2012 Contract Issues: New York Yankees

The Yankees are next in our 2012 Contract Issues series.  Here's what the team faces after the 2011 season:

Eligible For Free Agency (6)

• In one of the year's biggest surprises, Bartolo Colon's name is all over the leaderboard for free agent starters.  An offseason stem cell treatment was a factor, a procedure that was unknown to GM Brian Cashman at the time of the signing and is being investigated by MLB.  If Colon is not linked to HGH and his stellar pitching continues for the remaining three quarters of the season, he has to be looking at at least a nice one-year deal north of $5MM.
• