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.