The bet that can balance winning and Plan 189

For nearly two years now we’ve heard about the Yankees’ plans keep payroll below the luxury tax threshold in 2014. The story first cropped up in December, 2011, and a little over a year later Hal Steinbrenner acknowledged it as the organizational goal. Yet he always notes that getting under the threshold is a goal, one he believes is attainable, rather than a mandate. Fielding a championship-caliber team, he reminds us, remains the top priority.

Until the chips start to fall, fans can believe what they want. Some believe that the Steinbrenners are more concerned with lining their own pockets than winning, and won’t be convinced otherwise until the Yankees start doling out contracts. This is not an outrageous stance; given how much money the Yankees stand not only gain, but to take out of other teams’ pockets, getting under $189 million makes sense. At the same time, we saw the crowds at Yankee Stadium last year when the Yankees fielded a mediocre product. Surely the Steinbrenners understand that they could stand to lose plenty if the 2014 Yankees resemble the 1991 Yankees.

For those worried about how the payroll breaks down, we’ve seen some positive stories in the past few days about the Yankees showing interest in a number of quality free agents. On Friday Jon Heyman published one containing an encouraging quote from one of his sources: “Hal is very involved, and he wants to win.” Another interesting tidbit comes a few paragraphs later (emphasis mine).

Word is the Yankees still believe they can keep get their payroll below the luxury-tax threshold of $189 million, thanks to $100 million or so in contracts coming off the books, depending to a fair degree on the status of Alex Rodriguez‘s PED arbitration case vs. MLB.

If A-Rod somehow walks away without any suspension, he will count $33.5 million against the luxury tax next season ($27.5 million AAV, plus $6 million after he hits six more homers). If suspended for 50 games that number comes down to around $25 million, and if he gets suspended for 100 games it’s around $16.5 million ($10.5 million if he can’t hit six homers in 62 games, but he did hit seven in 44 games last year). And, of course, if he gets 162 or more games, the Yankees will have a nice heap of cash at their disposal.

The pace of the proceedings between MLB and Rodriguez throw a wrench into the Yankees’ off-season plans. Free agency is already in full swing with the GM meetings this week followed by the Winter Meetings in about a month. A good number of players will sign between now and when the Winter Meetings end on December 12. How can the Yankees make a move if they don’t know exactly what their 2014 books will look like?

The answer is that it shouldn’t matter. If Steinbrenner is truly serious about prioritizing a winning team over the luxury tax savings, he should forget that Alex Rodriguez exists. When arbitrator Fredric Horowitz renders his decision, it should have no effect on the Yankees’ plans. They should work with the assumption that Rodriguez will be suspended for all of 2014.

If the bet works out, the Yankees are in superb position. They can, with relative ease, field a competitive team and stay under the luxury tax threshold with another $33.5 million, in addition to the $40 million or so they have currently (as Mike calculated). That $70-plus million can pay for Robinson Cano, Masahiro Tanaka, plus two or three other starting-caliber players, depending on whether they’re acquired via free agency or the trade market. Chances are Rodriguez will push them over the threshold again in 2015, but at least they’ll have gotten below for one season, resetting the tax and keeping some of their revenue sharing monies.

If Rodriguez does play in 2014, Plan 189 does go out the window, though the luxury tax bill won’t be close last year’s record $29.1 million luxury tax bill. If Rodriguez avoids suspension and the Yankees are butting up against the tax threshold, they will pay $16.75 million in tax. At 50 games the bill would be $12.5 million, and at 100 games it would be $8.25 million.

Therein lies the entire bet. If the Yankees win, they get a championship team and pay zero dollars in luxury tax while keeping money previously sent to other teams. If they lose they still have to pay out those revenue sharing monies, plus luxury tax — though even in the worst case scenario the tax itself will amount to less than they’ve paid in the past four seasons.

As always, the it’s-not-my-money caveat applies. The Steinbrenners have the dollars, so they control who gets paid. But if they are serious about their statements, that winning takes precedence over the budget, they should spend as though Rodriguez doesn’t exist. To win that bet is a coup. To lose means writing another check, though not nearly to the level of last year and a bit below what they’ve paid in the recent past. We can only hope this makes sense to the people writing the checks.

Hal Steinbrenner speaks, and you’re not going to like what he has to say

(Mike Stobe/Getty Images)

MLB’s quarterly owners’ meetings are taking place right now, and Ken Davidoff managed to catch up with Hal Steinbrenner for a few minutes today. The team’s owner confirmed they have not had any serious talks about an extension for Robinson Cano (not new information) and acknowledged the club still needs a bat, but that’s not all. There’s more…

First thing that comes to mind: lol.

Second thing that comes to mind: The Yankees have a natural edge over the rest of the league because of their market and it’s immense money-making capabilities. Scaling back payroll even for one year is, frankly, a disservice to the fans. Doing it for multiple years is pretty close to a slap in the face. The Yankees aren’t hurting for money. They just built a new stadium and will receive hundreds of millions of dollars from their YES Network deal with News Corp., not to mention all the extra cash they’ll receive from MLB’s new national broadcast agreements. Hal’s dangerously close to saying “I know you know we make all this money, but not only are we not going to reinvest it in the team, we’re going to rub it in your face too.”

Whether they realize it or not — they don’t based on Hal’s comments — the Yankees are losing the PR war right now. The record-low ratings in our Fan Confidence Poll are not an accident. Fans are angry because they’ve done nothing to improve the team this offseason and plan to cut back on spending next winter. We’re not splitting atoms here, it’s pretty obvious why people aren’t happy with the team. If ownership and front office are truly oblivious to that, then things are going to get a lot worse before they get better.

Brian Costa has a full recap of Steinbrenner’s quotes, just in case you want to slam your head against the table a little more.

Hal Speaks: “Jobs are not riding on this”

(Mike Stobe/Getty)

The regular season ends tomorrow, so all across the league owners are spending the final series with their teams as they look forward to the postseason, search for answers, or just want to pal around with the fellas after being off-the-radar for the last six months. Maybe it’s all three in some cases.

Hal Steinbrenner was at Yankee Stadium yesterday, and he briefly spoke to the media prior to last night’s blowout win. Hal isn’t his father, so there wasn’t anything too exciting to come out of the media session. There is still some stuff to talk about, however. The following quotes come courtesy of George King and Bryan Hoch.

On whether jobs depend on how the Yankees finish the season…

“Are jobs riding on this? Not that I know of. Jobs are not riding on this and that’s not something I am concerned about right now. We look at everything in the off-season as we always do.”

In our recent polls, the majority of RAB readers said that neither Brian Cashman nor Joe Girardi should be fired or would have been fired had the Yankees failed to qualify for the postseason. A wildcard spot is clinched, but I suspect that sentiment will not change regardless of how the Yankees finish the season.

Cashman is under contract through 2014 and I never really thought/still don’t believe his job is in any kind of jeopardy. Girardi’s contract is up after next season and I was in the “he shouldn’t be fired but will be” camp with regards to his job security had the Yankees missed the postseason. He a fine manager, not great and not terrible, but five years is a pretty long time for stick around in this business. With Terry Francona available and waiting to be hired, my gut said Joe would have been the easy scapegoat.

On the tight race in the final month of the season…

“I am excited, I think we all would like a bit more breathing room, we have zero breathing room. But the guys have been playing tough and we have (Mark Teixeira) back Monday night and he will give us a boost so I am excited … I was concerned (about blowing the ten-game lead), I wouldn’t say I was worried. These guys know what is expected out of them. They are professionals. I had no doubt they were going to persevere the best they could. We kept getting a big guy back and another big guy goes out and it’s frustrating after a while. But we have everybody back now and we are at full strength and we will keep pressing on.”

Nothing really to add here, I just find it a little funny that he was “concerned” and not “worried.” I know there’s a difference, but I still got a nice chuckle out of this.

On the plan to get under the $189M luxury tax threshold by 2014…

“I’ve made it clear that it’s very important to me for several reasons. Again, you’re talking about a 10 percent reduction in payroll. I don’t see that as an outrageous concept. I never have.”

The 2014 payroll plan was just a well-sourced rumor until Steinbrenner (and Cashman) confirmed it back in Spring Training. I don’t know of any fans that actually like the plan since what the hell, if you have the money spent it. That said, I think we can all understand why they’re striving to get under the luxury tax considering the potentially enormous savings. That doesn’t mean we have to like it, but part of me is hoping that it will force the team to be smarter with their spending and decision making. A $189M payroll is still nothing to sneeze at anyway, if they can’t contend with that then the problems go well beyond the money.

Cashman, Hal met in New York; still no deal

Via Joel Sherman and David Waldstein, Brian Cashman and Hal Steinbrenner met in New York yesterday, though they talked mostly about baseball and the team’s baseball operations. That’s a pretty good indication that the two sides expect a new contract for the GM to be reached with ease. Cashman’s contract expires next Monday, so we should hear something very soon. I figure it’ll be another three-year deal, Cashman’s fourth in a row.

Cashman, Hal to meet next week

Via Joel Sherman, Brian Cashman and Hal Steinbrenner are scheduled to meet sometime next week to hammer out the GMs new contract. Last week we heard that talks were going well, but it looks like they’re getting ready to shake hands and sign on the dotted line. The World Series will end exactly two weeks from today, assuming it goes the full seven games, and CC Sabathia will be able to opt out of his contract three days after that. That’s when the offseason really starts for Cashman and the Yanks.

Hal talks playoffs, Jeter, payroll, plans

Hal Steinbrenner has vowed to make the 2011 Yankees a World Series-caliber team. (AP Photo/Kathy Willens)

Hal Steinbrenner, the Yankees’ Managing General Partner and co-chairman, took to the airwaves this afternoon and spent around 20 minutes chatting with Michael Kay and then Mike Francesa on New York’s two sports talk radio stations. While keeping the Yanks’ offseason plans close to the vest, Steinbrenner let slip a few choice words on the playoff scheduling, Chuck Greenberg’s recent comments, the clubs’ payroll and the Yanks’ willingness to dip into the free agency pool.

