Estimates 2018 Yankees payroll for luxury tax purposes: $178,700,425
2018 luxury tax threshold: $197 million
As Opening Day approaches, the Yankees’ payroll situation will evolve. They could still add guaranteed contracts through trades and free agency (or even extensions) before gaining clarity on salaries for players in their pre-arbitration years. Here we’ll keep track of where the payroll stands.
|Player||Luxury Tax Salary|
The average annual value of Stanton’s contract is $25M, but because the Marlins are sending $30M* as part of the trade, the Yankees will be responsible for only $22M for luxury tax purposes ($30M divided by ten remaining years on the contract).
* While the Yankees will only get the $30M if Stanton declines to opt out after the 2020 season, they can still deduct the amount from Stanton’s salary for luxury tax purposes, per Ken Rosenthal.
January 12th was the deadline for teams and their arbitration-eligible players to submit salary figures for 2018. The Yankees signed all eight of their eligible players prior to the deadline. Their salaries:
|Didi Gregorius||Year 3 of 4||$8.25M|
Players in their pre-arbitration years do not make much money at all, relatively speaking, though their salaries do count against the luxury tax payroll. They add up. Here are the Yankees’ known signed pre-arbitration-eligible players:
|Service Time (years.days)||MLB salary||MiLB salary|
Other Committed Money
- Dead money ($6M): Portion of Brian McCann’s salary ($5.5M) and half of Chase Headley’s assignment bonus ($500K)
- Two pre-arbitration-eligible players to fill-out 25-man roster ($1.09M): $545K each
- Remaining 40-man spots: $2M (estimated)
- Player benefits: $14.0446M (per the Associated Press)
That $1.09M number isn’t entirely accurate, since the two pre-arbitration-eligible players who fill out the roster probably won’t make exactly the $545,000 league minimum. Bird, Drury, Green, Judge, Montgomery, Sanchez, Severino, and Torreyes are the signed pre-arbitration-eligible players who are safe bets to be on the MLB roster all season. Their salaries add up to $4,818,325. The Yankees may not fill those final two remaining 25-man roster spots with pre-arbitration-eligible players. They could still acquire a veteran starter (or something else).
Alright, so when we add all that together, the guaranteed contracts plus arbitration players plus pre-arbitration players plus dead money plus miscellaneous expenses (benefits, other 40-man guys, etc.) we get approximately $179M ($178,700,425 to be exact). The luxury tax threshold is $197M next year, so the Yankees are left with $18M or so to play with. They reportedly want to set aside $10M for midseason additions, which leaves about $8M for upgrades before Opening Day. (They also have roughly $3.5M in potential bonuses to Stanton, Sabathia, Walker, and Robertson to plan for.)
The $179M payroll number would seem to have given the Yankees enough payroll space to sign one or two of their young cornerstone players to a long-term contract, which would potentially save millions down the road. Short-term pain (player has a higher salary for luxury tax payroll purposes in 2018) for long-term gain (below market salaries in the future). The Yankees signed Robinson Cano to an extension through his arbitration years and first few free agent years and didn’t regret it for a second. Obviously they decided against doing that this year.
The business goal this season is clear: Get under the luxury tax threshold and reset the luxury tax rate, which is currently the maximum 50%. Once the Yankees do that, they’ll be in much better position to lock up their own players (Sanchez, Judge, Severino, etc.) and spend big on free agents in the future. The Yankees still have some payroll space to play around this year, though I wouldn’t count on them spending wildly. This is their best chance to get under the luxury tax threshold and they’re not going to miss it.