Tagged: Luxury Tax

Yankees Dreams Do Not Equal Reality…

We may want it all but…

We’re the mighty Yankees. We should have every available superstar, right? To listen to some fans, that seems to be the case. But in reality, this is a business and the magical figure of $197 million to reset luxury tax penalties may as well be a hard and fast salary cap. Team Hal will do whatever it takes to stay under that mark.

It’s nice that free agent pitcher Yu Darvish has narrowed his choices to six teams, including the Yankees. But in the grand scheme of things, it means nothing. The Yankees are not going to pursue Darvish at this point given the pitcher’s desire for a contract in excess of $20 million per year annually.

Yesterday, Michael Kay reported on his show that the Yankees had previously offered Darvish 7 years at $160 million but had given him a short window (48 hours) to accept. When Darvish didn’t bite, the Yankees allegedly pulled the offer. No offense to Michael (he’s one of my favorites), I struggle with the thought the Yankees really made that type of offer with the current roster construction and cost. If the Yankees really did make that level of offer and Darvish did not accept, he was foolish in this stagnant market.

I really liked Yu Darvish when he first came to the United States and had been hopeful the Yankees would sign him before he was snagged by the Texas Rangers. But now, while I agree he is an upper echelon pitcher, I don’t feel that he’d be the right fit. The primary reason is money. The reality is that the Yankees will keep 2018 payroll below the $197 million threshold. Even if the Yankees moved contract(s) to make room, I don’t think it would be the wisest path to add a multi-year, greater than $20 mil per year, contract for a pitcher on the wrong side of 30. If Darvish was the missing piece to guarantee a World Series, it would be one thing but he’s not. The only thing that I like about a Darvish signing is that he wouldn’t cost multiple top prospects like a trade for Gerrit Cole would. The reality is that arms like Justus Sheffield and Albert Abreu could be out-performing Darvish in the big leagues within the next few years.

While Manny Machado would look great in Pinstripes, the reality is that he will not be part of the 2018 Yankees. At the moment, the Arizona Diamondbacks appear to be the frontrunner…if the Baltimore Orioles decide to trade their very talented third baseman. The D-Backs, if they acquire Machado, would move him to his position of preference (shortstop). While I think Machado should stay at third (for the sake of his surgically-repaired knees), you wonder if shortstop becomes Machado’s top priority when he hits the free agent market after the upcoming season. If so, the Yankees will not be in play given the team already has a strong shortstop. Didi Gregorius, the unsung hero of the 2017 Yankees, is not going anywhere.

Photo Credit: Getty Images

I am not opposed to the Yankees filling second and third bases with Gleyber Torres and Miguel Andujar, respectively. I just don’t feel the Yankees would entrust two critical positions to rookies at the same time.

GM Brian Cashman is talking like Torres could break camp as the starting second baseman but it makes the most sense to keep him at Triple A for the first few weeks to delay his MLB service time and push his free agent eligibility back a year. Hal Steinbrenner, the accountant, is never going to go hog wild with payroll, even if he is successful in resetting luxury tax penalties this year. Unlike his father, he will always be concerned about the bottom line. I am comfortable with Tyler Wade and Ronald Torreyes covering second until Torres is ready. I buy into the opinion that we didn’t see the real Wade last year and he could be more like the player he was for the Scranton/Wilkes-Barre RailRiders this year. Training camp will be very critical for him. But, really, there’s no question second base belongs to Torres regardless of what Wade is able to accomplish.

As for third, Andujar, if he isn’t traded, will be watched very closely at training camp as he attempts to disprove the perspective that his defensive game hasn’t caught up with his bat.  Another name that has been suggested, Kyle Holder, seems to be a stretch. Holder is 23 but the highest he has played was at High A Tampa last year. It would be very difficult to make that type of leap for the defensive wizard. He’s not a power bat but in the Yankees lineup, he would not need to be. Realistically, I think Holder is still a season or two away. My opinion remains that the 2018 Yankees third baseman is not presently on the roster. But if I am wrong and Andujar heads north to the Bronx with the big league club in late March, so be it. I’ll be a fan and supporter.

