Breaking down the payroll, part three

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It’s been less than a month since we last checked on in the Yankees’ projected 2012 payroll, but a lot has changed. Just about all of it in the last week or two as well. The Michael Pineda/Jesus Montero trade didn’t change anything financially (at least not significantly) since they’re both in their pre-arbitration years, but the Hiroki Kuroda signing and arbitration settlements sure did. Andruw Jones agreed to come back, Cory Wade inked a new deal … and that’s pretty much it. Here are the gory details…

The money listed is in terms of average annual value, which is what the luxury tax is based on. The players’ actual salaries are slightly different in some cased, but nothing crazy.

So that’s all of it, 22 players owed a maximum of $208.875M and a minimum of $206.475M. One of those 22 is not on the team anymore, and for simplicity’s sake, let’s assume Martin, Gardner, and Logan each win their arbitration cases. That gives us 21 active players and a $208.875M payroll, though Feliciano is only active in the sense that he’s taking a spot on the 40-man roster. It’s really 20 active players for that price.

The Yankees have been talking about spending just $2M or so on a DH, but I think that’s their way of trying to drive Johnny Damon‘s down more than anything. I expect them to end up spending about $4-5M on the DH, but anything more would surprise me. If they sign a DH for $5M and fill the remaining four roster spots with guys making the league minimum, the 25-man payroll would be approximately $215.875M, up a couple million up from the $212.7M that was luxury taxed in 2011. We haven’t even included the rest of the 40-man roster or stuff like player benefits (which gets taxed as well) yet either.

The other 15 players on the 40-man roster will make the league minimum, though let’s call it 16 players since Feliciano will be stashed on the 60-day DL so another player can be added at some point. Calling it $8M for those players is conservative ($500k each), since they’ll make a substantially smaller salary while in the minors. The $8M is probably closer to $3M in reality, if that. Player benefits are taxed and typically estimated at $10M, which brings us to $233.875M, conservatively. Just imagine if they add a player or two at the trade deadline.

None of us are privy to the Yankees’ financial info, but chances are they can support a payroll much higher than the $200M or so they’ve been spending in recent years. We can’t say that for sure, but it’s a reasonable assumption. I do however think the commissioner’s office and players union have discouraging them from raising payroll any further, just like they’ve encouraged small market teams (the Marlins and Athletics, specifically) to spend more in recent years. Raising the payscale for many second and third tier players over a handful of superstars is probably a net win for the union.

Anyway, that’s my one-paragraph semi-conspiracy payroll theory. As Stephen will explain later today, the club is going to have to make several tough decisions if they’re serious about getting under the $189M luxury tax threshold two years from now, but for now we don’t have to worry about that. The Yankees will again spend an absurd amount of money of their 40-man roster in 2012, far more than any other team.

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Revisiting the Burnett-for-Bay idea
  • jay destro

    Looking at cots recently the following are payroll obligations from some of the biggest clubs for 2014:

    pre-arb / and arb player contract obligations in 2014:

    red sox: $94.364
    yankees: $75.125
    phillies: $74.000

    Looks like the yankees set themselves up well to handle big raises for cano and potentially granderson while likely obtaining a big free agent – also adding to this will be third time arb’s for david robertson and brett gardner, both guys who are probably going to be due big raises by then.

    thought… is it worth it to explore moving players now to make LF a possible spot to be filled by having depth in your minors (Betances for Brown, queue the rab rank and file) and be able to move a guy like gardner around 2013 and keep your payroll flexible?

    just a thought.

  • statboy yankopherson

    anyone else check RAB immediately every time you open an internet browser?

    good stuff, mike

    • Slugger27

      right after porn, obviously

    • Dropped Third

      Its my home page

  • pacman

    The Feliciano deal still pisses me off…Cannot wait for him to be gone. same with marte. DH-Damon is going to be signed IMO…and come on fired up for how tampa treated him. Then cash trades AJ…we eat part of his salary and move on.

    • Rainbow Connection

      How did Tampa treat Damon?

  • mt

    I think Detroit may sign Pena or damon now that VMart is down for year. Sure they will pay more than us.

