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The Yankees Might As Well Wait Another Year For The Luxury Tax Threshold ‘Reset’

With Derek Jeter and Hiroki Kuroda  coming back for one more year, plus the uncertainty of the A-ROD suspension, why not push back the reset of the Luxury Tax Threshold, since you still have a chance to do this in 2015.  By then, all of your older players will be another year older, and #13 will be back to wreak havoc on your financial flexibility for years?

With Derek Jeter and Hiroki Kuroda coming back for one more year, plus the uncertainty of the A-ROD suspension, why not push back the reset of the Luxury Tax Threshold, since you still have a chance to do this in 2015? By then, all of your older players will be another year older, and #13 will be back to wreak havoc on your financial flexibility for years?

By Chuck Booth (Lead Baseball Analyst/Website Owner):

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Our Lead Writer Paul Sullivan (feel free to call him Sully) is right about Brian Cashman….The guy should be fired for his ineptness of stockpiling the Minor League System since taking over the reigns in 2006.

If you are not subscribing to Sully’s podcast daily (about 20 minutes), please do so here.  He talks complete sense for an objective perspective.

I will also denote that I am a Yankees fan.  I was one of the 1st to destroy the clubs winter last year, when they never addressed their Catching situation, and said they should do some more moves to bolster the club.

Not that Cashman listened to me at all, but he grabbed 3 players I said he should (1 reluctant player he never wanted – (good one Cash) was Alfonso Soriano). 

The other 2 players he picked up were Vernon Wells and Mark Reynolds.

Yankees win the 2009 World Series

Cashman and his management team, plus scouts have brutalized the Minor League System to the point where they can never turn to it in a time of need,  The club doesn't necessarily have to go under the luxury tax in 2014 - as the CBA states you only have to go under the total one year for the reset option.  The Bronx Bombers could still do this in 2015 - to be able to spend over limit to commence the 2016 campaign (the last year of current CBA).  As more than 5 time offenders, the Yankees pay a 50% tax on all money spent over the set amount,  In 2013, the club had to fork over a record total of $25 MIL.

Cashman and his management team, plus scouts have brutalized the Minor League System to the point where they can never turn to it in a time of need, The club doesn’t necessarily have to go under the luxury tax in 2014 – as the CBA states you only have to go under the total one year for the reset option. The Bronx Bombers could still do this in 2015 – to be able to spend over the limit, commencing for the 2016 campaign (the last year of current CBA). As more than 5 time offenders, New York pays a 50% tax on all money spent over the set amount. In 2013, the club had to fork over a record total of $25 MIL.  The limit on the Tax was $178 MIL, and their team payroll was near $229 MIL.

The reason I liked these moves was for the Luxury Tax Threshold.  The teams they picked them up from ate the majority of the contracts left, leaving a tax friendly total for New York

The team also did not look good to re-sign Robinson Cano from the get – go – and maintain financial sanity.

Again like Sully often says, the reason the Yankees GM has to do these moves, is because of his poor draft and trading record, has not garnered him these replacement (or depth) from Scranton Wilkes Barre or the Trenton Thunder.

The Yankees still finished in 1st for AL attendance during the 2013 campaign, with 3,279, 589 fans coming to Yankee Stadium III, however there were more empty seats than ever last campaign.

The Yankees still finished in 1st for AL attendance during the 2013 campaign, with 3,279, 589 fans coming to Yankee Stadium III, however there were more empty seats than ever last campaign.  For other fanbases to think the New York team could just try to build their franchise with patience like other cities are able to would be a little bit naive.  The idea is to blend the new and old players, but the Pinstripers have not fared well at the Draft Table, and constantly fight father time with their team perennially.  In a way, they have at least acted smarter to not burden the books with a 10 YR Deal/$240 MIL like departing 2B Robinson Cano is due to receive in Seattle.  This is a Billion Dollar plus enterprise

Now that the offseason has started, I agreed with the clubs moves in Brian McCann, and believe it or not, I also think the Jacoby Ellsbury deal is a risk the team had to put out there.

The one move I don’t like is the 3 YR/$45 MIL for the 36 Year Old Carlos Beltran.  I understand he has an awesome playoff pedigree, but you just threw the door shut on Brett Gardner‘s value, or even Ichiro Suzuki for that matter.

