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According to the AP, the Yankees will open the season with an estimated $204M payroll, the second highest in the game behind the Dodgers ($235M). This will be the first time since 1999 that New York will not have baseball’s highest Opening Day payroll. The Astros ($45M) and Marlins ($48M) have the lowest and second lowest payrolls, respectively, and the league average salary is in the $3.95M to $4M range.

The payroll estimations cover everything — the 40-man roster, players on the DL or restricted list, pro-rated salaries, payments from other teams, so on and so forth. The Yankees opened last season with a $228M payroll according to Cot’s, though that is an outlier because they took on salary late in camp (Vernon Wells and Lyle Overbay, etc.) to cover for injuries. The team’s average Opening day payroll from 2008-12 was ~$208M, so it has not increased as league revenues and other payrolls around the game have gone up. The luxury tax is doing what it was intended to do.

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(Jonathan Daniel/Getty)

(Jonathan Daniel/Getty)

After weeks and weeks of waiting, we now know Alex Rodriguez has been suspended for the entire 2014 season. The team still owes him some salary and he will count a small amount against the luxury tax this year (as I explained earlier), but for the most part his massive $27.5M luxury tax hit has been wiped off the books. Plus they don’t need to worry about his first $6M homerun milestone bonus. You can bet the front office and ownership are rejoicing.

With A-Rod suspended, it is once again time to look over the team’s payroll situation. As a reminder, the numbers listed are luxury tax hits, not actual 2014 salary. The two can be and often are different. For reference, here are Part One (last January), Part Two (August), Part Three (November), and Part Four (December) of the series.

Roberts’ one-year contract — Dan Connolly says it includes a $2M base salary plus $2.6M in plate appearance-based incentives — is not yet official but it will be very soon, so I’m including him. And yes, Kuroda’s translator counts against the luxury tax according to Dan Martin and Ken Davidoff. So silly.

The 15 players who are on the 40-man roster but not on the active 25-man roster are typically estimately at $2M-5M, so let’s go with $5M. Adding together everything above gives us a $195.751M payroll for luxury tax purposes for this coming season. If we say Jeter and Roberts are unlikely to trigger their bonuses but Kuroda will hit his, we’re still at $186.151M. It’s worth noting the players’ union expects Gardner’s salary to be “considerably higher” than projected by Matt Swartz’s model. We’re just going to have to wait to see about that.

That $186.151M gives the team just $2.849M to spend under the $189M luxury tax threshold. It also leaves them with this projected 25-man roster come Opening Day:

Catcher Infielders Outfielders Rotation Bullpen
McCann 1B Teixeira LF Gardner Sabathia Robertson
2B Roberts CF Ellsbury Kuroda Kelley
DH SS Jeter RF Beltran/Soriano Nova Thornton
Beltran/Soriano 3B Johnson ? (Phelps) ? (Warren)
? ?
Bench ?
C Cervelli OF Ichiro ?
IF Ryan ?

Based on what we heard yesterday, that last bench ? is going to a low cost player like Nunez, Anna, Scott Sizemore, Corban Joseph, or Yangervis Solarte. Johnson’s flexibility means he’s the emergency fifth outfielder in any given game. Barring a surprise addition, the position player portion of the Opening Day roster is pretty much set aside from that forthcoming Spring Training competition.

The pitching staff is much more up in the air. We know the Yankees are pursuing Masahiro Tanaka but signing him is not a given. If they fail to sign him, Brian Cashman has indicated they could look for cheap starters a la Freddy Garcia and Bartolo Colon back during the 2010-11 offseason. What we do know is there will be a fifth starter competition in camp, so that guy will be cheap. I have Phelps in parentheses in the table just because he seems like the favorite for the job, but it could just as easily be Warren. I do expect both to be on the Opening Day roster though, one as a starter and one in the bullpen.

The last three bullpen ?s could all wind up going to cheap internal candidates and the Yankees have a ton of ‘em. Huff, Betances, Claiborne, Cabral, Nuno, Robert Coello, Brian Gordon, Matt Daley, David Herndon, on and on it goes. I would love to see the Yankees add one (preferably two) relievers with some more big league pedigree, someone like Grant Balfour or Luis Ayala or even Joel Hanrahan, who isn’t expected to return from Tommy John surgery until sometime in May or June. Cheaps bullpens are great, but a bullpen in which Kelley is the second best reliever makes me a wee bit nervous.

(Al Bello/Getty)

(Al Bello/Getty)

So let’s say that out of those seven total ?s, five will be filled internally. Sizemore, Phelps, Warren, Huff, and Betances. Sound good? Good. Those guys will all earn something close to the league minimum, meaning another $3M or so added to the payroll. That brings us up to $189.151M total with one rotation spot and one bullpen spot still open. So the Yankees are already over the luxury tax threshold without a full roster or money set aside for midseason call-ups and waiver claims and whatever else.

There is obviously some leeway here — my $5M assumption for the 15 non-active roster players is conservative — but it’s clear signing Tanaka will put the Yankees over the luxury tax threshold. No doubt about it. Going with a cheap starter and a moderately priced reliever like Ayala would also put them over the threshold. Heck, going cheap with that last rotation and bullpen spot still puts them right up against the threshold at the very least, if not over. And remember, Gardner’s salary may end up larger than projected and they’ll need to call guys up throughout the season. The only two ways the Yankees can realistically clear payroll is by trading Gardner or Ichiro, and they’d have to eat some cash to move the latter. Plus they’d have to pay players to replace them.

Even with A-Rod almost completely off the books, the Yankees are still going to wind up over the luxury tax threshold this summer. The only question is how much. As one team executive said recently, “We either have to be under $189M or up over $200M or more. Think how dumb it would look if we worked for a few years to get under $189M and we didn’t and we were at like $189M and just missed. Either we go under or way over.” Given their current payroll situation, it looks like they’ll be way over. Hooray for that.

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A real catcher. (Maddie Meyer/Getty)

Hooray, a real catcher. (Maddie Meyer/Getty)

Boy have things changed since we last looked at the Yankees’ payroll situation. They lost Robinson Cano and Curtis Granderson to free agency but responded with four significant signings (plus one smaller one) of their own. There was also the non-tender deadline, which brought about some change. These last few weeks have been quite busy for the Bombers.

Needless to say, the chances of the Yankees staying under the $189M luxury tax threshold next season have taken a big hit. The team has been talking about staying under the threshold (at every opportunity, it seemed) for a good two years now, plus just about every move they made was geared towards achieving that goal. Just look at the way they structured the money in the Vernon Wells trade last spring.

Here is an updated look at the team’s payroll situation heading into next season. These are “luxury tax hits,” not actual 2014 salary. The two can be different. For reference, here are Part One (January), Part Two (August), and Part Three (November) of the series.

Yes, Kuroda’s translator counts against the luxury tax, at least according to Dan Martin and Ken Davidoff. I know, it’s silly, but it is what it is. Eight-five grand doesn’t sound like much, but it is one month’s worth of the league minimum salary. That means one fewer September call-up if the team wants to stay under the luxury tax threshold. Like I said, silly.

Anyway, add the guys under contract to the arbitration eligibles to the possible bonuses to the “other” and you get $212.995M. The 15 guys on the 40-man roster — there are 41 players listed above because the Beltran deal is not official yet, but they will have to make a move to accommodate him once the deal is final — but not on the active 25-man roster are usually estimated at $2-5M, so let’s use the high end and go with $5M. Now we’re up to $217.995M. The Bombers opened this past season at $228.1M and ended it at $236.2M, in case you’re wondering.

Obviously, the Yankees are not getting under the threshold without A-Rod getting suspended for all of next season. Not unless they trade Teixeira and Ichiro or something. Subtract out Alex’s salary and homer bonus and we’re down to $184.495M. Basically $4.5M under the luxury tax. Feel comfortable saying Jeter won’t win the MVP? I think that’s a safe assumption — he hasn’t won an MVP yet and is now coming off what amounts to a lost season at age 39. Eliminating the “win MVP” bonus from his contract frees up another $4M and brings us down to $180.495M.

What does that $180.495M buy the Yankees? Here is the projected 25-man roster as of right now:

Catcher Infielders Outfielders Rotation Bullpen
McCann 1B Teixeira LF Gardner Sabathia Robertson
2B Johnson or ? CF Ellsbury Kuroda Kelley
DH SS Jeter RF Beltran/Soriano Nova ? (Warren)
 Beltran/Soriano 3B Johnson or ? ? (Phelps) ? (Huff)
? ? (Betances)
Bench ?
C Cervelli OF Ichiro ?
IF Ryan OF Wells

There are eight total ?s but we can eliminate four with internal solutions. Those are the guys in parentheses. Phelps, Warren, Huff, and Betances — Huff and Betances are both out of minor league options (can’t go to Triple-A without passing through waivers) and that could give them a leg up when cut day comes around at the end of camp — will all earn something close to the league minimum, so that’s another $2.2M or so spent right there with four ?s still to be answered.

I assume those four ?s will go to veteran players yet to be acquired. That would be ideal, anyway. I guess they could go with Cabral and Clairborne for those final two bullpen spots, or maybe re-sign Matt Daley, but that would be a really sketchy relief corps behind Robertson. The Yankees would have just $6.305M to fill those four holes ($189M – $180.495M – $2.2M), which isn’t much. A big name starting pitcher like Masahiro Tanaka or Matt Garza or whoever isn’t happening without going over the threshold. Ditto Omar Infante. We’re talking $6.305M for a second/third baseman, a starter, and two relievers. Plus they’ll need to leave a little something for midseason call-ups and additions. Gonna be tight.

I see only three ways the Yankees could realistically trim payroll. They could dump Cervelli and replace him with the cheaper Romine or Murphy, but if they were going to do that, they would have non-tendered Frankie last week. That would only save about $450k anyway. The other two ways to clear some payroll space are by trading Gardner and/or Ichiro. There is “significant interest” in Gardner and the team is shopping Ichiro, so the wheels are in motion. Saving even $3M by dealng Ichiro would be a win. They could replace him with Almonte at the league minimum and see basically no drop in production (Steamer and Oliver projections both have them as sub-1.0 WAR players in 2014, if you care). Zoilo would add some nice versatility to the bench as a switch-hitter as well, but I digress.

Obviously this whole exercise is just an estimate, a ballpark figure. We can only be so precise from the outside. The arbitration-eligible guys could come in at a higher or lower salary than projected, for example. Ditto the benefits package all 30 teams must pay. Maybe the Yankees are comfortable saying Jeter won’t even finish in the top six of the MVP voting, nevermind win it. That would free up another $2M of potential bonus money. (I’m an idiot, disregard that last part.) There’s plenty of wiggle room here, but I think we can say that while staying under the $189M luxury tax threshold is still possible, it will be very difficult to actually pull off following the team’s recent moves.

According to David Waldstein, Hal Steinbrenner has given the okay to go over the threshold despite his recent public insistance that it remains their goal. Perhaps he’s softened his stance given how much revenue declined from 2012 to 2013 ($58M in ticket sales alone). They have already spent as if A-Rod is being suspended, after all. The Yankees have some payroll space left before getting to $189M, but they also have some roster holes to address. Their next move will be telling — if they sign a starter to a big money deal, forget it. They’re going over. If they sign someone cheap or shed salary in a trade, they might plan on seeing this thing through.

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Exclusive photo of the first time Cano heard about the plan to get under the luxury tax threshold. (Rich Schultz/Getty)

Exclusive photo of the first time Cano heard about the plan to get under the luxury tax threshold. (Rich Schultz/Getty)

Starting at midnight tonight, free agents will be free to negotiate and sign with any team. The offseason will finally get underway in earnest — up until now it’s been a lot of waiting and boring procedural stuff. Now the Yankees and the other 29 clubs can get down to business for real.

With that in mind, it’s worth figuring out how much money New York has to work with this winter. They’re trimming payroll and intend to get under the $189M luxury tax threshold next year, a threshold they can’t pass at all next season. The payroll is calculated at the end of the year for luxury tax purposes. They don’t get to spend freely after staying under on Opening Day or anything sneaky like that.

The Yankees have many holes to address and, for the first time in a long time, a finite amount of money to do it. Don’t get me wrong, the team never had a truly unlimited budget, but it sure felt like they did at times. None of us were worried about a hard payroll number, that’s for sure. This offseason will be a new experience. Here are the club’s current contract commitments for next season:

Just to be clear: those are luxury tax numbers, which are based off the average annual value of multi-year contracts. Some players will actually take home a different salary next summer — the money in the Wells trade was structured in such a way that he won’t count towards the tax this year despite a $21M salary — but that is how much they will count against the tax.

I tend to be conservative with this stuff, but I wouldn’t expect even a perfectly healthy, in-his-prime A-Rod to hit the 60 homers he’d need to hit to trigger his second $6M milestone bonus. The team does have to plan for the first milestone though — he’s only six homers away, which is easily doable — ditto Jeter’s awards-based bonuses. That stuff counts towards the luxury tax. Between the guys under contract, the arbitration-eligible, and bonuses, the Yankees already have 14 players locked in at $127.91M for 2014. Add in the $12M or so every team has to contribute towards player benefits and it’s really $139.91M for 14 roster spots.

That $139.91M leaves the team $49.09M to spend on the remaining 26 40-man roster spots. The 15 players on the 40-man but not on the 25-man active roster are usually estimated at $2-5M total (they earn a lower salary in the minors), so assuming the high-end of that range leaves us with $44.09M for the final eleven 25-man active roster spots. Non-tendering Nix and Stewart would free up another $2.4M but also create two more spots to fill. With Cervelli, Romine, and Murphy around, I see no reason to keep Stewart at that price. Nix is a fine utility man but that projected $1.4M salary is a bit steep. Let’s assume those two are non-tendered. We’re now sitting on $46.49M to fill 13 25-man active roster spots.