We’ll start with the sexy stuff. Hal opened both interviews with his assessment of the team’s performance in the playoffs. Both times, he blamed the days off in between the end of the ALDS and the start of the ALCS. “We seemed a little bit cold in that series,” Hal said of the ALCS. “I don’t know if it was the long layoff or not.” I’ll have more on the playoff format and the unnecessary days off later tonight, but the Yanks never seemed to click during the ALCS. Having to stop play for six days probably didn’t help.

As a side note, Hal also called the 2010 season “very disappointing.” I don’t find myself too disappointed by a six-game ALCS series even though the Yanks lost. Counting the playoffs, they won 101 games this year, tops among AL teams and just one fewer than the World Series champion Giants. It was disappointing to see them go down against Texas, but this was a fun season.

The Yanks’ co-owner shifted gears after that to talk about Derek Jeter and Mariano Rivera. “We absolutely want [Jeter] back. We absolutely want Mo back,” he said. Having said that, we’re running a business.” In fact, that’s a point Hal stressed in both radio appearances. The Yanks are a business and with Derek, the Steinbrenners want “a deal both sides are happy with.”

Hal seemed less nostalgic and sympathetic to the idea that Jeter deserves a huge contract than either Kay or Francesa wanted him to be. While noting that Derek is one of the all-time Yankee greats, he warned Kay, “There’s always the possibility that things could get messy.” To Francesa, he elaborated, “I want to get a deal done that he’s happy with but also that I’m happy with.”

In addition to resigning their own players, the Yankees will be active in the free agent market. Without naming specifics, Hal committed to spending the organization’s money. “We are looking at the free agent market as we do every year,” he said. “We certainly have money to spend and we’re going to look into it.” The team’s payroll, Hal said, will likely be on par with 2010’s though. So we shouldn’t expect too many big-ticket purchases if the team adheres to that budget.

Steinbrenner also stressed the team’s strategy. The use the free agent market to complement their youth movement, but they’re always going to spend money. “The fans need to know we’re not putting money in our pockets left and right,” he said. “We put most or all of it back into” the team. He also mentioned that the Legends Suites were sold at rates above 90 percent this year and that the franchise may adjust some ticket prices for 2011.

Finally, Hal talked about Chuck Greenberg’s comments. The Rangers CEO accused Yankee fans of being both violent and apathetic, and the Bombers were prepared to retaliate. These were “inappropriate, ridiculous comments,” Hal said. While the club accepted Greenberg’s apology, Hal was fairly merciless. “Stupid comments…they were inappropriate, “he said. “You need to apologize to our fans.”

At the end of both interviews, Hal said it was there intentions to build up the 2011 Yankees a “World Series-type team.” Whether it be via trade, free agency or both, the Yanks have a busy Hot Stove League ahead of them.

A trade deadline The Boss would be proud of

Despite already having the best record in baseball and a budget (albeit flexible) at its limit, the Yankees owned the trade deadline in a way that would make George Steinbrenner proud.  They got big names in Lance Berkman and Kerry Wood because they were willing to take on salary and not let money get in the way of improving the team.  They also did this without sacrificing any major pieces for their future.  There was no trading Jay Buhner for Ken Phelps, just signing the checks that other franchises were unwilling to write.

In fact, the Red Sox were in on Wood as well, but wouldn’t take on as much salary.  The Sox wouldn’t take on the $1.5 million the Yankees were willing to pay to get Wood (Beware, that link is for John Tomase who’s not the most credible of writers).  So the Red Sox, who by inquiring on Wood think they are still in the race (and they are) let a few hundred thousand dollars get in the way of obtaining him.  Much like the Alex Rodriguez and Mark Teixeira pursuits, the Red Sox had their chance and came up short when it came time to open the wallet (I guess they should have sold a few more memberships to Red Sox Nation).  Can you imagine how thrilled George would be to know this?

While the Astros did pick up a significant portion of Berkman’s salary, the Yankees still needed to commit to paying Berkman, having a down year, $3.1 million for 2 months of regular season work plus hopefully the playoffs.  Considering they have already committed $5.5 million to the DH position in Nick Johnson and we’re in a recession, this was not a tiny pill to swallow.  While upgrading the DH position in a big way was more of a want than a need, they saw an opportunity to strike with the biggest cost being money.  Again they went for it, and again, the Boss would be proud.

There were concerns after Steinbrenner’s passing that Hal would run the team more as a business and less as a fan leading the Yankees to cut back on spending going forward.  So far so good however, as the decision makers decided the increased payroll was worth the increased chances of winning it all.  Did the Yankees, as constructed on July 29th, have a chance to win the World Series?  Of course they did.  Do the Yankees, on August 1st have a better chance of winning the World Series?  Of course they do. Not only did the Yankees step up to the plate and take their shot, but for the most part their main competitors didn’t as the Red Sox and Rays didn’t wow anyone with their deadline moves.   Give credit to the guys signing the checks this year and know that what they pulled off the past few days would make the old man proud.