The team is aging by the minute.  Luckily for the Yanks, they are set to receive some salary cap relief from the Alex Rodriguez contract in 2014, but guess what, it is coming back in 2015 to finish.

New York had a chance to reset the Luxury Tax before the Beltran deal, and now, if the team wishes to do this, it will be at the expense of Starting Pitching and relief help.

In my article last week, the Yankees are already in the range of  $174 – $176 MIL (based on raises given in Arbitration to David Robertson and Brett Gardner coming.)

You still lack at least 2 Starting Pitchers, and a good reliever to at least setup Robertson, or to close.

I honestly think the club has the perfect DH in 2014 in the name of Alfonso Soriano.  Ellsbury would man left, Suzuki to play RF – and Wells would be your 4th OF.

Soriano only makes $5 MIL in 2014 for the team towards the Luxury Tax – because the Cubs are eating $13 MIL themselves to get out from under.

The Yankees would have been better to a few Million Dollars to Mark Reynolds on a 1 YR deal.

You have a wonky SS (at age 40) coming back for the club – trying to recover from a broken ankle. 

Teixeira virtually missed the whole year.   Now, because you inked Beltran to a deal, these two are blocked from as many AB they could have seen at DH.

I don’t think the Yankees should have been using the Designated Hitter for Jeter very much anyway.

Having said all of this, they are now stuck with the team assembled.

The Luxury Tax Threshold penalty for 5th time repeat offender is at 50% of the franchise’s spending over the limit. 

In 2013, the Bronx Bombers spent nearly $25 MIL for the penalty. 

Don’t feel bad for the organization folks, since they recovered more than $50 MIL in injury insurance off of Alex Rodriguez, Kevin Youkilis, Derek Jeter, Mark Teixeira and Curtis Granderson.

Gardner is signed for 1 more year before he hits Free Agency.  He will either be dealt, or be unlikely to re-sign, because his value will be high.  In going forward, he is too similar to Ellsbury, both in injury and in play.

Soriano is a bargain at his 2014 deal, before he will hit the open market again.  With Beltran in the loop now, it is likely his last year in New York too.

David Robertson will also be a Free Agent after this  next campaign. 

Derek Jeter and Suzuki are also on their last years of their deal, and while Wells is 5th on the current OF depth chart, he is not signed past 2014 either.

Lest we forget, the team had to throw $16.5 MIL Hiroki Kuroda‘s way in 2014 – for him not to leave the MLB forever.

So…..Why not wait until 2015 to reset the Luxury Tax Yankees?

The Luxury Tax Threshold in the Collective Bargaining Agreement states that you only have to fall under the cap for one year to reset this multiple offender penalty.

Even if the CBA is expiring after the 2016 year, the Yankees will have qualified to be at a zero percent penalty heading into that very year.

2014 Contracts in MIL Annual Average Vakue – AKA AAV (Age)

1. 1B Mark Teixeira – 23.0  (32)

2. SP CC Sabathia – 22.8  (32)

3. CF Jacoby Ellsbury – 21.9 (30)

4. C  Brian McCann – 17.0  (29)

5. SP Hiroki Kuroda – 16.5  (37)

6. LF/DH Carlos Beltran – 15.0 (36)

7. SS Derek Jeter – 12.0 (40)

8. OF Ichiro Suzuki – 6.5 (40)

9. ** OF Brett Gardner – Estimated $5 MIL for ARB 2014 (29)

10. ** RP David Robertson – Estimated $5 MIL for ARB 2014 (27)

11. OF/DH Alfonso Soriano – $5 MIL (37)

12.  RP Matt Thornton – $3.5 (37)

13. INF/OF Kelly Johnson – $2.8 MIL (32)

14. 2B/UT Brian Roberts – $2.0 MIL + Incentives (36)