So what 13 positions, exactly, does the team need to fill with that money? Here’s a look at the roster as it stands right now:

Catcher Infielders Outfielders Rotation Bullpen
Cervelli 1B Teixeira LF Soriano Sabathia Robertson
2B ? CF Gardner Nova Kelley
 Designated Hitter SS Jeter RF Ichiro/Wells Phelps Warren
? 3B A-Rod ? ?
? ?
Bench ?
C Romine or Murphy OF Ichiro/Wells ?
IF Nunez ?

I think it’s safe to assume Nunez, Phelps, and Warren will make the roster and fill three of those 13 open spots. Phelps and Warren have earned spots and the Yankees love Nunez. He’s not going anywhere. Either Romine or Murphy can fill in as the backup catcher. All four are in their pre-arbitration years and will make something close to the league minimum, leaving the Yankees with roughly $44.29M to answer those remaining nine ?s.

One of those nine ?s is at second base, meaning Robinson Cano. I feel it’s inevitable that he’ll sign a fat new contract, probably something in the $20-25M average annual value range. Splitting the middle and calling it $22.5M leaves the Yankees are left with $21.79M to fill their remaining eight roster spots. They are going to need to save some payroll space for midseason call-ups and acquisitions (trades, waivers, etc.), so let’s make life easy and call it an even $20M for those eight spots. Still with me? Good.

Obviously the two open rotation spots are the biggest concern. The Yankees have some cheap internal options for those last four bullpen spots — specifically Claiborne, Cabral, Huff, Betances, Daley, and Nuno — though I would like to see them add a veteran late-inning guy to pair with Robertson and Kelley. The bullpen has more openings but is not as much of a priority as the rotation at this point. It’s easy to see the appeal of Masahiro Tanaka here — his posting fee is expected to be gigantic but it doesn’t count towards the luxury tax. Only his contract counts towards the tax. Assuming he signs for a $10M average annual value like Yu Darvish, that’s a bargain for someone who many people expect to be a number two-ish starter. He’s a very luxury tax friendly option for the pitching-needy Yankees.

If the Bombers wind up spending $10-12M on Tanaka or another starter, they’ll be left with $8-10M for the remaining seven spots. Betances (league minimum) figures to get one bullpen spot because he’s out of options. The Yankees could find a fifth starter and long man out of the Warren, Huff, Nuno, and Marshall foursome with the other two guys going to Triple-A as the sixth and seventh starters. They’ll be needed at some point, no doubt about it. It’s worth noting Huff is out of options and would need to clear waivers to go to Triple-A. Either way, the fifth starter and long man would make something near the league minimum in this scenario. That leaves $6.5-8.5M for the last four ?s, which are a DH (Mark Reynolds?), another bench player (preferably a lefty bat with some pop), and two relievers. Maybe Huff makes the team as a lefty specialist with another guy filling in as the long man. That’s an option.

(Maddie Meyer/Getty)

(Maddie Meyer/Getty)

Now, for the elephant in the room: A-Rod. If he is suspended for all of next season, his $33.5M tax hit ($27.5M salary plus $6M bonus) is wiped off the books and the Yankees suddenly have a ton of extra money to spend. Someone like Brian McCann or Carlos Beltran or Matt Garza becomes a realistic option. Heck, they’d be able to afford two of those guys with Rodriguez off the books. If he is suspended for only part of the season, the salary portion of his tax hit would be pro-rated but the team would still have to prepare for that full $6M milestone bonus. Either way, A-Rod being suspended for any length of time leads to considerable payroll savings, though the Yankees would have to find someone else for third base. That’s a trade the team would be happy to make.

In addition to what feels like the inevitability of Rodriguez being suspended for some number of games, it’s also unlikely Jeter will reach all of the bonuses in his new contract. The Yankees have to go into 2014 prepared just in case he does, but this is something they can monitor as the season progresses. If July rolls around and it’s obvious he’s not an MVP candidate — seems silly to say now, but remember, he was in the MVP conversation as recently as 2012 — that’s suddenly $4M the team can allocate elsewhere, specifically towards a trade deadline pickup. That’s a nice chunk of change to have available at the deadline.

After running through all of this, it seems like the Yankees have enough payroll space to make one big Tanaka-sized splash in addition to re-signing Cano this winter. A-Rod’s appeal hearing will resume in mid-November, meaning the ruling may not come down until mid-December, after the Winter Meetings. They’ll have a lot more money to spend if he is indeed suspended, but some of the top players figure to be off the board by then. More than anything, I think this little exercise — which is just an estimation, remember, these numbers are not exact — shows just how much the Yankees will need a) Teixeira and Sabathia to rebound, b) Nova to put together a full productive season (not a half one like 2011 and 2013), and b) youngsters like Phelps, Warren, and various catchers to step forward and contribute. That seems like a lot to ask.