    Coming in at $230-235 million when last year was $217 million is not an insignificant increase, even though there have been complaints that Yanks aren’t spending. These arb raises are like inflation creep in real life. Also Martin filed for a bit higher number than I expected. Biggest differences are that Kuroda replaces Colon (basically), savings from Posada’s departure are largely eaten up by all the arb raises and contract bumps (like Swisher and Granderson) from last year, and Garcia has a bump.

    Same thing will happen next year when Yanks exercise options on Granderson and Cano and both make $15 million in 2013 before FA in 2014.

    • CP

      I heard that it was always Damon’s dream to play in Detroit.

  • countryclub

    Heyman tweeted this morning that they have 2 mil for the DH unless they can save around 10 mil over next 2 years by trading AJ. Good to hear that they’re still exploring moving him.

    • RetroRob

      If they plan to “save” ten million over the next two years by trading AJ, that would mean they expect to eat up to $23 million of the remaining $33 million on his contract.

      He’s certainly tradeable if the receiving team is only on the hook for two years at $5 million per. Factoring in the luxury tax, which will be going up, that’s more than $14 million in cost reduction to the Yankees over two years.

      I couldn’t see them trading AJ when he was still slotted as one of the five starters and they would have needed to replace his nearly 195 innings of pitching he’s averaged over the past three seasons. The arrival of Kuroda and Pineda means AJ is now one of seven starters (not including the fleet of starters they can call on in AAA), and he’s not one of the top five. That means he is ultimately bullpen bound. Would they Yankees rather pay more than $23 million (luxury tax included) a year for AJ to toss 50-70 innings out of the pen, or would they rather reduce their expensens by more than seven million per season by moving AJ and freeing up the money for other needs?

      I think the answer is obvious. AJ is done. It’s now just a question of when. meaning now or do they showcase him some in Spring Training.

  • Rainbow Connection

    Any news on Eric Chavez? I keep assuming they will pick him up as well.

  • craig

    Shouldn’t Alex be $27.5 million? He is paid $30 million this year, but the AAV of his deal is $27.5 million.

    Also, this doesn’t take into account the cost of benefits, which I believe goes for all MLB teams with respect to the Luxury Tax. I have seen figures from $5-10 million to cover that and I assume that is somewhat comparable to the other teams in the league.

    • Mike Axisa

      Yeah, I had the wrong salaries in their for A-Rod, Tex, Jeter, and CC. I fixed it, and the overall change was less than $1M.

      I included benefits in the third to last paragraph.

      • craig

        Cool…it will be interesting to see if they can do the $189 in ’14. If they are going to, it seems like no big FA signing after this year. That should tell us a whole lot.

  • Dick Winters

    They need to find a way to dump Teixera. We’re only stuck with the ARod and Soriano contracts because of Hank. Dump Burnett. Swisher will not be retained next offseason unless he comes through in the postseason for once. We need a DH and Johnny would be perfect. He’s a clutch hitter and that’s what we need with Posada gone.

    • TLVP

      head spins… don’t know where to start…

      • Cris Pengiucci


    • Mike Axisa

      The last thing Johnny Damon has been in recent years is “clutch.” His numbers with RISP are beyond awful.

    • The 6’7 & Above Club

      IF… they were to seriously dump Teixera , I would have rather kept Montero with the hope and possibility of him learning 1st base.

      They can’t dump him so its a moot point. Soriano’s only on the hook for 2 seasons and A-Rod’s contract isn’t as costly as the years on his career come to a close.

      • craig

        Alex’s deal is for $27.5 million a year for luxury tax purposes because it goes off of AAV. The declining salary is only for cash on hand purposes.

        • Needed Pitching

          and he should at least get to the 660 and 714 HR milestones, adding another 6M each

    • Mister Delaware

      Bring back Broshus!

      • jsbrendog

        you’re my boy scotty b!!!!

    • I am not the droids you’re looking for…

      Major, I think all those drops in Europe have left you a little . . . Confused.

  • Chas131

    Shouldnt you be using AAV and not actual salary? The luxury tax doesn’t use actual figures, does it?

    • Mike Axisa

      Yeah, I goofed. I had the wrong salaries for A-Rod, CC, Tex, and Jeter. The post is fixed, and it changed things by less than $1M.

