Something smells fishy with the Yankees

The New York Yankees signed Andy Pettitte, Mariano Rivera and Hiroki Kuroda to one year contracts. Russell Martin was allowed to waltz away fairly cheaply to the Pirates. Ichiro Suzuki‘s agent says he is tired of waiting for the Yankees and is now listening to other offers. Nick Swisher is in the rear view mirror. The only contracts the Yankees have added so far are roster fillers like Jim Miller, etc, and one year deals that more than likely will be off the books for 2014. Curtis Granderson, Phil Hughes, Robinson Cano and Joba Chamberlain are all dangerously close to free agency in 2014. We have all heard to the point of nausea that the Yankees have given themselves a hard cap of $189 million in 2014. What nobody is saying is that as of right now, there is only about $96 million tied up for 2014.

Let’s look at that $96 million. $70.5 million of that is tied up in three guys: C.C. Sabathia, Alex Rodriguez and Mark Teixeira. Derek Jeter will account for only $3 million if the Yankees buy out the last year $8 to $10 million if Jeter picks up his player option. The rest is made up of only a few important arbitration pieces in Brett Gardner, Ivan Nova and David Robertson. That’s it! All the other arbitration eligible players are fungible unless Michael Pineda comes back and has a decent 2013. Then you can add a couple of million for him in arbitration.

Doing the math, if–and that is a huge IF–the Yankees decide to extend Granderson and Cano, you can add say $25 million for Cano and perhaps $17 or $18 for Granderson and we are up to $140 million. In other words, not even close to $189 million. And yet, Martin was deemed too expensive as was Swisher. Something is not adding up here. Even if the Yankees extend Phil Hughes, we are probably only talking about $10 to $12 per season. And still we are $28 million short of the dreaded $189 million.

Add to this math equation that the Yankees are going to receive some $420 million from News Corp as part of the sale of YES shares and the $85 million per year YES will pay the team for rights to broadcast the games. Even at a casual glance done by a casual fan, there seems to be something really fishy going on with all this hand-wringing that the Yankees can’t afford players and do not want to sign long term deals.

So what is really going on here? The suspicious inner writer remembers when the software company that was the longtime livelihood went through a severe austerity move that was puzzling at the time. Things all became clear when the company was sold soon after. With the Dodgers recently purchased for two billion dollars, could the Yankees be getting as lean as possible to entice a buyer to unload multiple billions for the Yankees?

We all knew George Steinbrenner. The Yankees were his baby. He would have rather have gnawed off his own arm than even consider having someone else own the team. But we don’t see the same kind of team love in his children. Who could blame them for wanting to maximize their inheritance and make bundles of money that would put them in the stratosphere?

And if not that, then what? Could this all be a ruse to wait for just the right free agent and score another Sabathia-like franchise move? Well, that is more the optimistic view. But when we see the Yankees never even getting around to offering Martin and Ichiro deals, where would this optimism come from? The Yankees will have only until Spring Training is over as a window to extend Cano, Granderson and Hughes. The team thus far has dragged its feet and could very well see all three hit the open market. Then what?

Unless the math of this post is seriously off (and that is always possible), adding a good player at multiple years will not break the bank. Heck, there even seems to be room to bring Josh Hamilton on board. How much fun would that be with 81 of his games at Yankee Stadium? That is what a glance at the bottom line reveals to this perspective. But instead, all we hear are statements from Brian Cashman that the Yankees do not have the financial latitude to spend money in 2014. Something does not add up. At least from this seat, the BS meter is tingling on overdrive. The only thing that does seem obvious is that putting the best team possible on the field is not the top priority.

25 thoughts on “Something smells fishy with the Yankees

  1. Badgerbc

    For luxury tax calculation, you need to use average annual value of a given contract. Plus incentives like reaching 660 HR counts (A-Rod will likely reach it this season) which would add 6mil. And they're sending 8.5mil to Pittsburgh for Burnett

    • williamjtasker

      Yes, but we're still not talking big money here. Sabathia's deal flattens out as does Teixeira's. And Burnett is off the books after 2013.

      • Badgerbc

        Well assuming that they don't extend Cano or Granderson this offseason, I have them at anywhere between 130mil and 140 mil right now (including higher end estimate on arbitration and 40 roster considerations). As for contract cost "flattening out," *Average Annual Value* does that for you from the start. The key question is whether the Steinbrenners are looking to get under the luxury tax rate threshold long term or not. I don't think that is clear at this point. If they get under it this offseason, they would finally get off the 40 percent bracket. Tactically they could gain some "reserve" for going over it in case the team collapses as they did in 2008-2009. Everyone expects them to go under the 189 threshold next season, but I would not be surprised if they try to do it this winter just to do this.

