2015 Payroll Breakdown: Part Two

(Presswire)
(Presswire)

Although the Yankees didn’t do anything of note at the Winter Meetings last week, they have been busy this offseason and especially this month. Most of the moves have been on the smaller side, at least relative to last offseason, though the club has remade the left side of the infield, added some pitching, and improved the bench. As a result, the 2015 payroll situation has changed quite a bit since our last update in early-October.

The Yankees insist they will not give Max Scherzer the kind of ginormous contract it will take to bring him to New York, and when you see their current contract commitments, it’s easy to understand why. They have a lot of big contracts gone bad and next year’s payroll is already well beyond the $189M luxury tax threshold. Unless ownership decides to push payroll to a place it’s never been, Scherzer (or James Shields, for that matter) isn’t happening. Here’s where the 2015 payroll sits right now.

UNDER CONTRACT (16 players signed for $206.56M)
Players: A-Rod ($27.5M), CC Sabathia ($24.4M), Mark Teixeira ($22.5M), Masahiro Tanaka ($22.14M), Jacoby Ellsbury ($21.86M), Brian McCann ($17M), Carlos Beltran ($15M), Brett Gardner ($13M), Chase Headley ($13M), Martin Prado ($10M), Andrew Miller ($9M), Chris Capuano ($5M), Chris Young ($2.5M), Brendan Ryan ($1.67M), Esmil Rogers ($1.48M), Jose DePaula ($510k)

Those are each player’s luxury tax “hit,” not their actual take home salary for the 2015 season. The Yankees seem to operate in terms of luxury tax salary because that’s the most important number to them. Those 16 players already soak up over $206M of payroll on their own and that’s just incredible. It’s nearly $13M per player. The scary part is that no one really knows what to expect from the four highest paid players next year due to injuries and other factors.

DePaula is a special case here because the only one of those 16 players who isn’t locked into an MLB roster spot heading into next season. The Yankees signed him to a split one-year contract back in November, so he’ll earn $510k while in MLB and only $175k in the minors. For luxury tax purposes, his salary will be based on his time at each level. If, for example, he spends half the year in MLB and half in Triple-A, his luxury tax hit will be a little more than $342k — half of $510k plus half of $175k. Got it? Good. The other 15 players here are pretty straight forward. They’re all expected to be on the roster.

ARBITRATION-ELIGIBLE (four players projected for $9.2M)
Players: Ivan Nova ($3.3M), Shawn Kelley ($2.5M), Michael Pineda ($2.1M), David Phelps ($1.3M)

The Yankees started the offseason with seven arbitration-eligible players and now they’re down to four. Francisco Cervelli was traded, David Huff was non-tendered, and Rogers agreed to a contract to avoid arbitration on non-tender deadline day. The Yankees cut his salary the maximum amount, so it seems like they said either take the offer or we’re going to non-tender you. Harsh, but not a bad strategy.

MLBTR’s arbitration projections are generally very accurate but there are always some outliers, so these salaries could be high or low. For now they work as good estimates. None of those four players stands out as a contract extension candidate. Pineda and Nova would have if not for all the injuries — Nova is hurt right now and Pineda’s made 13 starts in the last three years. Then again, neither guy received a huge signing bonus as amateurs, so maybe they’d jump at the chance to get a guaranteed payday and the Yankees could low-ball them. I don’t see that happening though. Adding these four to the under contract guys gives us $215.76M on 20 players.

PRE-ARBITRATION (19 players)
Players: Tyler Austin, Manny Banuelos, Dellin Betances, Danny Burawa, Preston Claiborne, Ramon Flores, Didi Gregorius, Bryan Mitchell, John Ryan Murphy, Eury Perez, Branden Pinder, Jose Pirela, Jose Ramirez, Austin Romine, Gary Sanchez, Adam Warren, Chase Whitley, Mason Williams, Justin Wilson

As with DePaula earlier, these 19 players will sign split contracts for the 2015 season, so they’ll earn something close to the league minimum in MLB and something considerably less in the minors. Again, their luxury tax hit depends on how much time they spend at each level. At this point, Betances, Gregorius, Warren, either Murphy or Romine, and probably Wilson are the only guys here we can safely say will spend all of next season in the show. Everyone else figures to either ride the bus up and down or simply spend most of the season in the minors.

Conservatively assuming $600k each for Betances, Gregorius, Warren, Wilson, and one of the backup catchers — the MLB minimum is $507,500 next year, but these guys all have big league time and will earn more than that — brings us to $218.76M for 25 roster spots, including DePaula, who’s probably going to start the year in Triple-A. The remaining pre-arbitration players are usually estimated at $2M or so for the season, bringing us to $220.76M for 39 roster spots. (The Yankees have one open 40-man spot right now.) Good gravy that’s a lot of money.