15. OF/DH Vernon Wells – $2.4 MIL (35)

16. INF Brendan Ryan – $2.0 MIL (30)

17. SP Ivan Nova – $2 MIL projected dollars in Arbitration (25)

18. RP Shawn Kelly – $1.5 MIL projected dollars in Arbitration

19. C – Francisco Cervelli – 800 K in projected dollars in Arbitration (26)

Total after these 19 players is $178.5 MIL towards AAV

Entry Level Contracts – 2014 Yankees. $3 MIL

20.  SP – David Phelps

21.  SP – Michael Pineda

22.  INF – Eduardo Nunez

23.  RP – Cesar Cabral

24.  RP – Adam Warren

25.  RP – Preston Claiborne

Total Payroll look right now is $180.5 MIL on 23 players – with a look to sign 2 FA’s

(This also assumes that the Yankees get out from the A-Rod contract with a full year suspension in 2014…not guaranteed.)

Why not add….

1 Starting Pitcher – $15 MIL per year (  Matt Garza – 4 YRs/$60 MIL) Payroll up to $196 MIL.

2 Starting Pitcher  – $10 MIL per year  (Masahiro Tanaka – 8 YRs/$80 MIL) Payroll up to $206 MIL.

1 back up 1B/3B -(Mark Reynolds – 1 YR/$4 MIL w/incentives).

If the team adds $33 MIL to the $180.5 right now, then it is $214 MIL, – this would only equate to a $12.5 MIL penalty for 2014.  If A-Rod only gets 50 games, then add $20 MIL more in salary and $10 MIL in luxury tax.

You could still add more payroll at the Trade Deadline.  The team should do this for the last stand at a champion.

Of course you could always trade Brett Gardner for an entry level contract – that would help in future years of play.

Another idea would be to move Catching prospect Gary Sanchez at the 2014 Trade Deadline for a team controllable Starting Pitcher for the 2015 year.

Since you have McCann as a backstopper for many years to come, you can always look for another Catcher later.

It is all about the cash (no pun intended for the Yanks GM).  New York resetting the luxury tax at least once in the next 2 years, will save them about $75 - 90 MIL in penalties between the 2016 - 2020 seasons.  Once this franchise does reset the clock, MLB should step in with a new Tax system because who is stop them from spending between $250 - $275 MIL?

It is all about the cash (no pun intended for the Yanks GM). New York resetting the luxury tax at least once in the next 2 years, will save them about $75 – 90 MIL in penalties between the 2016 – 2020 seasons. Once this franchise does reset the clock, MLB should step in with a new Tax system because who is stop them from spending between $250 – $275 MIL?

If the team were to wait until 2015 for the Luxury Tax Reset, then the clubs best chance to win in the next 5 years is still in 2014.

2016 will see Rodriguez, Sabathia, Teixeira and Beltran all be in their upper 30’s and Rodriguez would be 41.  I actually think he will be DFA’d by then, however the club will still be on the hook for his dough.

After 2016, all of these guys contracts will be over, except for A-Rod would be back for one more year on the books.

If you signed Balfour and Infante, they would clear as well by the end of 2016.

2016 could still see the team spend a ton in money on Free Agency, with their penalty being back to a 1st year offender on the Threshold Tax.

Whether the team likes it or not, the pending A - Rod suspension has everything to do with what direction this club will take next in the offseason.  Again, they should thank their lucky stars that $27.5 MIL AAV could come off the books for even 1 year.

Whether the team likes it or not, the pending A – Rod suspension has everything to do with what direction this club will take next in the offseason. Again, they should thank their lucky stars that $27.5 MIL AAV could come off the books for even 1 year.  Would it surprise anyone if that the ruler of that suspension, would give something in the range of Ryan Braun’s 65 game ban?

2015 contracts in MIL – AAV Age (Based On My Projected Deals For Infante, Balfour and Garza)

1. A-ROD  – 27.5  (39)

2. SP Sabathia – 22.8 (33)

3. 1B Teixeira – 23.0 (35)

4. CF Ellsbury – 21.9 (31)

5. C McCann – 17.0  (30)

6. LF/DH Beltran – 15.0  (37)

7. INF  Ryan – 2.0 (2015 SS) (31)

1 SP- Matt Garza (8) AAV from 2014 $15 MIL

9 SP #3 Ivan Nova – $5 MIL in ARB 2015 (26)

10. 3B Eduardo Nunez – $2 MIL in ARB 2015 ) (28)

11. SP Masahiro Tanaka – $10 MIL

12.   RP Matt Thornton – $3.5 (38)

13.  RP Shawn Kelley – $3 MIL in ARB  (31)

14.  SP#4 – Michael Pineda – $2.3 MIL in 2015 ARB

15 – 17:  Club needs a Starting RF/LF + 4th OF (maybe combination of Zoilo Almonte, Tyler Austin, Melky Mesa, Slade Heathcott, Mason Williams) or could possibly use $6.5  MIL in salary for 2 spots on FA.