I was glad to see the Yankees settle two of their potential arbitration cases yesterday when they signed Tommy Kahnle and Aaron Hicks to one-year contracts for $1.325 million and $2.825 million, respectively. With today’s deadline to exchange arbitration figures, it’s possible that we could see other signings. The other arbitration eligible players are Didi Gregorius, Dellin Betances, Sonny Gray, Adam Warren, Chasen Shreve and Austin Romine. The Yankees want to avoid contentious battles like the one with Dellin Betances last year, even though they won. Of the players, I’d really hate to see Gregorius or Gray go to arbitration. They are such huge keys for the upcoming season. The worst way to start the year would be for them to go into a room to hear about their faults from the team’s perspective.

My general sense is that the Yankees will make at least one other significant move before training camp but it’s equally possible that ‘what you see is what you get’ with the current roster. I expect other non-roster invitees beyond infielder Jace Peterson but it’s hard to classify any of those as “significant”.

Let’s see what today brings…

Go Yankees!

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Ready, Set, Stall…

The Most Boring Off-Season Ever…

It’s kind of funny to say that this has been one of the slowest Hot Stove Leagues in recent memory, especially when your team acquires the best slugger on the planet, but I can’t remember the last time the majority of the top free agents were unsigned in January.

The Yankees never figured to be big players in the free agent market, given their desire to keep the ‘Alex Rodriguez-freed’ payroll under the luxury tax threshold of $197 million for reset purposes. But then the Los Angeles Dodgers made their big salary relief trade with the Atlanta Braves which gave them the same opportunity as the Yankees to reset their luxury tax rate so you have baseball’s two biggest spenders on the sidelines.

My personal hope is that the slow free agent market leads Todd Frazier back to Pinstripes where he belongs. Of course, rumors circulated yesterday that the Yankees had been back in touch with the Baltimore Orioles about third baseman Manny Machado. I am not convinced the Orioles would trade their best player to the Yankees despite his impending free agency, but conversely, I am not sure the Yankees should give up some of their best prospects for a guy they could sign as a free agent next fall. I wouldn’t want to give the O’s the bullets to reload. But then again, if the O’s make a trade this winter, they’ll bring in quality talent from somewhere. As long as Machado is on the table, it probably keeps any potential deal with Todd Frazier on ice (no pun intended for those of you in New York and New Jersey).

Mark Prior has found his way to the Los Angeles Dodgers as their new bullpen coach, replacing Josh Bard who decided to take a seat on the Yankees bench next to new manager Aaron Boone. The Yankees’ one-time top draft pick (he didn’t sign in 1998) and former Chicago Cub was most recently the minor league pitching coordinator for his hometown San Diego Padres. Prior attempted to make the transition to a relief pitcher in the Yankees organization during the 2011 season but could never capture the potential that was once promised to him through a series of arm injuries. I hope that he finds greater success with his coaching career.

Some teams have been very active with minor league contract signings carrying training camp invitations, but until yesterday, the Yankees had been quiet. It changed when they signed former Atlanta Braves infielder Jace Peterson to a minor league deal on Friday. Peterson has a high pedigree (he was once a first-round draft selection for the San Diego Padres) but he’s never been able to hit in the Major Leagues. He found his way to the Braves for the 2015 season but underwhelmed the team as its starting second baseman that year. The career .234 hitter was released by the Braves last month when he was non-tendered in advance of arbitration. I can’t see him as more than training camp fodder and help with the Scranton/Wilkes-Barre RailRiders, but you can never have enough competition for Major League jobs. Good luck to Peterson as he attempts to find his place with his third MLB organization. New coaches, new scenery….who knows, crazier things have happened. In a bit of irony, Peterson made his MLB debut during the 2014 season when former and now current Padres third baseman Chase Headley was placed on the DL. Peterson seems like this year’s Pete Kozma signing to me. If he could only hit, he looks like a version of Austin Romine’s brother Andrew with an ability to play multiple positions.