BONUSES (up to $10.825M)
Players: Alex Rodriguez ($6M with six more homers), Chris Young (up to $3.825M based on plate appearances), Chase Headley (up to $1M based on plate appearances)

Bonuses do count towards the luxury tax and A-Rod’s homer milestone bonus is the big one. He’s six away from tying Willie Mays on the all-time homerun list and that triggers the first of five milestone bonuses. (The next milestone kicks in at 714 homers and he’s 60 away from that, so it won’t happen this year if at all.) A-Rod hasn’t hit fewer than seven homers during a season in which he actually played a game since he was a 19-year-old kid in 1995. Even with two surgically repaired hips and almost two full years away from the game, six homers seems doable for Alex as long as he stays on the field.

Young’s and Headley’s bonuses are all based on plate appearance totals. Headley gets $250k each for his 475th, 500th, 525th, and 550th plate appearance of the season. Young’s bonuses are much more complicated — he gets $150k for his 250th plate appearance and that gradually climbs to $550k for his 600th plate appearances. In a perfect world Headley gets his full $1M and Young gets maybe less than half that $3.825M. (He’d have to hit 400 plate appearances to get roughly half.) I’m not going to include the bonuses in our running payroll total because they aren’t guaranteed, but they are something to keep in mind and something the Yankees have to plan for.

CURRENT 25-MAN ROSTER
There’s still a lot of offseason left and a lot can change, yadda yadda yadda, but here’s the Yankees’ 25-man roster as it stands right now:

Catcher Infielders Outfielders Rotation Bullpen
McCann 1B Teixeira LF Gardner Sabathia Betances
2B Prado CF Ellsbury Tanaka Miller
DH SS Gregorius RF Beltran Pineda Warren
A-Rod! 3B Headley Capuano Kelley
Phelps Wilson
Bench Disabled List Rogers
C Murphy or Romine OF Young Nova ?
IF Ryan ?

The bench question mark would likely be Pirela if the season started today, but maybe he gets beaten out by a non-roster invitee or something in Spring Training. Either way, that spot figures to cost right around the league minimum. The Yankees could go in a lot of different directions for the bullpen question mark, including putting Phelps in the ‘pen and letting Mitchell or Banuelos or DePaula start. Whitley, Claiborne, Burawa … lots of cheap internal options for the final pitching question mark.

Of course, I don’t know many people who want that spot filled with a cheap internal option. Lots of people want Scherzer or Shields or a big trade for Jordan Zimmermann, someone like that. A legitimate top notch starter to improve the rotation. The Yankees already have approximately $220M in luxury tax hits committed to their 40-man roster as it is right now though. Oh, you know what? I totally forgot to add the $12M or so each team has to pay in benefits each season, which counts towards the luxury tax. The Yankees are really at $232M or so for those 39 roster spots. The team finished the 2013 season — meaning after midseason trades — with $236.2M in payroll for the luxury tax, their all-time record. They’re approaching that number now before doing anything in season.

Yes, this is just an estimate and there’s still a lot of wiggle room with the bonuses and arbitration-eligible and pre-arbitration players, but not a ton. I’d guess we’re within $10M of the real payroll number, which is a lot and a little at the same time. Point is, the Yankees are at the very least in the ballpark of setting a new franchise record payroll. Adding someone like Scherzer or Shields would make it all but guaranteed. The Yankees have a ton of money and can afford this — at least I think they can, I haven’t seen their books — but Hal Steinbrenner seems disinclined to go any higher, at least right now. They do always seem to take on money in midseason trades, of course.

Given the numbers and where the payroll sits right now, I think the only player the Yankees would sign for substantial money this offseason would be Hiroki Kuroda, and that’s only because he’ll take a one-year contract and they’re very comfortable with him. If he doesn’t return, bottom feeding for more Capuano types is likely in the cards. That doesn’t mean the Yankees can’t make a significant move, they could always make a big trade where the dollars are even or they shed payroll, but those are hard to do. Aside from Kuroda, I would be very surprised if the Yankees took on any more big money contracts this winter.

email

2015 Payroll Breakdown: Part One

(Presswire)
(Presswire)

The dust is still settling following the end of the 2014 regular season, but the Yankees have already started their offseason by beginning contract talks with GM Brian Cashman. That’s the very first item on the winter agenda — finding a GM, whether it’s Cashman or someone else. Nothing can happen until the guy in charge is in place.