Previous 2014 Payroll Breakdowns: Part One (January 2nd) and Part Two (August 7th).

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Aug
07

2014 Payroll Breakdown: Part Two

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Hooray for being (kinda) free next year? (Andy Marlin/Getty)

Hooray for being (kinda) free next year? (Andy Marlin/Getty)

For the last 18 months or so, almost every move the Yankees have made has been geared towards getting under the $189M luxury tax threshold in 2014. They’ve gravitated towards short-term contracts, in some cases choosing future financial flexibility over roster quality. It’s cost them on the field, but they are better positioned to get under the tax threshold.

The luxury tax, if you don’t know by now, is based on the average annual value of contracts on the 40-man roster. Players who are added to the 40-man late (called up, trade, etc.) or taken off early (released, traded, etc.) have their “tax hits” pro-rated. Performance bonuses count against the tax as well, as does each team’s portion of the league’s player benefits. The benefits are expected to jump from $10.8M to about $12M for 2014. Just like that, the $189M threshold is really $177M.

This post is Part Two because I actually did a Part One once upon a time, but that was all the way back in January. Obviously a lot has changed since then and the payroll situation is worth revisiting. Let’s start by looking at the 2014 contract status of every player currently on the 40-man roster. The salaries listed are “tax hit” numbers, not their actual take-home salary. That doesn’t matter for the luxury tax calculation.

Some fancy accounting at the time of the trades brought Soriano’s and Wells’ tax hits way down. Wells is actually free, and had MLB allowed it, the Yankees would have actually received a $2M credit against the luxury tax because of the way the money was structured. That won’t happen though, he just counts as zero dollars against the tax.

Given his self-proclaimed “nightmare” season, I have to think Jeter will exercise that player option. It’s very tough to see him opting out and getting more after looking very much like a 39-year-old shortstop whose body is broken down this summer. He could try it and maybe the Steinbrenners will cave, but it would surprise me. Also, that extra $7.5M in bonuses is really $7M because he won’t trigger any incentives this year. All told, Jeter’s current contract can realistically only max out at $16.5M next year.

According to the Collective Bargaining Agreement, that player option year is treated as a one-year contract if exercised. It does not get lumped together with the first three guaranteed years of Jeter’s contract and averaged out. The bonuses are reachable but some ($4M for AL MVP) are more reachable than others ($500k for Silver Slugger). They’re in the contract though, and the Yankees have to account for them. Could you imagine barely staying under the threshold all year only to have Jeter blow it up by winning the MVP or something? That would be hilarious.

Anyway, adding Jeter to the “under contract” guys gives us a guaranteed $94.4M for seven players, or $101.4M when accounting for the $7M in bonuses. That leaves the team $75.6M under the $177M “real” threshold to fill 33 40-man roster spots. Fifteen of those spots will go to the extra guys stashed in the minors, where they make much less than the big league minimum. I’ve seen those spots estimated anywhere from $2-5M total, so let’s stick with the high-end and be conservative. Now the Yankees are at $70.6M to fill 18 big league roster spots.

Barring something completely unexpected, a big chunk of that money will go to Cano. His tax hit could end up in the $20-25M range. Suddenly we go from $70.6M for 18 spots to $45.6M for 17 spots. If the Yankees trust Pineda in the rotation and go with Stewvelli behind the plate again, they could fill eight of those 17 spots on the cheap with the arbitration-eligible guys. Gardner, Robertson, and Nova will be the highest paid arb guys, but none will get more than $6M or so and Gardner’s the only one who will realistically approach $5M. That trio could pull in $15M total on the high end, the other five guys about $7-8M total, just spit-balling. That brings us to $22.6M for nine remaining roster spots.

To use his words, the pink elephant in the room here is A-Rod. If his suspension is overturned, he and his $27.5M tax hit — he’s only 13 homers away from his first $6M bonus, so the team would really have to prepared for a $33.5M tax hit — will be on the roster and splitting time between third base and DH. If his suspension is upheld and he misses the entire year (believed to be the most likely scenario, but who really knows?), suddenly the team has an extra $27.5M to play with. They will need a replacement third baseman, however. The difference between a suspension and no suspension is $22.6M for nine roster spots or $56.1M for ten roster spots. It’s the difference between digging through second tier free agents or going on a nice little free agent shopping spree in the winter.

For the sake of argument, let’s say the team re-signs Cano, Jeter picks up his option, and A-Rod does indeed wind up missing the entire season due to suspension. This is the roster they’d be looking at based on the guys they have under contract/control:

Catchers Infielders Outfielders Rotation Bullpen
Cervelli 1B Teixeira CF Gardner Sabathia Robertson
Stewart 2B Cano RF Ichiro Nova Kelley
SS Jeter LF Wells/Soriano Phelps Claiborne
3B Nix OF Mesa or Almonte Pineda Nuno/Warren
Designated Hitter IF Nunez Nuno/Warren Betances
Wells/Soriano IF Adams or Cruz ?
?