      • Ed

        You missed another. Granderson’s AAV is about $6M, you’ve got him down at $10M.

  • bklyn

    I believe the trade for Pineda has implications on our involvement in the elite SP market next year. Having Pineda pan out as a front line starter definitely lessens the need for Cashman to unload the Brinks truck on Hamels, Cain, and Grienke next year. This Pineda move is one step in bringing in the budget for the years to come.

    • Dropped Third

      I agree, if Pineda looks good this year, I don’t see cash reeling in an elite SP. Cash could fill that role with a Kuroda type signing next year as well and try to keep salary low for the 189 in 14 goal.

      • RetroRob

        Well, if Kuroda pitches well, then a Kuroda-like signing could very well be Kuroda.

        I would love to see Banuelos improve his command in 2012 so that he’s a very real option to join the rotation in 2013 as the second lefty or, gasp, third lefty if they sign Hamels.


        Obviously what Hughes does in 2012 will heavily impact if he makes the rotation moving forward, so he’s either in the rotation, in the pen, or on some other team.

  • Cris Pengiucci

    I found this a bit confusing:

    “and players union have discouraging them from raising payroll any further”

    I understand why the commissioner’s office takes that stand (competitive balance and all that), but isn’t it in the players’ best interest to have the Yankees with a higher payroll, thereby driving up their salaries as other teams try to compete with the Yankees?

    • Mike Axisa

      Yes, but it’s probably a trade off. The Yankees can’t raise their payroll, but all these other small market teams must raise theirs. Instead of one or two stars getting big money, multiple second and third tier guys are getting more money, and it raises the payscale for those types of players across the league.

      Like I said, just a crack conspiracy theory.

      • RkyMtnYank

        “raises the payscale for those type of players across the league” are the kinds of things that make my head spin. Given that even league minimum players are still over paid for with what they contribute to society, let’s just pay all baseball players more and raise the price of everything to pay for it. Soon the rest of the countries baseball stadiums will be as empty as all those recliners next to the field at YS. I’d like to see these guys on the disabled list like Feliciano have to apply for disability and live off that kind of money rather than full salary. We need to find a way to turn this kind of money back into useful things for society such as teachers, books, schools etc.. My district lost 17 teachers, had to close a school and some kids were actually denied and education for the sake of 1.35m dollars, a portion of CC’s raise, because he wasn’t already paid enough for throwing a baseball. I know the 1%er’s will chime in that they worked so hard and are so deserving but that is a crock of shit!

        • Bavarian Yankee

          so the Yankees should pay for schools, teachers etc.? I think Hank and Hal will like that idea //not

          That’s not a baseball problem, that’s a political problem.

          • RkyMtnYank

            It’s societies problem and the government is “NEVER” going to resolve it as long as the current system still exists.
            You can lump actors and all the other professional sports etc.. all into the same category.

        • Sweet Dick Willie

          Given that even league minimum players are still over paid for with what they contribute to society

          Where did you get the notion that one’s remuneration is in anyway correlated to his contribution to society?

          If that were the case, cancer researchers would be paid Warren Buffet money, but they’re not.

          Your remuneration is based on 3 things: the demand for what you do, your ability to do what you do, and the difficulty of replacing you.

          Contribution to society has never has had anything to do with it.

          • RkyMtnYank

            Wow, that’s the kind of thinking that has our whole economy on the downward spiral that it’s in.
            Yes, cancer researchers should be baseball money and baseball players should be paid cancer research money, but that’s how backwards our society is. You can replace anyone playing baseball exponentially easier that you can replace a cancer researcher. That requires years of education. Contribution to society has never had anything to do with it but that’s why it needs to change, otherwise everyone will end up having to play sports or act because that’s where all the money is. We will see how much longer our society can sustain its gluttonous ways.

            • Sweet Dick Willie

              I’m just stating a fact; nowhere did I say that’s the way it should be, but guess what, that’s the reality of the situation.

              Now you can bitch and moan about reality all you want, and although it may make you feel better, it won’t change the situation.

              It may be your opinion that land in the country should be valued equally to beachfront property, but as long as people continue to vote with their pocket books for the beach, it will continue to be valued higher.