I have no interest in debating the merits of re-signing Cashman now. It’s pretty clearly going to happen regardless of what you or I think. Instead, I want to get a jump on the offseason and free agency by looking at how much money the Yankees will have to spend this winter. It should go without saying this is nothing more than an estimation. Salary figures are available but luxury tax calculations are complex and we really have no idea how much the Yankees can or are willing to spend. All we can have is their recent spending trends.

Anyway, if you’re worried the team may try to squeeze under the $189M luxury tax threshold in 2015 after back-to-back postseason-less years, don’t. Alex Rodriguez‘s hefty salary comes back on the books and last winter’s free agent signings make getting under the threshold all but impossible at this point. Ten players are either hitting free agency or retiring (Chris Capuano, Stephen Drew, Chase Headley, Rich Hill, Derek Jeter, Hiroki Kuroda, Brandon McCarthy, David Robertson, Ichiro Suzuki, Chris Young) but that still doesn’t leave the team with much wiggle room. Let’s break it down.

UNDER CONTRACT (ten players signed for $175.07M)
Players: A-Rod ($27.5M), CC Sabathia ($24.4M), Mark Teixeira ($22.5M), Masahiro Tanaka ($22.14M), Jacoby Ellsbury ($21.86M), Brian McCann ($17M), Carlos Beltran ($15M), Brett Gardner ($13M), Martin Prado ($10M), Brendan Ryan ($1.67M)

Just to be clear, those are luxury tax “hits” since that’s the most most important number to the Yankees. Each player’s actual 2015 salary may be different. The Yankees have ten players under contract next year and the scary thing is that they have no idea what they’re going to get out of A-Rod or Sabathia, plus they’ll be holding their breath every time Tanaka throws a pitch, at least for the first few weeks. Those ten players don’t come with much certainty.

The only contract option the Yankees have to worry about this offseason is Andrew Bailey’s club option. Forgot about him, didn’t you? The team signed him to a minor league deal last spring then rehabbed him from shoulder capsule surgery this summer with an eye on getting him in their 2015 bullpen. The option is valued at $2.5M, so not much but not nothing either. Bailey did not pitch at all this year — Joe Girardi confirmed Bailey had a “few setbacks” in his rehab back in August — and the option isn’t a slam dunk. He might have looked awful towards the end of his rehab, enough to scare the team away. We have no way of knowing.

(Presswire)
(Presswire)

Arbitration-Eligible (seven players)
Players: David Huff (first time), Michael Pineda (first time), David Phelps (first time, Super Two), Ivan Nova (second time), Esmil Rogers (second time), Francisco Cervelli (second time), Shawn Kelley (fourth time, Super Two)

The Super Two cutoff this offseason is projected to be two years and 133 days of service time according to MLBTR, so Phelps will qualify at two years and 156 days. He should clear the cutoff comfortably even if the projection is off a bit. The Yankees managed to prevent Pineda from becoming a Super Two last year by sending him to the minors when his rehab was complete in July, but there’s no more avoiding arbitration now. He’ll get a nice raise in his first time through even after missing all that time.

Huff and Rogers are non-tender candidates. Huff won’t get a big raise at all and, even though he pitched well this year (211 ERA+!), I don’t think he’s someone you go out of your way to keep. Rogers actually made $1.85M this past season and the Collective Bargaining Agreement says the Yankees can’t pay him less than 80% of that next year, or $1.48M. No player has ever had their salary reduced through arbitration either. The Yankees may like Rogers’ arm but there’s no way they’ll keep him at that salary.

Estimating arbitration salaries is damn near impossible, at least for me, but I’m going to ballpark it anyway:

  • Pineda: $3M, up from $500k-ish (awesome when healthy, All-Star in 2011)
  • Phelps: $2M, up from $500k-ish
  • Nova: $3.8M, up from $3.3M (hurt all year)
  • Cervelli: $1M, up from $700k
  • Kelley: $2.5M, up from $1.765M
  • Huff and Rogers non-tendered

Sound okay to you? MLBTR’s crazy accurate arbitration projections are still a few weeks away, so this will have to do for now. If you don’t like Cervelli and/or Kelley at those salaries, you still sign then them trade them, not non-tender them. They have some actual value. Not much, but some.

Anyway, my spit-balled arbitration numbers give us another $12M for five players on top of the $175.07M for ten players above, bringing us to $187.07M for 15 players. Considering I did nothing more than guess with those arbitration numbers, let’s round it up to $188M and go with that. Round numbers are easy. Like I said earlier, this is nothing more than an estimation. In a few weeks we’ll get a better idea of the arbitration salaries once MLBTR crunches the numbers.

