Keeping Curtis

Using the information available at Cot’s, the Yankees have ~$88.5 million worth of average annual value committed to A-Rod, Tex, Jeter, and Sabathia already for 2014, assuming that Jeter exercises his 2014 player option and that Sabathia’s 2016 club option vests. Add in the $10 million or so in taxable benefits the club will have to pay, and we’re right around $100 million in taxed payroll, with only four players accounted for (and not counting A-Rod’s many home run milestone bonuses, which will be added to the luxury tax bill once they’re reached as well). Could new contracts for Cano and Granderson be worked into this formula, with enough money left over to round out a quality roster? It certainly looks like it could be done, but if both players insist on top dollar for their next contracts, it would leave the team with essentially no room for error in terms of cranking out young replacements, and the team will need, at least, a new catcher, outfielder, and one or two starting pitchers making the minimum salary in 2014 to make this feasible.

Not that the Yankees are completely without cards in their sleeves here. As Joel Sherman notes, there are a few ways the Yankees could get creative with new contracts now that would allow them to retain these players while shaving a little bit of money off of the tax number they’ll account for later. The league probably wouldn’t appreciate such a blatant tax work-around by the Yankees after they specifically designed the new collective bargaining agreement to try to make the luxury tax a harder cap in practice, but I don’t see how they could prevent the Yankees from, say, giving Robinson Cano a new contract before the end of the season and converting his 2013 option into a guaranteed year, thereby pulling down the AAV of the entire contract, short of engaging in in collusion. And the union may not go wild about the notion of A-Rod converting those home run bonuses into an extra guaranteed year at ~60% of his potential earnings, but it also seems like they’d have a pretty tough case to make against it, given how unlikely it is that A-Rod earns all of those bonuses by becoming the all-time home run king at this point in his career.*

To me, however, the real question is this: should the Yankees even want to give Granderson a new contract? He doesn’t exist in a vacuum after all, as the team will have the room for one more big deal, at most, once you account for Cano’s share of the remaining budget, which means that keeping Granderson around would mean swearing off Cole Hamels, Matt Cain, or any of the other starting pitchers who could be on the market after the 2012 season. That’s a defensible course to take but, in my opinion, Granderson has a few factors working heavily against him. First and foremost, he’ll be 33 years old in 2014, meaning that a new contract would be comprised entirely of years in which you’d expect him to be in decline. Secondly, the Yankees have good depth of talent in the system at the centerfield position, with Mason Williams, Ravel Santana, and Slade Heathcott (ranked 3rd, 9th, and 13th respectively in my prospect rankings) all playing the position right now, wiT. Williams and Santana, at least, having clear ceilings as All-Star caliber performers at the position. There’s no guarantee they reach those ceilings, of course, but the Yankees have two more years of control over Granderson, at which time we’ll have a more realistic read on how these youngsters will project at the big league level.

That’s not to say there aren’t some alternatives with regards to roster flexibility here. The Yankees could, for example, re-sign Granderson with the intention of moving him to left-field when Williams is ready for the big leagues, allowing Brett Gardner to leave town once he becomes eligible for free agency. That would make their ideal 2015 outfield Granderson-Williams-Santana, a not unattractive proposition by any means. Still, the biggest downside to keeping Granderson would be the opportunity cost of committing such a large tax number to a player entering his mid-30’s. Forced to choose between either Hamels/Cain and Granderson, I’d much rather see the Yankees go after the extra pitching and let Grandy walk than vice-versa, given the lack of high ceiling arms in the upper levels of the system at the moment.

*For what it’s worth, an extension for Cano ASAP seems like it should be a no-brainer right now for exactly this reason. If an extension is going to get done anyway, it doesn’t make any sense to put it off when you can accrue real savings now. Frankly, I don’t see why the team didn’t do that this offseason, at least once they put in the austerity plans. Sherman’s idea for A-Rod strikes me as an obvious win-win for both sides, but also probably too counter-intuitive to actually be done.

Born in Southwestern Ohio and currently residing on the Chesapeake Bay, Brien is a former editor-in-chief of IIATMS who now spends most of his time sitting on his deck watching his tomatoes ripen and consuming far more MLB Network programming than is safe for one's health or sanity.

