The (small) benefit of signing Cano now

Spring Training Game Thread: Yankees vs. Cano
Teixeira out 8-10 weeks with strained right wrist
(AP Photo/Matt Slocum)
(AP Photo/Matt Slocum)

As I said in the second base preview this morning, Robinson Cano‘s impending free agency is the cloud that’s going to hang over the Yankees until he signs a new contract, one way or the other. Brian Cashman admitted the team has already made a “significant offer” in an effort to retain their second baseman, but Cano didn’t hire Scott Boras to take the first offer. The two sides will undoubtedly continue to talk right down to the very end.

The Yankees have already broken their policy of not signing a player (or coach or executive) to a new contract until their current one expires once for Cano and they’re obviously willing to do it again. The primary advantage to breaking the policy is avoiding a bidding war, which could escalate quickly thanks to the suddenly free-spending Dodgers. You can be sure Magic Johnson & Co. will make a serious push to sign Robbie after the season if he hits free agency, and that is the kind of bidding war no team wants caught up in.

The other advantage of signing Cano before he hits free agency — and specifically this month before the season starts — has to do with their plan to get under the $189 million luxury tax threshold by next season. The Collective Bargaining Agreement is a bore to read and a nightmare to interpret, but Joel Sherman explains contract extensions are added to whatever is left on the the player’s existing contract to create a new total for luxury tax calculation purposes. Rather than giving Cano a new contract after the season with whatever average annual value, signing him right now would include his 2013 salary — a paltry $15M compared to what he will earn in the future — and one more year to the extension, dragging down the annual average value (and luxury tax hit).

Just as an example, let’s say the Yankees sign Cano to Mark Teixeira‘s contract, meaning eight years and $180M. I’m just using that as an example, I’m not advocating it. If they give him that deal after the season, it’s a straight average annual value calculation: $180M divided by eight years equals a $22.5M luxury tax hit. Now, if they were to give him that deal this month before the season begins, the average annual value of the contract would be $195M (new contract plus his 2013 salary) divided by nine years (new contract plus 2013), or $21.7M annually. The difference isn’t much in the grand scheme of things, but $800k is room for that one extra bench player or middle reliever under the luxury tax threshold.

That is just one example and obviously the numbers would change depending on the contract. Things would have been much better had the Yankees managed to sign Cano before last season — his luxury tax hit with that new eight-year, $180M deal would have been $20.9M had he signed it prior to 2012 — but Boras would have never let that happen. He wouldn’t have had much leverage in talks and that’s the name of the game here, creating leverage to get the biggest contract possible. Would have been a nice way to save some room under the luxury tax threshold for 2014 and beyond, but alas.

I don’t expect the Yankees to sign Cano to a new contract this month but I don’t think there is zero chance of it happening. It would surprise me though, you can count the number of big-name Boras clients to skip free agency in favor of an extension on one hand (Carlos Gonzalez, Jered Weaver, and … ?). The club would save a tiny bit of space under the luxury tax threshold by signing Robbie this month, not to mention any money they would save by avoiding a bidding war with the Dodgers. There are several reasons for New York to try to hammer out a deal in the coming weeks, but I don’t expect Boras to make things easy.

email
Spring Training Game Thread: Yankees vs. Cano
Teixeira out 8-10 weeks with strained right wrist
  • mick taylor

    cano will be almost 32 years old when his contract kicks in. i would not give him anymore than a 5 year deal, at 22 million per year. tex was 28 not 32 when he signed his yankee contract the yanks would be crazy to give a 32 year old player a 8 year deal. plus cano will have no incentive to hustle or play hard once he lands that deal. i would trade him right now for a top number 1 prospect. if the mets could get wheeler for beltran, cano should bring back more.

  • OldYanksFan

    I guess Robbie’s value could get even higher if he has a monster year, but I would play the odds that we will get little to no discount by signing him now, so I would wait a year. If nothing else, I would think Cano would give the Yankees ‘1st refusal’ when he hits FA.

    And honestly, I know the ‘rumor mill’ is almost always shit, but I have thought for 2 years now that Robbie is juicing. I’m almost afraid to resign him before the season starts.

    • soxhata

      When your best friend is Melky Cabrera,I too think Robby is suspicious.Remeber when Melky was caught Cano missed a few games with a sore necenk.Then he tanked for weeks before having a decent september.I still can’t fathom the salaries today.These players are not superheroes.Cano’s big 0 for 27 in the playoffs was enough to show it.I am glad we didn’t throw money on average guys like Greinke and talented but troubled guys like Hamilton.I would wait to sign him.If we suck at the trade deadline,we can get a couple great prospects for him and Grandy,and could always try to sign him in the offseason.

    • soxhata

      When your best friend is Melky Cabrera,I too think Robby is suspicious.Remeber when Melky was caught Cano missed a few games with a sore neck.Then he tanked for weeks before having a decent september.I still can’t fathom the salaries today.These players are not superheroes.Cano’s big 0 for 27 in the playoffs was enough to show it.I am glad we didn’t throw money on average guys like Greinke and talented but troubled guys like Hamilton.I would wait to sign him.If we suck at the trade deadline,we can get a couple great prospects for him and Grandy,and could always try to sign him in the offseason.