              Likewise, as long as people continue to vote with their pocket books for entertainment, those who provide it at a high level will be compensated accordingly.

              • RkyMtnYank

                You are correct, I understand the reality of the situation, I just don’t have to agree with it moving forward. The state of our economy/society and people now agreeing with paying baseball players even more money is just ludicrous.

            • Don W

              You want to reduce their salaries? Stop watching.

              • RkyMtnYank

                Yea, because that will solve the problem! sigh

        • Rainbow Connection

          The true solution is for idiots like you and I to stop going to games, buying merchandise and supporting a bunch of clods throwing balls around for millions of dollars. Our society is such garbage. Now I’m depressed.

          • RkyMtnYank

            Idiot? I would have to say you are the idiot for thinking that all these millions of dollars being thrown around are somehow justified? This has the norm of illogical thinking, especially for Yankee fans. Living outside of NY you are the type of fan I end up having to defend the Yankees against!

          • RkyMtnYank

            Also, fyi, I do purchase as little as possible to minimally support my love for baseball and hypocrisy.

            • Rainbow Connection

              Me, too. I refuse to go to games.
              Instead of spending hundreds of dollars at games, people should donate the money to their local schools.

              • RkyMtnYank

                It would help for more of us normal people to donate our time and money to useful cause sure, bu,t rather irrelevant since a lot of us do that already. The point is it should be all the highly overpaid millionaires doing it but they don’t, they deserve all the money that they make.

                • RkyMtnYank

                  ugh, my cat sent that msg with the grammar issues. :)

        • YanksFan

          Teachers in this country are OVERPAID for the most part. Blame the union who does not want to fire bad teachers, especailly if their tenured. Why does tenure even exist?

          Most people in our society don’t even get paid 1/2 of what teachers(or cops or firefighters) make. But we pay their salaries thru our taxes. What is fair about that? We have no say in the hiring of civil servants BUT we could choose not to go to sporting events.

          I guess supply & demand mean nothing to you.

      • PinedaColada

        But how do small market teams even attempt to sign their homegrown stars like Fielder for example if they have to pay 3rd tier guys more money thus reducing what they can commit to a superstar? I feel like that takes away from the competitive balance

  • bwolfsohn

    Staying under $189mil

    Just reading where Cano has options for 2012 and 2013 probably $15-18mil… I’m sure they’re under market for what he is worth…

    Why don’t they sign him to a NEW 2 year deal for well over what he is getting with a 1 year $5 mil option… i.e. $25,25,5 he gets more money, we get under $189 mil for 2014..
    Then in 2014, sign him for long-term if he’ll do a deal before he hits the market….

    just masticating on some numbers…

  • Troll Hunter

    DH Solution…..Marlins sign Prince, Yankees trade Cerveli (have a feeling Guillen would love him) and cash for Gabby Sanchez. Low cost DH/back up 1st base good hitting young player which fits perfectly in the Yankees future payroll plans.

    • Thomas Cassidy

      Except the Marlins won’t sign Prince, and Cervelli is our back up catcher.

    • MannyGeee

      Cervelli is not without a home now that Montero is gone. Romine is not ready at the dish, or so they say, to tkae that spot seriously.

      and also, Cervelli is the Italian Swisher, Ozzie will fcking LOATHE him.

      • Steve (different one)

        Isn’t Cervelli from Venezuela? Same as Guillen?

  • Bavarian Yankee

    “…and players union have discouraging them from raising payroll any further…”

    can somebody explain this? Why wouldn’t the players union like it if the Yanks spend even more?

  • Rich

    Interesting if you unload either Garcia or Hughes and AJ it cuts down $20 million. Obviously we are stuck with AJ but, either Hughes or Garcia maybe out.

    • Preston

      We aren’t getting rid of AJ’s contract. The Braves got 5 million in savings for trading Derek Lowe. We’d have to eat a lot of money to trade AJ. Hughes and Garcia’s salaries are low enough that I would rather have Hughes in middle-relief and Garcia as the long-man/spot starter than have the salary relief/marginal prospect we’d get in return for them.

