Yankees Still Have Money To Spend

Yankees Still Have Money To Spend

The New York Yankees swooped in Saturday to acquire reigning NL MVP Giancarlo Stanton after he had invoked his no-trade clause to block deals to the Giants and Cardinals. It was a relative bargain for New York with Starlin Castro and second-tier prospects Jorge Guzman and Jose Devers going to Miami.

The Yankees have made it clear they intend to get under the $197 million luxury tax threshold in 2018, which will reset their tax rate — the club is currently taxed at the maximum 50 percent — and save them millions. They’ve paid luxury tax every year since the system was put in place in 2002. That’s a lot of wasted money.

Acquiring the largest contract in the sport — Stanton is three years into his record 13-year, $325 million contract — doesn’t seem to jibe with the plan to get under the luxury tax, but given the team’s payroll situation, the Yankees can not only afford Stanton, but they still have room for another signing or two.

The average annual value of Stanton’s contract is $25 million, but since the Marlins are kicking in $30 million, that money is spread out across the remaining years of the contract. So that’s a $3 million “credit” to the Yankees per season, reducing Stanton’s luxury tax “hit” to $22 million per year. It doesn’t matter that New York may never actually see a penny of that $30 million — the Marlins only pay it if Stanton does not opt out — they’re still credited with the luxury tax savings.

Following the 2017 season, the Yankees shed the pricey contracts of CC Sabathia ($25 million) and Alex Rodriguez ($27.5 million) — yes, the Yankees were still paying A-Rod this year — as well as smaller salaries like Matt Holliday ($13 million) and Michael Pineda ($7.4 million). That comes one year after shedding Mark Teixeira ($22.5 million). So many of those big contracts are coming off the books.

All of that money going away is what puts the Yankees in position to get under the luxury tax this season, even with Stanton. That and their stable of young impact players, who provide a ton of value at near league minimum salaries. Aaron Judge, Gary Sanchez  and Luis Severino are crucial to making the luxury tax plan happen. Here is a breakdown of New York’s payroll situation.

Guaranteed contracts

The Yankees still have some wiggle room even after adding Giancarlo Stanton’s contract.USATSI

At the moment the Yankees only have seven players under contract for the 2018 season. These seven players account for $120.92 million against the luxury tax threshold. Here are the seven players with their luxury tax hits:

  • Masahiro Tanaka: $22.14 million
  • Giancarlo Stanton: $22 million
  • Jacoby Ellsbury: $21.86 million
  • Aroldis Chapman: $17.2 million
  • David Robertson: $13 million
  • Chase Headley: $13 million
  • Brett Gardner: $11.72 million

Keep in mind Castro’s $8.57 million luxury tax hit — Castro signed a seven-year deal worth $60 million with the Cubs back in 2012 — goes away with the trade, so Stanton is only really adding $13.43 million to the team’s luxury tax payroll in 2018. Removing Castro’s salary is not insignificant.

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