Jace, just a note, please don’t scratch the big guy…

Photo Credit: Steve Mitchell-USA TODAY Sports

The New York Post ran an article a couple of days ago indicating that GM Brian Cashman is prepared to go into the season with youngsters at second and third, meaning Gleyber Torres (or Tyler Wade) and Miguel Andujar. I still find it difficult to believe that the Yankees would entrust both critical positions to youth and inexperience (at the MLB level) at the same time. The Post article included Cashman’s words “if the market changes, we’re prepared to adjust” which shows that this is just a waiting game and Cashman is hoping for prices to fall.

I am excited about Gleyber Torres and the future of second base in his hands. I’ve seen so many say that he should open the season as the starting second baseman. For as much as I love the guy, the Yankees MUST delay the start of his MLB service time to pick up an additional year before he hits free agency.  That only means that he’ll spend a few weeks in Moosic, PA focusing on solely the nuances of second base before hitting the main stage in the Bronx. It will be well worth the wait for so many reasons. At this point, it’s just fine-tuning but for a guy coming off Tommy John surgery, even a position player with his non-throwing arm, a few weeks in Triple A would be beneficial. In the interim, Ronald Torreyes and Tyler Wade deserve the opportunity to keep the position warm for Torres.

Photo Credit: Andrew Savulich-NY Post

The guys over at NJ Advance Media for NJ.com do a great job covering the Yankees. Randy Miller posted a column today featuring a scout’s take on top Yankees prospects. It is well worth the read. As a huge fan of pitching prospect Albert Abreu, I thought the scout’s take on the young right-hander was excellent: “I love him. You’re going to like this kid. I saw him in the Fall League. He was throwing 91-97. He sat 94. He’ll show you a plus curveball at times that is tight with depth. His changeup needs some refinement, but it has a chance to be a plus pitch in the future. He’s aggressive. He gets swings and misses. He’s pretty good with a good body. And he’s a good makeup kid. His delivery gets out of whack at times and it affects his stuff. When he stays square and direct to the plate and he’s working downhill, he’s good. I give him a chance to be a No. 3 starter, a middle-of-the-rotation type guy. If everything comes, he has an outside chance to be a No. 2 starter. Based on what I’ve seen, I like him better than Chance Adams.” I know that Justus Sheffield is going to be a great Yankee, but the scout’s last line about Abreu is the very reason that I’d gladly give up Chance Adams in a trade for a proven MLB starting pitcher. I am very high on Abreu and I am excited about his future in pinstripes.

It’s such a great time to be young and a Yankee for so many of these guys. Who wants to join?…

Photo Credit: Getty Images

Go Yankees!

The Law of Diminishing Return…

 

Dollars to donuts…

Joel Sherman has a good post today with his Hardball Blog in The New York Post entitled ’What would George do?’ among questions in Yanks’ $189M quest.

I do not dispute the reasons for why the Yankees are financially motivated to get under the $189M threshold given the reduced tax penalties it will create for future years in addition to the savings in 2014.  But can the Yankees maintain a championship caliber club in their quest to reconcile the bottom line?  Something’s got to give, and I am fearful that it will be the quality of the Yankee clubs put on the field in the next few years.

That sounds kind of ridiculous to say when other clubs have proven you can succeed with lesser dollars, but in Tampa, for example, it was years of high draft picks that filled the cupboards with premier players like Evan Longoria and David Price.  I see the same thing happening in Kansas City as they’ve been building solid, young talent.  The Yankees, on the other hand, have been picking at the bottom end of rounds for years and there have been more than a few misses along the way.  There has been a renewed emphasis on the farm system in recent years, however, it is still not within the upper echelon among the other clubs.

This paragraph in Joel Sherman’s post cuts to the heart of the problem:

“The aging/diminishing Alex Rodriguez, CC Sabathia and Mark Teixeira plus the roughly $11 million each team is charged for a benefits plan costs about $84 million toward the luxury tax each season. That would give the Yankees roughly $105 million to complete a contender in 2014. But say Robinson Cano gets $22 million a year. Now it is $83 million for everything else. That is doable, but less so after a year in which the Yankees’ farm system regressed horribly, potentially derailing the expected pipeline of lower-cost talent.”