  • Barry’s Gift Basket

    I’ve been called a moron around here for saying this (but I’ll do it again);

    Just let him walk away. I don’t think there will be anything reasonable about Robbie’s next contract.

    • Dalek Jeter

      BGB’s message to Cash and Co. Regarding Cano: https://www.youtube.com/watch?v=w14IQB8yNNw

      • Barry’s Gift Basket

        Hah kinda.

        • Dalek Jeter

          I don’t necessarily disagree that they should walk away. I just think they should make a few legit offers just to show that hey, he chose to leave, we didn’t choose to not resign him.

          • Barry’s Gift Basket

            Totally.

            They will do that (they are doing it, aprently) but there is a line wich i don’t think they should cross; 6yrs and 20M per year.

            Unfortunately, there is no way Robbie is signing a contract like that. And he shouldn’t for his own sake, but the yankees shouldn’t go higher either (but i think they will go higher and will be an honest mistake).

            • Deathstroke Heathcott

              I could go a little higher on the 20M per year but I agree, 6 years is the limit as to what I’m willing to stomach.

            • Dalek Jeter

              Gun to my head I’d do 7 and 22-23 per, but 6 at 20 per would be wonderful.

              I don’t understand why you think “he shouldn’t (sign more than 6yrs @ 20 per) for his own sake.” If he’s thinking about him and his family, he should sign the biggest and longest contract out there.

              • Barry’s Gift Basket

                Perhaps I worded that poorly (I apologize again, english is not my natural language).

                I meant the oposite of what you understood; he shouldn’t sign a 6 year contract with the yankees because he’ll get more from the same Yankees (or dodgers or somebody else).

                • Dalek Jeter

                  No, in retrospect what you said originally made perfect sense. I just wasn’t paying attention to what I was reading.

  • John O

    So, if that interpretation of the CBA is correct, why don’t the Yankees try to sign A-rod to a one-year, five million dollar extension after this season? Under his current contract, A-rod is owed $28m, $25m, $21m, $20m and $20m over the last five years. Adding another year at five million once 2013 is over would drop the AAV of the contract for luxury tax purposes from 27.5 million to 18.2 million. You can play games with the cap in the NFL, why not try it here?

    • Dalek Jeter

      I got 22.8 AAV under the current contract, and 19.83 AAV with your plan. It’s still not the worst idea if it’s possible…but is it rally worth it?

    • Deathstroke Heathcott

      I think it only works when you’re giving the player a raise on the yearly salary on the extension, otherwise it falls under trying to circumvent the luxury tax which Selig would step in on.

    • http://www.riveraveblues.com Mike Axisa

      MLB would step in because it’s blatant luxury tax circumvention.

    • Need Pitching & Hitting (but mostly hitting)

      It doesn’t quite work like that. If an extension is signed during a multi year contract, not only do the remaining years of the current contract get included in the AAV of the new contract, but also the difference between what was taxed and what was actually paid in the previous years of the current contract is added to the new contract.
      By the end of the year, he will have been paid $189M (what a coincidence!), including signing bonus, but the Yankees will have only been taxed on $165M of that(6 years @ $27.5M), so the remaining untaxed $24M would be included in the new contract for luxury tax purposes.
      So in your scenario, if it was actually allowed by the commish, the AAV would be $23M ($91M future salary + $24M from last contract/5 years). Still a savings, but not as much, and it might not be allowed anyways.

  • Eddard

    And this is exactly why Cano won’t sign now, it’ll be less money for him if he does. Boras knows he needs to hit the open market. Therefore, the Yankees should offer him a maximum of 6 years and tell him if he doesn’t take it then the Yankees remove their name from consideration.

    You cannot keep giving 8-10 year deals to players over 30 years old. If you want to give that deal to an elite player who is 26-27, fine but not 32. We’re paying A-Rod $30 million to take steroids and sit on the bench in the playoffs and that’s all thanks to Hank.

  • Mike Myers

    Isnt it a bigger benefit to wait until after the season. I see 3 possibilities.

    1) Cano plays similar to his career. Boras asks for the moon and we have to pay it

    2) One of the minor leaguers makes a big stride and or Adams shows he is healthy. Boras stil asks for the moon, but we dont have to pay it.

    3) Cano shows decline and Boras asks for the moon, but we wont have to pay it.

  • http://riveraveblues sandyg

    my favorite yankee player ever was mickey mantle.iam not given the mick a 7 year deal for 27 mil per,no way do i give cano 7 years 189 mil.trade him to st.louis for oscar taveras now.come the trading deadline in july when the yankees are 15 games out,start trading the free agents and build up the system fo9r 2014

    • TomH

      There was an exchange on the board about 3 weeks ago, about whether the Yankees could wind up 10 games out by mid-season. Most people laughed at the very thought. Unwise laughter.

  • Jack P

    Tex out for 10 weeks…. great………………………

    • Jack P

      This according to Mike Francesca according to Girardi/Sweeney

  • Dalek Jeter

    Fat Man is reporting that Tex is out 8-10 weeks with a strained wrist? He’s as confused as I am. How is he going to be out 2+months with a STRAINED wrist?

    • sangreal

      “ECU Tendon Strain” apparently

  • Frank

    Yanks sure are missing Swisher right about now.

    • sangreal

      my thoughts exactly