18 – 20: 3 relievers on entry level contracts – $2 MIL.

21.  RP David Robertson – $7.0 MIL

22  – New 2B – $2 MIL per year

23 – 24Back Up Catcher (Cervelli or Romine)  and Backup FA OF – $2 MIL 

25 – 5th Starter like David Phelps or one another entry level contract.

Total 2015 Team Payroll could hover around $189 MIL

This leaves you a little wiggle room here.  The team should really sign a proven Closer like Balfour, as Robertson is likely to warrant a bigger deal in future years.

Part of the Yankees problem is not having a clear direction with the payroll – and flip flopping on their goals with this very aspect.

Just because the club could add up to 4 more players still would not guarantee them anything in 2014 either, and sooner or later they will have to pay the piper for at least one year.

I am not even proud of how my favorite team has conducted business either.  By stating these facts, I only wanted to offer some advice. Who knows, Cashman has seemed to follow suit before with the MLB Reports 2 cents worth.

The Yankees have only missed the playoffs twice in Derek Jeter's Career (2008), they have made the Post Season in all other 17 seasons, including 10 ALCS Appearances,  7 World Series Appearances and 5 World Series.  Derek Jeter is the ALL - Time leader in hits for the Post Season, with 200 in 650 AB (.308).  But the aging superstar is probably entering into his last year.  Now that the team has started spending cash to protect their attendance, and viewership ratings on TV, they should not be shy.  Instead the Yankees can try to send out Jeter with at least a playoff spot in 2014.  The one thing coming is that one year the Yanks have to show some fiscal restraint.  With a rapidly aging team, it is my opinion they should just wait 1 more year anyway.

The Yankees have only missed the playoffs twice in Derek Jeter’s Career (2008), they have made the Post Season in all other 17 seasons, including 10 ALCS Appearances, 7 World Series Appearances and 5 World Series. He is the ALL – Time leader in hits for the Post Season, with 200 in 650 AB (.308). But the aging superstar is probably entering into his last season in the MLB. Now that the team has started spending cash to protect their attendance, and viewership ratings on TV, they should not be shy. Instead the Yankees can try to send out Jeter with at least a playoff spot in 2014. The one thing coming is that one year the Yanks have to show some fiscal restraint. With a rapidly aging team, it is my opinion they should just wait 1 more year anyway.

 *** The views and opinions expressed in this report are those of the author and do not necessarily reflect the views of mlbreports.com ***

***Chuck Booth – Lead Baseball Analyst/Website Owner and author of the Fastest 30 Ballgames:  

To learn more about my  “The Fastest 30 Ballgames Book” and how to purchase it, click here .

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About chuckbooth3023

I played competitive baseball until 18 years old and had offers to play NCAA Division 1 University Baseball at Liberty University. Post-concussion symptoms from previous football and baseball head injuries forced me to retire by age 19. After two nearly made World Record Attempts in 2008, I set a New World Record by visiting all 30 MLB Parks (from 1st to last pitch) in only 24 Calendar Days in the summer 0f 2009. In April of 2012, I established yet another new GWR by visiting all 30 Parks in only 23 Calendar Days! You can see the full schedule at the page of the www.mlbreports.com/gwr-tracker . In 2015, I watched 224 MLB Games, spanning all 30 MLB Parks in 183 Days. Read about that World Record Journey at https://mlbreports.com/183in2015/229sked2015/

Posted on December 14, 2013, in MLB Payroll and Contracts, MLB Teams: Articles and Analysis, The Rest: Everything Baseball and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Comments Off on The Yankees Might As Well Wait Another Year For The Luxury Tax Threshold ‘Reset’.

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