I checked the cities of Baltimore, Boston, and Tampa against Manhattan on a cost of living calculator and found that the equivalent salaries in New York would need to substantially greater to maintain the same cost of living.  A Boston salary would need to be 63.10% greater, Baltimore 89.70%, and Tampa 145.28%.  Okay, not every player will live in Manhattan and that’s probably an extreme, but it still shows on the affordability scale, it simply takes more dollars to live in New York than anywhere else.  Other places like Florida and Texas have no state income tax.  I am sure that when A.J. Burnett got to Pittsburgh, it wasn’t just the reduced spotlight that helped his successful turnaround, the realization of how much further his millions would go in the Steel City probably factored into the equation.

As it stands at the moment, it is very likely the Yankees enter the 2013 season as a weaker team than the one who was swept by the Detroit Tigers last month.  I know, a lot can happen between now and then, but for the sake of this post, I have only the insight for where we stand today.  I felt that it was essential for the Yankees to re-sign Hiroki Kuroda.  As soon as there were indications that Kuroda would consider a one-year deal, the Yankees should have been aggressive in locking him up.  But by delaying, the two LA teams are stepping up their pursuit and the area has an advantage given Kuroda’s familiarity and close ties to Southern CA.  I believe that his wife and two daughters still reside in California.  Losing Kuroda from the rotation will hurt.  I am not convinced that David Phelps can match the level of performance that Kuroda achieved this past season.

The sooner the Yanks can move Alex Rodriguez to full-time DH will be better.  They need a quality, front-line third baseman who can hit in the clutch.  Sadly, there are not any high level prospects so free agency or a trade might be the only options.  Given the former is probably not where the team intends to put its “limited” dollars, a trade is most likely the only solution.  Of course, that will only deplete the Yankees of other young talent.

I guess Moneyball is alive and well and living in the Bronx.  It is time for Brian Cashman to prove to the critics that he is a good general manager despite the Yankee resources.  I do believe that he is so it will be interesting to see how the next few months unfold.  I have read those who believe the Yankees will ultimately spend without regard to 2014, but given Hal Steinbrenner’s financial background, I see the team sticking to its plan.  Time will tell if his stance is justified.  Perhaps this is a radical, game-saving approach that will bring fiscal responsibility back into the game.  Then again, maybe not…

–Scott

 

$189 Million by 2014 or bust…

 

His accounting degree was the first tip-off…

So, it’s true that the fiscal conservative in Managing General Partner Hal Steinbrenner is coming to the forefront.  It’s clear that the Yankees have shown considerable restraint in their financial decisions in recent years and none more evident than this off-season when the Yankees watched and let others pay exorbitant dollars for free agent talent.  It was widely rumored that the Yankees have their eye on 2014 and the desire to get their payroll under the $189 million threshold for luxury tax purposes.  But now that Hal Steinbrenner is on record for the stated goal, it will be interesting to see how this plays out in the next few years.

While there are other guaranteed contracts, the most notable in 2014 will be Alex Rodriguez.  If he continues his deterioration as a star player, that $25 million in 2014 is going to look like a huge albatross.  I haven’t tallied the guaranteed dollars, but it’s clear that the next few years will see similar off-seasons like the one we just experienced.  No significant free agent signings, bargain basement ‘right before training camp’ deals like the one given to Raul Ibanez, and trades for young (and cheap) talent.  It will also mean the Yankees won’t overpay to retain talent, which probably shows the door to Nick Swisher.

Meanwhile, teams like the Los Angeles Angels and the Texas Rangers are profiting from regional TV deals (not to mention previous dollars they received through revenue sharing at the Yankees’ expense).  So, it will be other teams splurging on big talent, and the Yankees as a passive by-stander.  There is some logic in the team’s decision but I am concerned that it will bring an end to the winning run the Yankees have been on since the early 1990’s.  As a Yankees fan, the 1980’s were very difficult.  Yes, we were spoiled by George Steinbrenner’s win at all costs mentality, but 90 to 100 loss teams wearing the grand tradition of the pinstripes seems sacrilegious to me.  I am sure that the YES Network is not excited at that prospect either.  But if the stars, like A-Rod and Derek Jeter, continue to wither while eating up valuable salary dollars, the team is going to develop a Pittsburgh Pirates feel to it.  Very limited dollars to fill the holes.

