Part 2: A New Yankee Strategy Post-CBA

Last week, I voiced my complaints about the new CBA. It’s a horrible document that will harm baseball, but it’s a document that is now baseball reality. The Yankees have to learn to live with it, and need to readjust their strategy to win in the new environment.

The Yankees have a pretty difficult goal: perennial contention. They want to make the playoffs 90% of the time, and have a shot at the World Series. They do not go into rebuilding mode, and will almost never be sellers at the trade deadline.

I think we have a pretty good handle on Brian Cashman’s plan to make this a reality before the new CBA. He made selective large free agent investments. He traded for promising but undervalued players. And he acquired highly talented prospects by going over slot at the draft and investing heavily in Latin America, and then spent the money to retain these players through their prime years. The last tactic brought us Robinson Cano, Gary Sanchez, Jesus Montero, Manuel Banuelos and other prospects, while the penultimate tactic brought us Mason Williams, Dellin Betances, Austin Jackson (Curtis Granderson), David Robertson, and tons more players. Both activities will be significantly reduced over the years with this new CBA. The Yankees can probably spend a little extra on scouting and coaching to make the most out of their minuscule signing budgets, but overall they will see their capacity to bring in new talent via these avenues reduced by a lot.

So, the Yankees are going to have to rely on free agency as their competitive edge over other teams. They have competent management and more money than other teams, so it’s natural to simple say, “OK, spend more on free agency” and call it a day.

I think the Yankees should think about spending differently on free agency using their giant budget. They should take their savings from decreased investment in prospect development and use it to bend what you might want to call the “free agent yield curve” toward shorter contracts and higher salaries. We’ve written a lot about how roster space is as much a limitation on Yankee player acquisition as is player costs. They should work to pay a premium to get free agents to sign 3 or 4 year deals instead of 6 or 7 year deals. How much will this premium cost? Probably quite a lot – a $20 million free agent may cost $25 million or more per year. One recent example – under this strategy, the Yankees would consider baiting Derek Jeter with a $20 million arbitration case instead of signing him to a 3 or 4 year deal, and then go out and pay for Jose Reyes right now. The Yankees will face higher player costs overall, since they’ll have to replace the free agent after the shorter contract is up, possibly at a higher cost. I’m fine with this. The Yankees can afford to pay this premium, and will get to play more free agents closer to the prime of their careers, albeit at higher cost and risk.

What benefits do the Yankees get out of this? First, they get increased roster flexibility – they wouldn’t need to pass up on Albert Pujols because they have Mark Teixeira under contract for the next decade. They lose a lot of tail risk involving players on monster contracts declining or becoming injury. They will raise the overall talent level of their team by keeping ages down. All this will cost money, but the Yankees should both have some in reserve (declining payroll over the past few years) and will save quite a bit on player development. Over time, I expect some free agents who are relatively young (Felix Hernandez, Justin Upton types) will learn that they can make a big payday from the Yankees in their 20s, and then hit it big again with a second dip to free agency like Rafael Furcal or J.D. Drew or even C.C. Sabathia, Alex Rodriguez and A.J. Burnett did with opt-outs.

It’s not ideal, but I think it’s a strategy with a lot of potential for success. It’s untried, but I think the strategy would provide the Yankees with a real asymmetric advantage using their bank account. I have trouble seeing the status quo strategy maintaining perpetual contention over the long term, without high end young talent coming in from Latin America.

E.J. Fagan been blogging about Yankee baseball since 2006. He lives and works in Washington, DC.

10 thoughts on “Part 2: A New Yankee Strategy Post-CBA

  1. jmr1983

    I absolutely love this idea, but do you think superstar free agents would be willing to take 4/100 as opposed to 6/120? I’m wondering if the higher short term dollars would make up for the desire for long-term job security?

    • So, I think it depends on the free agent. I think a 27 year old free agent would do it. I don’t think a 31 year old one would.

  2. DirtyWater

    Hey I got an idea. Why don’t the Yankees draft well, splash out on the occasional IFA instead of bolstering their weak draft, stop paying players for 7 years for what they use to be and will only be for a season or two and use the increadible advantage a $200m payroll should give them.

    Or just keep complaining how unfair the new CBA is to them.

    • SEHumphrey

      I’ve been thinking about the CBA a bit, and it to me that it has limited negative effect on the Yankees. In particular, the international signings seem like a place where they can really just destroy the other teams with limited consequences.

      Yes, they will be taxed heavily when they go over their allotment. Yes, they may lose some 1st-round picks. But really what’s the cost?

      First – the “tax”. Honestly, this is nothing. If everyone is “limited” to $2.9m and the Yankees drop $5m, the tax is still relatively nothing (particularly because it doesn’t get double taxed – it doesn’t get included in luxury tax calculations).

      Second – loss of picks (note that I’m still not completely sure if the loss of picks only apply to overspending on the draft, or for both the draft and IFAs). The value of the 30th pick in the draft is something like 1 WAR net of salary (http://www.fangraphs.com/blogs/index.php/how-compensation-picks-stifle-free-agent-salaries/ ). This isn’t nothing, but it isn’t a ton. If the Yankees just accept that they are going to lose this every year (and it’s not going to a rival either – it just disappears), this isn’t much of a loss. What it actually encourages is radically overspending – why lose a pick for signing a few really good players, when you can lose the same pick for signing A LOT of really good players.

      Ultimately, my suggestion is to go all out on signing IFAs. The idea put forth by EJ is definitely a nice complementary strategy, and one I’d advocate, but I think the CBA really encourages the Yankees to spend like crazy on IFAs.

      • Ed

        It’s not that easy. if you exceed the limit by 15% or more you face a 100% tax and lose the right to spend $250K or more on any player in the next signing period.

  3. bottom line

    Or they could do the obvious– sue Selig for putting his greay paw ever deeper into their pockets (revenue sharing, luxury taxes, punitive draft positi0oning, extra picks for poor performers– it goes on and on). And the endlessly recurring theme is make the Yankees bleed.

    But didn’t mean to distract from EJ’s excellent and creative thesis. Don’t know if it would work but Yanks will have to do creative thinking of this sort to adapt.

  4. bottom line

    “greasy paw,” that is

  5. Its always been my understanding that since MLB contracts are guaranteed, they are viewed by agents and players in terms of total dollars, not the AAV. So a 100M 5 year contract is considered better than a 3 year 75M deal. Especially for pitchers, who get hurt and lose their top earning ability overnight. But the same holds true for position players as well.

    How much would Travis Hafner or Grady Sizemore have received if the hit the FA market a few years ago? Had they taken a deal like this, their career earnings would have been drastically reduced. This isn’t a unique proposal, its one teams will float occasionally. But it’s rarely successful. If you take this tact, you won’t sign many players in my view.

    • Agreed, it would have to be a huge overpay to make it worthwhile to the player.

  6. Marit

    As far as I’ve understood, lost draft picks only apply to the Rule 4 draft, not international signings. However, lost draft picks do not disappear, they are given to small market/bad teams as part of the Competitive Balance Lottery.

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