(Presswire)
(Presswire)

Pre-Arbitration (18 players)
Players: Manny Banuelos, Dellin BetancesJose Campos, Preston Claiborne, Ramon Flores, Shane Greene, Slade Heathcott, Bryan Mitchell, John Ryan Murphy, Eury Perez, Jose Pirela, Jose Ramirez, Antoan Richardson, Austin Romine, Gary Sanchez, Zelous Wheeler, Adam Warren, Chase Whitley

Richardson and Wheeler will likely be cut loose this winter, maybe Perez too. He is out of minor league options (I think) but could stick around all winter and come to camp to compete for a bench job. Then again, if the Yankees need a 40-man spot in the offseason, he’ll probably get the axe. Either way, the pre-arbitration guys who get knocked off the 40-man roster will be replaced by more pre-arbitration players (Rule 5 Draft eligible players, waiver claims, etc.), so the salary numbers are a wash.

Of those 18 players, only Betances and Warren are locks to be on the Opening Day roster. Greene is a good bet to make the team in some capacity. Something would need to happen with Cervelli for Murphy or Romine to crack the big league roster. Claiborne and Whitley are classic up-and-down depth arms while Perez, Pirela, and Flores could compete for a bench job, I suppose. The rest — Banuelos, Heathcott, Ramirez, and Sanchez — are ticketed for the minors.

Like most other teams, the Yankees have a sliding scale for pre-arbitration salaries based on service time and awards voting, stuff like that. Warren and Betances won’t make the league minimum next season even though the Yankees could technically renew their contracts at that salary. There’s a relationship aspect to this. You don’t want to upset players and agents by cheaping out with pre-arbitration salaries. Conservatively assuming $600k each for Warren, Betances, and Greene puts us at $189.8M for 18 players with this roster:

Catcher Infielders Outfielders Rotation Bullpen
McCann 1B Teixeira LF Gardner Tanaka Betances
2B Prado CF Ellsbury Pineda Warren
DH SS Ryan RF Beltran Sabathia? Kelley
? 3B A-Rod! Greene ?
Phelps ?
Bench Disabled List ?
C Cervelli ? Nova ?
? ?

Some of those open spots can and presumably will be filled internally. Claiborne or Mitchell or Ramirez or Jacob Lindgren or Nick Rumbelow or any number of other reliever could work their way into the bullpen. Maybe Bailey and Huff too. Pirela or Perez could squeeze onto the bench. The Yankees do have some options in house but no long-term answers to any of those question marks. There’s no shortstop to push Ryan to the bench, for example.

Aside from an injury-fueled outlier in 2013, the Yankees have opened the season with a payroll in the $195M to $210M range every year since 2008, give or take a few million here or there. That $189.8M covers 18 MLB roster players, though there will be another 15 players on the 40-man roster but not the active 25-man roster that count against the luxury tax. They’re usually estimated at $2M (they earn lower salaries in the minors). There’s also $12M or so in benefits every team must play. Now we’re up to $203.8M for 17 active roster players plus Nova.

If the Yankees are going to stick to that $210M or so payroll limit, they have very little room to maneuver this winter. They need a shortstop (pushing Ryan to the bench), preferably another starter (pushing Phelps or Greene to the bullpen), and miscellaneous depth pieces at the absolute minimum. Retaining David Robertson and adding another starting caliber infielder at second and/or third base seem like two items that should be pretty high on the offseason to-do list as well.

The Yankees don’t have nany pieces to offer in a cash-clearing trade either. Dealing Cervelli or Kelley is nothing more than rearranging furniture at their salary levels. Same with Phelps or even Pineda. To clear some real money, they’d have to trade Gardner or Prado, two of their three or four best offensive players. How do you trade them and realistically improve the team? I’m sure it’s possible. I just don’t see how. It would take some creativity and luck — not many clubs are willing to take on useful big money pieces in exchange for useful low-cost pieces. The Yankees are generally the salary dumpees, not the salary dumpers.

George King recently reported the “early industry vibe is the Yankees aren’t going to spend big money this winter” and I totally buy that. Seems completely plausible after spending all that money last winter and winding up with a worse record and fewer runs scored. They took their shot(s) last offseason and may now focus on tinkering rather than overhauling. And, to be honest, the Yankees aren’t one or two big free agents away from contending either. Figuring out how to get this club back on the right track without ballooning payroll will be one heck of a task for Cashman & Co.

AP: Yankees to open season with $204M payroll

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.

2014 Payroll Breakdown: Part Five

(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.

2014 Payroll Breakdown: Part Four

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.

2014 Payroll Breakdown: Part Three

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).

2014 Payroll Breakdown: Part Two

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.