  2. dockeen

    What worries me is the following. What sort of buyer does an austere Yankees appeal to? Some novice who just read 'Money ball' and thinks he/she can run them smarter and better?

  3. Norm

    I'd agree, something strange is going on here. First off, is there some reason they can only negotiate with one player at a time (or so it seems)? First they sign Kuroda. Then they sign Pettitte. Then they sign Mo. Why are they waiting on Ichiro? Could it be they don't really want him back, and are hoping he signs elsewhere? If he does, who plays right field? Is this a prelude to some kind of December surprise, as happened with Sabathia a few years ago? You have to wonder.

    • nate

      Enter text the article above says Brian keeps saying we don't have the money for this or that, but the last couple days he actually is saying the total opposite.He's saying they still can add payroll and multi year deals,so if anything where up i would say its a great player in the works.Members of the team seem pretty convinced that we have a great team, so there's something they know that we don't. I think Robinson is going for a couple good players,maybe another 3 team trade and with the pieces we get are going to make us better and save $.Prob a pitcher and position player from say Oakland. A top pitcher and cespedes for right field for cano!!
      here!

  4. Yankguy

    How about Cano straight up for Giancarlo Stanton? I think he can provide pop and true leadership for the future. We can try Adams at 2nd

  5. Aly

    This is all becoming clear to ne now. The Yankees are going to be sold to Jeffrey Loria!! Oh, no!!! LOL

  6. uyf1950

    William, your premise starts out $5MM off with the AAV's of A-Rod, Tex and CC. They come to $75MM add in just Cano being renewed for say $24MM +/- that's $99MM that's just 4 players of a 25 man active roster. Add in a starting Center Fielder and starting Right Fielder say even cheap ones another $16MM total for those 2 that brings the total to $ 115MM add in Jeter exercising his 2014 option that's another $9.5MM we are now up to $125MM +/- for 7 players. Add in a catcher and a DH even cheap ones another $5MM +/- they are now up to $130MM +/- for just 9 players. They still have no pitchers other then CC, no bullpen and no bench.Add 4 more starting pitchers that's $15MM minimum they are up to $145MM and in a bullpen including a closer another $17MM +/- that bring them to $162MM +/- for just 20 active roster players. Now add 8 MM for 5 bench players they are up to $170MM +/-. Add in $5 to 7MM for the remaining 15 players to round out the 40 man roster that comes to $175 to $177MM +/- and they still have to include $10MM that MLB adds to a teams payroll for benefits, etc. and they are right on top of the $189MM luxury tax threshold of $189MM.
    As for the comment that the Yankees "can't afford" the money I don't believe that's the issue the Yankees ownership/management has been claiming. For the most part what I've read makes me believe they just are tired of paying the luxury and and revenue sharing. And want to recoup that money. As a fan I think that is unfortunate but in the real world where baseball is a business the option to recoup about $20MM per year if the Yankees remain under the luxury tax is a might strong incentive, to do so, rather then revert to their old spending ways. At least that's my opinion.

  7. Yardisiak

    My hope is a deal for upton is brewing. Would replace the power of swisher. A deal for Choo wouldn't be bad either…

  8. Guessing the Marlins want a boatload of prospects for Stanton, not a high priced player about to get REALLY expensive.

  9. brian

    Other than the fact that there isn't a snowballs chance in hell that Jeter isn't playing for the Yankees in 2014…. this seems like good analysis

  10. Bill

    We may very well be living through a reprise of the early 1960s. When Dan Topping and Del Webb sold the Yankees in 1964, they had spent several years not investing in the farm system, thus improving the financial picture of the club. This led to CBS buying what was referred to as a "pig in the poke". By the time the team changed hands they were left with nothing but the name and history. The only difference between then and now is that currently the team is not willing to invest in the salaries for those players which would keep the team close to the top. Cashman has been scouring the bargain basement bins for a couple of years, with a fair amount of success. But now we're reaching a tipping point where either they've been lying all along and will spring a December surprise, or they're going to put the team on the market, with the new buyer not being subject to a 50% luxury tax penalty after 2014. The more we watch, the more it seems that the Steinbrenners are looking to get out. A Yankee franchise that can spend money without the onerous luxury tax is far more attractive to a prospective buyer. Thoughts?