19 thoughts on “Keeping Curtis

  1. williamjtasker

    An excellent analysis of the situation. I love Granderson and can see him producing the next couple of years. If I had to choose between Granderson and Gardner, at this point, I'd go with Granderson. But I can't see giving any kind of deal to a guy for his age 33 to 36 seasons when his bat is no longer as quick. To be realistic, I can't see Granderson as a long-term option at this point and hope that one of the prospects you mentioned can become better than Austin Jackson.

    • BrienJackson

      Well the big difference between Grandy and Gardner is money and time. Granderson will need a new deal that pays him $15-20 in AAV starting in 2014, while Gardner will be in his fina; year of arbitration, and likely undervalued through that process as well since so much of his value derives from defense. By the time a big decision needs to be made on him we ought to have a pretty good idea of what the Yankees' outfield prospects are really going to be capable of, and barring setbacks they should all be ready by some time in 2015.

      As for the Jackson comp, Heathcott's injuries have put a dent into his long-term projections, but Williams and Santana both profile as better prospects than Jackson, IMO.

      • GabeLezra

        I've heard a lot of people compare Williams to Jackson, but I was under the impression that Williams has both more power potential than Jackson (even though he hit only a few home runs last season, I'm under the impression that people think the power will come). They both have 70 speed, I guess, but I'd take Williams; it's possible Jackson has better defense though. Either way, Williams is the real deal.

        Sad as it seems, it might be best to let Curtis walk. And I really do feel sad about that. He's one of my absolute favorite guys in baseball (and I'm in the majority on that).

    • Greg

      keep in mind that Cano just switched to Boras, so good luck with doing anything prior to free agency. Guys don't switch to Boras because they want to make a deal early; if that's what he wanted to do, he could have kept his prior agent.

  2. thecutoffman

    Anything can happen over the next 2 years. I think this discussion is getting waaaay ahead of itself. Maybe focus a little more on the 2012 season, rather than the one in 2014.

    • Bill

      I agree that Granderson will be overpaid in his next contract. And I think someone else will do the overpaying. I think the days of Hank sticking his nose in and committing money that creates a double-edged sword are over.

      We'll also see exactly how good a GM and talent evaluator Brian Cashman is. I'm thinking the results will be good, but let's see how it plays out.

    • GabeLezra

      I dunno, this is an important conversation to have now, just so we don't get surprised in a couple years. The team has been doing a lot of financial planning, and these are the things they need to keep in mind.

  3. BrienJackson

    "Anything can happen over the next 2 years."

    Well, yes and no. Obviously things can happen that can change the baseball related calculations, but there are two things the absolutely will NOT change between then and now:

    1. The Yankees are imposing a hard payroll cap of $189 million on themselves.

    2. They've already committed just shy of $100 million of that with just four players under contract (assuming Jeter exercises his option).

    So…yeah, these are pressing concerns, and they probably will impact this season as well. For example, you certainly aren't going to see the Yankees be willing to trade many of their young players for deadline reinforcements that either won't be around in 2014 or who will be getting expensive if they are, nor are they particularly likely to get into the bidding if, say, Matt Cain or Zack Greinke become available before the deadline if their teams fall out of contention and they don't have new deals worked out, because they simply can't afford to give up these players that they're going to need producing for them at the minimum salary to make competing on a $189 million budget possible on top of their existing commitments (and need to re-sign Cano).

    Or we could write another post about Michael Pineda's fastball velocity, I guess.

  4. Ralph

    CC's options is for 2017 just for the sake of accuracy, and his option doesn't have anything to do with 2014, 2015, or 2016 luxury tax purposes since they will only be taxed on the 5 yr 122M guaranteed money they agreed to back in October. I calculate the 2014 Luxury tax hit as 79.4M for Arod, Tex, CC and Jeter. The guaranteed part of Jeter's the deal is 3 yrs and 51M (17M annually). The deal calls for salaries of 15M, 16M, 17M, with a 3M dollar buyout of his option. That makes up the 51M guaranteed and that drives the AAV, the Yanks are taxed on for 2011-2013. In 2014 he has an 8M player option (Assuming none of his performance bonuses are reached), but since they have been taxed on the 3M dollar buy out, the actual value of his option is 5M. I think the math that you've done, assumes that if his option is picked up his deal is worth 56M 4 yrs, which is an AAV of 14M. However, wouldn't that mean the yankees already paid taxes on some of that 14M? Since they paid taxes on 17M AAV for the first three years. I have to believe they get credit for that. And if that is the case, they will have a little more room in the luxury tax area.