There’s plenty of room for improvement with that roster, so having that $56M-ish to spend is more necessity than luxury. A legitimate starting catcher, a starting third baseman, an outfielder better than Ichiro/Wells/Soriano, a veteran starting pitcher or two, and a handful of relievers would be on the offseason shopping list. If A-Rod is not suspended, they still need all of that stuff (except for a third baseman), but will have only half the money to spend.

The Yankees have an awful lot of cash coming off the books this offseason, which is a very good thing as far as the payroll plan is concerned. The downside to having that money free is all the holes they have to fill. There’s a reason all that money is available — a whole bunch of important, centerpiece-type players are becoming free agents. The offseason should be fun because there figures to be busy with lots of moves, but make no mistake: the Yankees are not in a good position to get under that luxury tax threshold and remain competitive if A-Rod misses anything less than the entire season.

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Since we last met, the Yankees addressed nearly all of their arbitration business by signing Phil Hughes, Boone Logan, and Joba Chamberlain to one-year contracts that were a bit more pricey than MLBTR’s projections. Here’s an updated look at the team’s payroll situation for the upcoming season…

Assuming Robertson wins his arbitration hearing (doesn’t make a big difference either way), the Yankees already have $203.825M in real dollars (not average annual value for luxury tax purposes) tied up in 17 roster spots. They’ve opened each of the last five seasons with a real-dollar payroll in the $203-214M range, meaning they have approximately $10.2M to spend on the remaining 23 40-man roster spots if they’re willing to again open the season at a similar level.

The 15 players on the 40-man but not in the big leagues will earn less than the league minimum — the pro-rated minimum in the show and something much less in the minors. I’ve seen those players estimated at $2.5M total which I think might actually be a little light in the Yankees’ case. Remember, Alex Rodriguez and Michael Pineda are going to open the season on the 60-day DL and will have their 40-man spots occupied by other players. Let’s call it $3.5M for the non-active roster 40-man players.

Ivan Nova, David Phelps, Chris Stewart, Frankie Cervelli, Eduardo Nunez, and Clay Rapada are in their pre-arbitration years but project to open the season on the 25-man roster. They’ll earn something close to the league minimum, so $3M for the group ($500k each). Those six combined with the 15 non-25-man players brings us to $210.325M for 38 players. Jayson Nix and Matt Diaz are the early favorites to fill out the bench, and they signed minor league contracts that will pay them $900k and $1.2M in the big leagues, respectively. We’re now at $212.425M for a full 40-man roster.

The Yankees still have a number of holes to fill, but at this point I think we should all stop expecting them to find a legitimate starting catcher. Maybe (hopefully) they’ll claim George Kottaras and his meager $1M salary to, if nothing else, compete for the job in the camp. It’s not like they’d be taking on a huge financial commitment or anything. They still need a DH and miscellaneous depth pieces, both on the bench and for the pitching staff. More minor league contracts are inevitable, but there still appears to be some room left in the payroll to acquire a real big leaguer who improves the club. I expect that to happen at DH.

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Since our last installment, the Yankees have signed Kevin Youkilis, re-signed Ichiro Suzuki, and avoided arbitration with Brett Gardner. Here’s an updated look at the team’s payroll situation for 2013…

That’s a total of $201.1M for 17 roster spots in terms of real dollars, meaning actual 2013 salaries and not the average annual value for luxury tax purposes. The Yankees have opened each of the last five years with a payroll in the $200-2014M range (again, real dollars), leaving them approximately $13M to fill the remaining 23 40-man roster spots assuming they’re willing to spend a similar amount.

The 15 players who are on the 40-man but will not be on the 25-man active roster will earn less than the league minimum. Those guys have split contracts that pay them one amount in the show (something close to the league minimum) and another in the minors (much less). I’ve been estimating those guys at $500k each to make life easy ($7.5M total), but I’ve also seen others estimate that total at $2.5M. Either way, it eats up a chunk of that remaining $13M or so.

Chris Stewart, Eduardo Nunez, David Phelps, Ivan Nova, and Clay Rapada are all in their pre-arbitration years and will pull down a combined $2.5M or so in 2013. That gives us to $203.6M for 22 roster spots, but the 15 non-active roster guys bring us into the $206.1-211.1M range. Two of those last three roster spots could go to Matt Diaz ($1.1M) and Jayson Nix ($900k), who are not on the 40-man at the moment. Either way, the Yankees have something like $3-8M to fill out the roster if they intend to open the season at a similar to level to the last five years.