In many respects, it is unfair that the salary threshold is equal among teams given the higher cost of living in New York, combined with the increased pressure that goes with playing on the biggest stage.  Once the ownership situation with the Los Angeles Dodgers is settled, there will be a slugfest in LA as the Dodgers spend to rebuild their legacy and prominence in the City of Angels.  Meanwhile, in New York, the Mets and Yankees will be scooping up the leftovers from the Pittsburgh Pirates and Kansas City Royals.

Okay, I might be a bit pessimistic but there will be a number of very difficult decisions to be made between now and 2014 as the Yankees attempt to reach their goal.  If the Yankees win the 2014 World Series, then credit Hal Steinbrenner for being one of the greatest owners in Yankees history.  If not, how long will it take to recover?…

Open mouth, insert foot…

You know, I don’t really care what Bobby Valentine is saying in Red Sox camp.  I know that if he were the Yankees manager, he’d be making disparaging remarks about the Sox.  It just goes with the territory when it comes to Bobby V.  Whatever helps him get motivated.  Speaking of Red Sox managers, it was really weird seeing the ESPN clips of Terry Francona in Yankees camp, hugging Yankees and talking with Joe Girardi and his coaches.  Unlike Valentine, I have a great deal of respect for Terry Francona.  Regardless, the Bobby V ingredient should make the Yankees-Red Sox rivalry very spicy this year.  It kind of sets the stage for Joe Maddon and the Tampa Bay Rays to steal the show…

I’m sure that A-Rod wasn’t saddened by the news…

Since I am on the topic of the Red Sox, I should say congratulations to Red Sox catcher Jason Varitek, who announced his retirement today.  He was a hated players at times, but like Jorge Posada, his intensity was off the charts.  He is the kind of guy you hate on another team but you’d love to have him on your team.  I think his baseball career is only getting started as I see future success as a manager for him.  I could even see him being an eventual replacement for Bobby Valentine.  Regardless of what he decides to do, we haven’t heard the last of Tek.

If you can’t beat ‘em, join ‘em…again…

Back to the Yankees, I am glad to see the return of third baseman Eric Chavez.  It took a long time…right up to the start of training camp…but it got done.  I liked Chavez in his years as an Oakland A, and while he isn’t the player he once was, he is a great role player and teammate.  He is also a very sorely needed third baseman given the fragility of the guy in front of him.  Yes, Chavez is an injury risk but if he can stay healthy, he’ll be an invaluable part of the 2012 Yankees.

The Seattle Mariners pipeline worked last time (Tino Martinez)…

I liked the Yankees signing of former Seattle Mariners closer David Aardsma.  I don’t think he’ll be in the running for Mariano Rivera’s replacement when THAT day comes, but it was a low risk, high reward signing.  Having 7th and 8th inning options in late summer of David Robertson, Rafael Soriano, Joba Chamberlain, and Aardsma is a manager’s dream.

Best wishes for a fast return…

Here’s hoping for a speedy recovery for former Yankees pitcher A.J. Burnett.  In a batting incident the other day, a failed bunt attempt led to a broken right orbital bone in his face.  I was frustrated with Burnett as a Yankees pitcher, but I’ll never dispute that he is a great guy and a terrific teammate.  I am hoping that the move to Pittsburgh allows Burnett to flourish and hope the latest injury is not a precursor of things to come.

Don’t trip on the snow rounding first…

It is hard to think of baseball when it is snowing.  Snow has been a rare commodity in Minnesota this year, but we received slightly more than a dusting this week.  Living by Target Field, it’s strange to see the stadium and the surrounding snow while thinking that Joe Mauer and company are practicing to get ready to make the trip home to Minneapolis.  I have already bought my tickets for when the Red Sox and Yankees come to town, however, the Yankees don’t arrive in Minneapolis until late September.  I hope that AL East will be decided in the Yankees favor by that time…

Names I’ve known all of my adult life, and in some cases, when I was just a Daydream Believer…

Whitney Houston, Gary Carter and now Davy Jones?  This has not been a fun couple of weeks…

 

–Scott