  • UYF1950

    Mike, I’m curious. You seem to have used the AAV of most of the players that are under contract. Except for Cano and Granderson. You chose to use their salaries for the 2012 season. Which somewhat distorts the overall figure. Their AAV is slightly less than $9MM for the 2012 season not $14MM you show for Cano and just about $6MM for Granderson not $10MM. I have not assumed the Yankees will pick up the players option year to calculate that number. But even including that their AAV doesn’t approach the number you are showing.

    • Preston

      I think it has to do with the fact that they are option years. In terms of AAV the options are treated as one year deals.

    • Ed

      You’re taxed on the guaranteed portion of a contract. The options don’t come into play until they’re picked up. Basically, you treat Cano as if he signed a 4 year deal then two separate 1 year deals.

      Granderson should be $6M though. This season is part of the guaranteed portion of his contract.

      • Needed Pitching

        technically, I think Cano would only count for 12M of his 14M for luxury tax purposes, because the 2M option buyout was included in luxury tax calculations during the 4 year deal.
        And if they pick up Granderson’s option next year, 13M of his 15M option would count, because the 2M buyout is included in his current AAV (the 6M you cited)

  • vin

    Good stuff, Mike. I can’t wait until Stephen’s post… I’ve also been crunching the numbers and am curious to see how our conclusions match up or differ.

  • Scott

    Assuming the likely price spread between Damon and Pena is $5m (it was $4.75 in 2011), it seems incredibly short-sighted to go for Damon. What they mainly need is a DH against righties, and while they’re both lefties, there’s no comparison.

    – Damon had a reverse platoon split last year and basically no split in 2010, yielding an OPS in the .730s vs RHP those two years combined.

    – Pena used to be in the mid-900s vs RHP (2008-09), still was .759 his worst year ever (2010), and was .892 in 2011. Safe to guess he’ll be in the mid-.800s vs RHP in 2012.

    Is a difference of 100-150 OPS points for most of your DH at-bats worth $5m? Hell yeah; it’s just like the difference in 2011 between Posada as DH and Montero as DH, which had most of us tearing our hair out for the latter half of last season.

    To see Damon and Pena as remotely comparable, yuo have to (a) ignore the R/L splits and/or (b) assess Damon’s career as a whole rather than what he actually can do in 2012 in the role the Yanks need.

    • Preston

      If the plan is for Damon to DH everyday I agree with you. But if they really plan on using A-Rod, Jeter, Tex, Cano and Swisher in a significant number of games (with Andruw getting all ABs against LHP) then Damon might only be looking att say 300 ABs. Considering there age and skill set Damon might handle that type of a diminished role better than Pena. I’d still rather have Pena though.

      • MannyGeee

        on the risk of beating a dead horse:

        FWIW if you are going to spend $2M on Damon to semi platoon split against RHB while rotating all the IF into DH those days anyhow flashing an OPS in the .730s vs RHP….

        Why not just ride out Nunez those days and settle with his OPS of .673 vs RHP. and he will be the guy who is filling in for Cano/Jeter/A Rod anyhow, can still swipe a bag, and already here…

        All I am saying is outside of name and nostalgia value of Damon and his ‘clutchyness’, he would likely not be worth the $2M you will be paying him or the spot on the 25 man roster.

        might be better off carrying another LOOGY or 3rd catcher.

        • Preston

          Well, 2 million should buy less than 1 WAR, so it’s not expecting much. I don’t think Nunez in a DH role is realistic. But I’d be fine with signing nobody. I also like Pena a lot more than Damon. My point was if the idea is to have a DH in a very reduced role, Damon may be more willing to accept that (for all the reasons that make him an inferior candidate). For the record I ideally want to try and trade for Brandon Allen.

    • RetroRob

      You are aware that Posada’s OPS was approximately 100 points higher vs. RHP than Montero’s was in the MINORS!

      The myth of Montero was always going to be greater than the reality, as we will now see unfold now that he’s in MLB fulltime. The kid’s a fine hitter, but there’s a segment of Yankee fans that already were planning to attend his HOF induction.

      Under your argument, the Yankees should be looking seriously at Posada. There are great similarities between Pena and Posada. Both were effective against righties, both sucked the big one against lefties.