I don’t expect New York to acquire a real starting catcher at this point, so their remaining holes include a DH and various bench pieces (right-handed hitting outfielder, utility infielder, etc.). Diaz, Nix, and Nunez could fill out the bench, but I hope they’ll seek out at least one more quality reserve player and some minor league contract guys to provide competition in camp. As much as I’d like to see them acquire Jason Kubel, I don’t see it happening. If the Yankees are only willing to spend that $3-8M or so for those remaining spots, the pickin’s will be very slim.

In case you missed it, earlier today I took a super early look at the team’s 2014 payroll situation.

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(Gregory Shamus/Getty)

Although the calendar just flipped to 2013, I think we’re all looking ahead to 2014 as far as the Yankees’ payroll is concerned. The club plans to get under the $189M luxury tax threshold one year from now, and because of the way the tax is calculated, they’ll have to stay under that amount for the entire 2014 season. The Yankees haven’t finished a season with a sub-$189M payroll in about ten years, so it’s a significant cut o matter how much ownership and the front office try to downplay it.

The luxury tax is based on the average annual value of contracts* on the 40-man roster and is basically adjusted daily, meaning the “tax hit” for players who don’t spend the entire season on the 40-man (called up late, traded, etc.) is pro-rated. Bonuses count as well, as does the team’s portion of the league’s player benefits. Players benefit costs are shared equally by the 30 teams and will be valued at a touch less than $10.8M in 2013, but they are expected to go up to about $12M for 2014. Just like that, the $189M is really $177M as far as what can actually be spent on players.

Obviously a whole lot is going to change over the next 22 months, but the Yankees have started to plan for 2014 by going heavy on one-year contracts this offseason. Here is where the current 40-man roster stands with regards to the 2014 payroll…

The Yankees have just four players under contract for 2014, but those four soak up 42.8% (!) of the $189M limit, or 45.7% of the $177M limit, if you prefer. There’s a decent chance two of those players (A-Rod and Ichiro) will be non-playable and need some kind of replacement. It seems like a safe bet that Jeter will exercise his player option, though I suppose he could decline the option and demand a multi-year contract if he has a huge year. That would be something.

Obviously A-Rod won’t hit all five of those homer milestones in 2014. He’s sitting on 647 career homers right now and will miss about half of 2013 due to his hip injury, and you know what? It would be pretty great for 2014 payroll purposes if he managed to hit 13 homers next season to take care of that first milestone. He’d need to have a monster campaign in 2014 to trigger the 714th homer bonus, which is unlikely to happen at this point. Even A-Rod in his prime would have trouble hitting enough homers to trigger that bonus. Saving that $6M would be pretty big in the grand scheme of things, think of it as the ability to acquire a $17-18M player at the trade deadline.

Nova would need to spend about four months in the minors next season to avoid being arbitration-eligible in 2014, which doesn’t seem all that unrealistic if he continues to pitch the way he did in the second half. Pineda would need to spend about three months in the minors to delay arbitration, but remember, he will collect service time while on the DL at the start of the season. He’d have to be activated off the DL when healthy in May or June, then be optioned down and basically spend the rest of the season in Triple-A. I could see the Yankees sending Pineda down for the two or three weeks to delay free agency a year, but not three months to delay arbitration, especially if he’s healthy and throwing well.

Ten players who project to be full-time big leaguers in 2013 are due to hit free agency next winter, including three starting pitchers and half the bullpen. Cano’s free agency is the elephant in the room, as he’s expected to command a nine-figure contract in an age when so many teams have so much money to spend. You don’t have to try all that hard to envision the Tigers, Dodgers, Angels, Red Sox, Nationals, Rangers, Mariners, Cubs, or Giants making a run at him. I expect the Yankees to re-sign him to a huge contract, and if it’s worth say $23M annually (eight years, $184M?), the Yankees will be left with $73.1M to spend on 35 (!) 40-man roster spots during all of 2014. Doable for sure, but it won’t be easy given the current market.

* I get questions about this every single day. The luxury tax is based on the average annual value of the contracts. Front-loading, back-loading, side-loading, or whatever else you can think of won’t help. MLB will also step in should there be any blatant luxury tax circumvention, such as signing Cano to a one-year, $5M deal for 2014 with a nine-year, $200M player option. It won’t help at all.

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Dec
05

2013 Payroll Breakdown: Part Two

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This is probably something I should have pieced together last week, prior to the Winter Meetings, but better late than never I suppose. Here’s a breakdown of the Yankees’ current payroll situation for 2013…

That adds up to $182.55M for only 15 40-man rosters spots, and that’s real dollars being spent. It’s not average annual value for luxury tax purposes. The 15 players who are on the 40-man roster but not on the 25-man active roster will earn the league minimum ($480k-ish), so let’s just estimate them at $7.5M total ($500k each). That brings us up to $190.05M with ten roster spots to fill.