    • uyf1950

      I doubt very, very seriously that an extra $15MM in luxury tax money would be a deal breaker to someone or some group that would be interested in buying the Yankees if the Steinbrenners wanted to sell. After all keep in mind you are talking about a franchise that has worldwide appeal and arguably would sell even today for between $2 and $3 billion dollars without the Yankees share of the YesNetwork. That $15MM in luxury tax money is chump change to a prospective buyer.

  11. jerkblog

    You should read the article posted on this very blog to get a better handle on the luxury tax implications: http://itsaboutthemoney.net/archives/2012/11/13/e

    I think you can still draw the same conclusion, but having so much false info put out there by the media & bloggers about the CBT gets my goat. Jeter will not count as 3 million for 2014 if he opts out, for instance. It will be a tough road to travel for 189.

    • uyf1950

      In my opinion the only way Jeter doesn't exercise his option is if his numbers fall off the cliff in 2013 and or his injury gives him trouble. Other then one of those 2 things happening he's coming back in 2014. And yes I agree 100% the $189MM threshold goal will be very tough, but not impossible. It will just take some v ery hard decisions. The first one being they can only afford to re-sign 1, it's either Cano or Granderson not both. And from this fans perspective having a 38 or older Cano manning 2nd base on a 9 or 10 year deal does NOT bring smiles to my face. By the same token having a 35 or 36 year old Granderson who will most certainly be a defensively challenged center fielder or left field if they move him over doesn't bring a smile to my face either on a 5 plus year deal.

  12. jay hoenemeyer

    This maybe the 'new normal ' ,slightly better than average teams running around in pinstripes , claiming to be the " Yankees " . As they say , " Follow the money " and the money is NOT going into the ball club . It ain't Luria country , but you can see it from here .

  13. Urban

    William, I see you're doing what a few of us have attempted, which is trying to figure out just how much the Yankees can spend. I think the hill is a little higher and challenging than you've estimated. To start. the real payroll target at the start of 2014 is not $189M (or a dollar less to be under), but probably somehwere around $176M. Players' benefits need to be folded into that number, and while the general number that is used is $10M, is actually a little bit higher, probably more like $11M for 2014, taking the Yankees target in salaries to about $178M. Yet the Yankees season-ending payroll is generally higher as players get added during the year based on injuries and/or upgrades, meaning the team has to leave one or two million room for that, hence a target around $176 to $177M.

    • Urban

      The $177MM payroll target sounds doable, and it is, but it will require the largest cuts the Yankees have done in, well, forever. That's what's driving this offseason as Cashman wants as few as possible committments on the books past this year. By doing that it allows Cashman as much flexibility as possible to fill out the remaining roster.

      As is, for 2014, the Yankees will have three players (A-Rod, Teixeira and Sabathia) eating up a large chunk, basically a touch under $75M based on AAV. I'm not adding in Cano, Granderson and Jeter, the latter who will no doubt trip his $3M opt-out at the end of 2013 and then negotiate a new deal. (Since it's a player opt-out, it is already "assumed" for luxury tax purposes when calculating Jeter's current AAV.) Jeter will cost them more than the current target of $9.5M. I'm not convinced Cano is returning, so that's certainly one way they can get under $177M. It can be done. I think it will be done. Won't be easy, but I don't see Josh Hamilton as being part of it!

  14. jay_robertson

    Does all of this mean that Jason will be changing the name of this blog in the semi-near future?

    "It is ALWAYS about the money, suckers…"

    Really, Really, Really hoping your very logical arguments are just a way to pass time in a very dull off season. Not that sure they are wrong, but I can hope. Just as I can hope we can return the same team, without some of the best pieces, and have a better record next season. We should be able to – right – take away Soriano, Martin, and Swish; replace them with nothing – that should make us a cinch to win a hundred games.

    Just btw, for the three of you out there who have somehow never heard it before – there is a quote out there attributed to Einstein:

    Insanity: doing the same thing over and over again and expecting different results.

  15. Jim

    What impact on yanks team salary toward luxury tax would ARod being deemed physically unable to play due to his hip have?

    • BrienJackson

      None.

      • Chad

        He could retire. :)

        • Jim

          By his numbers it looks like he did last year

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