  • Dicka24

    That Arod deal is rancid. I remember the day they announced it and I cringed. Imagine paying a hitter that kind of $$ into his age 42 season? G R O S S

    I won’t even comment on the Soriano money. Oops, I just did. $11 million for what is a 7th inning reliever. That might be one of the most absurd contracts I’ve ever seen.

    • Thomas Cassidy

      He was hurt last year. Let’s wait until next year to see if the deal is bad.

  • DC Gardner

    So the 2014 $189M mark includes the entire 40 man roster and player benefits! I didn’t realize that. The young kids are going to be crucial if we are to make this happen. Assuming these replacements by 2014:

    Kuroda -> Jose Campos = $10M – $0.5M = ($9.5M)
    Soriano/Felic./Marte -> David Phelps (on 40) = ($15.25M)
    Swisher -> Mason Williams = $10.25M – $0.5M = ($9.75M)
    Burnett -> Banuelos = $16.5M – $0.5M = ($16M)
    Mariano -> Betances (on 40) = ($15M)
    Russel Martin -> Romine (On 40) = ($8.2M)

    Total Savings: ($73.7M)
    Luxury Tax 2014 Payroll after Savings = $160.175M

    There is very little wiggle room as Mike points out! If Mariano decides he’s not ready to hang it up and gets another $15M in 2014 the payroll becomes $175.175. Assuming Granderson is still with us, he’ll likely be getting a raise I’ll estimate of $5M pushing that total to $180.175. Raises to Gardner, Nova, Chamberlain, Hughes, and Robertson will continue to push that higher if their still with us.

    Tough choices will have to be made if Mariano continues to defy age. Also, meeting this budget goal is putting a lot of pressure on our farm system to provide worthy replacements.

    • mt

      This does give a flavor but there are some other issues – what will Cano be (his new FA contractversus his current option yerar salary); still not sure whether Jeter counts for $8 million (his 2014 salary) or $5 million (additional guaranteed money in 2014 if he picks up option assuming you do not go back and correct 2011, 2012, and 2013 – however, I thought someone in a prior post say that if Jeter does pick up option we would be charged full $ 8million and the cost of his $3 million buyout which would have been charged in 2011-2013 would be deducted form prior years and we would get a refund for those years) and of course Grandy or his “new FA contract or his replacement”.

      Garcia would also come off.

      I look forward to Stephen Rhoads post on this topic.

  • Denver fighting tebows

    hey mike,

    do you think the montero trade changes the yankees situation on cespedes? i understand he’s very unlikely at this point, but we could work him in at Hi-A, have him work his way up the ladder, and maybe DH in august and september before moving into right field next year.

    with this high payroll, it might be hard, but do you think the trade affects these odds?

    • RetroRob

      When the Yankees don’t get Cespedes, get down on one knee and do a Tebow. He is not going to be a good hitter in the majors.

  • YanksFan

    The budget is up for this year but I firmly believe that they develop their budget and decide year-to-year what to do based on circumstances. Kuroda available for 10M – too good to pass up.

    I think 189 is doable but the fan base may not be happy not having a name player. I don’t care about the name, I care about the production. While I will hate to lose a Cano/Grandy who knows what else is out there. We did not know Pineda was out there until it happened.

    Production may slip but the value may go up. Who knows what Boston or TB or Toronto has 2 years from now.

  • RetroRob

    The player benefits is a new wrinkle here that I haven’t seen reported, including here on RAB. What’s the apples-to-apples comparison? What was the Yankees 2011 40-man luxury tax number? Is the $212.7M number fully loaded to include the player benefits? If it is, then the Yankees have a lot more cutting to do to get to $189M.

    • Needed Pitching

      that 212.7 includes everything (AAV + earned performance bonuses + 40-man + benefits.
      To get to 189, the AAV of the 25-man roster would likely have to be in the 172-177M range. (and I believe if ARod got one of his HR bonuses that year, that 6M would count as well, so if he was in range of a milestone bonus in the year they were trying to fall below, they would have to plan on 6M lower so the bonus wouldn’t push them over the threshold.

  • Hennessy

    Posada is a much better option than Damon as the lefty portion of the DH platoon for 2012. Though he was basically an automatic out against LHPs last year he hit .269/.348/.466 against RHP, while Damon hit .255/.315/.401 against RHP.