    • BrienJackson

      If the options are exercised, they count against the total value of the contract, so that affects the AAV and the tax consequences are applied retroactively. So, yes, if Jeter exercises that option it will bring down the AAV of the total deal and the Yankees will get a refund on their 2011-13 payments, but this is irrelevant for our purposes, since the concern for the Yankees' is not one of financing the tax payments themselves, but of getting the payroll number below the tax threshold for the purpose of qualifying for revenue sharing refunds in the eight figures.

      • Ralph

        So for my understand, if the Jeter exercises his option, the 2014 luxury tax hit, in regards to Jeters luxury tax number is the 56/4? But the Yankees will get a check from MLB (or just removed from the top of luxury tax payments they I have, I guess)?

        • BrienJackson

          Yes.

  5. Hippeaux

    Love Granderson, but because of his reputation and personality I think he will be overpaid in his next contract, especially if he keeps performing near his 2011 level. A Jayson Werth/Jason Bay-style mistake seems inevitable. Let somebody else make it. Bet on the kids.

  6. Baseball Guy

    …already waiting to hear the cries, "Jeter is selfish…he should give up his option year for the good of the team." (Ugggg. That will get tired and played out quickly.) (I just brought it up – and it's already tired.)

    If the $189m is based on the total averages of the contracts, can't the Yankees just extend the players with the huge contracts for one more year – at a lower cost thereby effectively reducing the AAV of the contracts? This would open more flexibility. (They could have an "agreement" with the players that the final year can get increased at a later point.) (Didn't the Red Sox just do something similar with Adrian Gonzalez?)

  7. michael

    Brien (or anyone): This article presupposes Cano will be extended, or in the least is a priority to be re-signed beyond 2013, where Granderson will not be extended or is a lesser priority. Why?

    Cano is ~18 months younger than Granderson. Is there another factor that favors keeping one over the other? I would tend to lean the other way, if any direction. I think a big difference is understanding when contact rates vs. BB% peaks in an aging curve. I also tend to think high batting average and low rate of error for an infielder are metrics that would lead to Cano being overrated, whether by another team in trade, or in contract negotiation. Both things to consider when comparing relative value going forward.

    • Well, a power hitting 2b is harder to replace than an OF, for one.

      • BrienJackson

        That would be the big factor, sort of supported by the fact the Yankees have some good outfield prospects, (and Gardner able to play center), while having very few middle infield prospects. Corban Joseph is probably a utility player at best, David Adams is always hurt, and Angelo Gumbs, though super talented, is also super raw and probably won't be ready until at least 2015.

      • michael

        Is it? Looking at the performance of 2b compared to CF over the past couple of years, it seems that having a competent full-time CF is offensively scarce as 2B. I don't share the same confidence that Brien has in OF prospects. The high-upside prospects for most position players are far away.

        I agree that you can shift gardner to CF and then pick up a power bat for LF relatively cheap. However, it will likely be an older player who fields the position poorly. The team would likely be taking a hit on production from both positions.

        I think the answer is to get creative with trades. The Yankees have a lot of depth to trade from and may involve more than one team to replace CF or 2b with a younger, cost-controlled player.
        If the team could get another 2b in his arbitration seasons who is only a 2-3 win player, while moving Cano's contract and exchanging a couple higher-level prospects for younger, more raw prospects, would you approve?

  8. Allen

    How about this idea for getting around the 2014 cap: a one year $500,000 contract for 2014, with a 5 year $100 million player option after that. Applies to Granderson, Cano, Hamels, etc. For the players, they are essentially just agreeing to one year of deferred salary.

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