56m. The team will have already taken a $51m hit on the luxury tax from him, so it would only count as a $5m hit in 2014.

      The player option could work out rather well for the team as far as the luxury tax is concerned.

      On a side note, this quirk of the luxury tax is why John Lackey’s club option for an extra year at the minimum salary is so valuable to the Red Sox.

  28. Plank says:

    Here comes the opus.

  29. Ted Nelson says:

    Will be interesting to see if they do it. I certainly think that they can.

    They have $73.5 mill committed in 2014 according to B-R.
    Extend/replace – Cano, Granderson, Swisher, Martin, Hughes, Joba, Logan
    Arb 3 – Gardner, Robertson
    Arb 2 – Cervelli, Wade
    Arb 1 – Nova, Nunez
    Pre-arb? – Montero, Noesi, Phelps, Warren, Betances, Banuelos, Romine, Laird/CoJo/Mustlier, JR Murphy, Slade Heathcott, Brett Marshall, Stoneburner, Kontos, DJ Mitchell, Whitley, Montgomery, Adams…

    If they get Cano and Gradnerson @ $20 mill AAV each and Martin @ $7 mill (they could look to Montero, Romine, and/or Cervelli instead of course)… that leaves close to $70 million for RF and Ps to fill in around CC, Robertson, and whatever young guys step up.

    C – Martin, Montero, Romine, Cervelli, Murphy
    1B – Teixiera
    2B – Cano
    3B – A-Rod
    SS – Jeter
    LF – Gardner
    CF – Granderson
    RF – Swisher or ?
    DH – Montero, A-Rod, ?
    UTL – Nunez, Mustelier, CoJo, Laird, Adams, Heathcott, Murphy, Segedin
    SP – CC, Nova, ?Hughes?, Noesi, Phelps, Warren, Betances, Banuelos, Marshall, Stoneburner, Mitchell, ?Brackman?
    RP – Robertson, over-flow starters, ?Joba?, Wade, Kontos, Montgomery, Whitley, Ramirez

    Should be able to bring in a RF, SP, and 4th OF, hit on 20-25% of their prospects and have a good team under $189 million.

    • Ted Nelson says:

      *Didn’t realize Jeter’s gone in 2014… so Nunez there or replacement. Still think it’s very doable (especially if they let Martin walk).
      I don’t know what arb raises will be, but even being conservative:

      A-Rod – 25
      CC – 23
      Tex – 22.5
      Cano – 22.5
      Granderson – 20 (which might be way too high depending on his 2012)
      Gardner + Robertson – 25?
      Martin – 7
      Nova – 5?
      Nunez – 3?
      Wade – 2?
      Montero, 2 SP, Romine, UTL, 5 relievers – 5 combined

      That’s $160 million for 21 roster spots. Leaves RF, one SP (assuming only 3 young non-Hughes starters hit), SS/UTL (with Nunez at other spot), and a 4th OF. $29 million for those four spots.

      • Johnny O says:

        Seems reasonable but just counting a whole lotta prospect luck.

        If it’s for the long-term betterment of the franchise I am ok with them tyring to get one year under $189M. As long as they spend (wisely) on the draft and IFA.

        • Ted Nelson says:

          Yeah, the prospect success is a big variable.

          I think my expectations are pretty reasonable (3 SP, some relievers and/or just acquire cheap relievers, Montero being at least solid, and a couple of bench guys), but the nice thing is that if they have bad luck/execution with their young guys they can just ditch the plan and spend more money. Best case luck/execution with their young guys and $189 mill could be a joke.

          New CBA seems to pretty much take care of how much $ they can spend on amateurs, making execution the key.

  30. mt says:

    Jeter’s $8 million player option – I assume Jeter will take it if he can walk – hopefully only that part counts, not the $14 million for 2011-2014.

    Also must count the $10 mm benefits (per Sherman) and the rest of the 40 man roster.

    Not sure if they can do both Grandy and Cano if Jeter must be there and these other items.

    • Plank says:

      Yeah, 189MM is deceiving. With 40 man and benefits, it’s probably closer to 170-175MM in actual 25 man payroll. Not gonna happen.

      I would assume Jeter will exercise the option even if he can’t walk.

    • Ted Nelson says:

      Depends in part on how well Granderson plays in 2012-13. He should be a lot more expensive should he repeat 2011 than if he plays to his career numbers.

      I still think it’s very possible with normal returns from their young players. Of course they can deviate if they see value in a player… but the marginal cost of a $10 million AAV player is not suddenly something like $50+ million rather than $10 million… and that’s a big, big deal.

      C – Martin 7
      1B – Tex 22.5
      2B – Cano 22.5
      3B – A-Rod ~25
      SS – Jeter 8 or AAV?
      LF – Gardner arb… 8?
      CF – Granderson 20 (if he repeats 2011 in 2012 and 2013)
      RF – X
      DH – Montero 0.5
      BUC – Romine 0.5
      UTL – Nunez arb… 2.5-3?
      UTL – Mustelier/CoJo/Adams/Laird/4th OF/etc. 0.5

      SP – CC 23
      SP – Nova 5
      SP – X
      SP – 0.5
      SP – 0.5

      RP – DRob 12 (Papelbon $)
      RP – 0.5
      RP – Wade 2
      RP – 0.5
      RP – 0.5
      RP – 0.5
      RP – 0.5

      That’s 163 million… + 10 million for benefits + 7.5 million for 15 roster spots = 180.5… leaving around $8 mill to get a RF and SP… If they are looking for a #4 or #5 SP (or no SP at all… they’ve got like 9 prospects for 3 spots so hopefully 3 hit) this becomes very doable. Just have to find a moderately priced RF and
      fill in the BP with minimum guys. If Granderson doesn’t repeat 2011 twice and is more looking at, say, $15-17 million that also frees up $3-5 million. Same if Cano only gets $20 mill AAV…

      • Ted Nelson says:

        “but the marginal cost of a $10 million AAV player is not suddenly something like $50+ million rather than $10 million… and that’s a big, big deal.”

        *now suddenly

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