The Yankees have started each of the last five seasons with an Opening Day payroll between $200-214M (again, real dollars), and I assume they’re willing to spend that much again this year. We know they’re trying to get under the $189M luxury tax threshold for 2014, but they’re theoretically in the clear for 2013. Opening next season with a similar payroll means they have anywhere from $10-24M to spend during the remainder of the offseason, and their holes include a right fielder, a catcher, a good utility infielder, and bench pieces. League minimum guys like Chris Stewart, Eduardo Nunez, David Phelps, Ivan Nova, and Clay Rapada mean it’s really $7.5-21.5M for five roster spots.

Barring an unexpected trade, it’s tough to see the Yankees spending much money on a backstop given the available options and their reported disinterest in A.J. Pierzynski. Even a (very unlikely) trade for Carlos Santana wouldn’t put a big dent in the budget because he’s due just $550k next season as part of his long-term contract. A right fielder could range anywhere from dirt cheap (Nate Schierholtz at $2M?) to pretty pricey (Justin Upton at $9.75M?). Jeff Keppinger could wind up with $4-6M annually while Asdrubal Cabrera is owed $6.5M. I guess that’s the going rate for a replacement third baseman/high-end utility infielder.

As frustrating as it is to watch the Yankees sit on the sidelines so far this week, I do think there’s some good to come from it. Some of the recently-signed free agent contracts have struck me as big overpays, talking specifically talking about guys like Angel Pagan, Marco Scutaro, and Shane Victorino. All nice players in their own way, but they got more money and one more year than I expected. Avoiding an overpay like that is a good thing for New York for obvious reasons, 2014 payroll plan or not. Either way, hopefully they’re planning to spend on the high end of that $7.5-21.5M range over so they can make one more serious run before scaling back payroll.

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Oct
28

2013 Payroll Breakdown: Part One

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The Yankees intend to get under the $189M luxury tax threshold by 2014, and they’re going to have to starting taking action this offseason to make sure that happens. Throughout the winter we’ll check in on the club’s payroll situation as they make roster moves to see how they’re setup for 2013 and potentially 2014 as well. Free agency will open sometime soon depending on the length of the World Series (it’ll start no later than ten days from now no matter what), so let’s first look at the money the Yankees have coming off the books this winter. It’s not a small amount.

I’m assuming Soriano will opt-out of his contract, which seems likely. The Yankees will pay $8.5M of Burnett’s salary next year after paying $11.5M last year, so that’s cool. Feliciano has a $500k buyout coming to him as well. Put it all together — (Pending Free Agents) minus (Scheduled Raises) minus (Dead Money & Buyouts) — and the club will have approximately $72.64M coming off the books this offseason. I’m ignoring minimum salary pickups like Derek Lowe, because who cares about guys making the minimum.

Anyway, I count nine arbitration-eligible players this offseason: Phil Hughes, Brett Gardner, David Robertson, Joba Chamberlain, Boone Logan, Jayson Nix, Casey McGehee, Frankie Cervelli, and Chris Dickerson. Dickerson and Cervelli are on the Super Two bubble, so they might fall short. McGehee seems like a safe bet to either be non-tendered or traded, clearing his salary. Hughes, Robertson, and Logan are due considerable raises (relative to last year’s salary) while Joba and Gardner will get slightly smaller raised due to their injuries. This will be expensive class though, probably an increase of $10M or so compared to last year. Suddenly that $72.64M becomes $62.64M. Once MLBTR posts their salary projections we’ll have a much better idea of the arbitration situation.

With that money, the Yankees will need to find a catcher, a right fielder, a DH, a late-inning reliever, at least one starting pitcher (preferably two), a bench, and miscellaneous depth players. That’s assuming they’re willing to spend as much in 2013 as they did in 2012. It is more than enough money, but Brian Cashman & Co. will need to find payroll-friendly solutions if they’re going to stick to this 2014 payroll plan. Either that or they’re going to be signing a bunch of players to one-year contracts, which isn’t necessarily a bad thing. I’d love to see both Kuroda and Pettitte on one-year pacts, that would be my ideal starting pitching solution.

As the offseason progresses and players to start to sign — both free agents and arbitration guys — we’ll have a better idea of what the Yankees will spend in 2013 compared to 2012. I think this will be the team’s busiest offseason since 2008-2009 (it probably won’t even be all that close when it’s all said and done), but it’ll be interesting to see how the Yankees plug those holes given what appears to be an utter lack of viable alternatives. This might be a winter heavy on trades and not free agent signings.

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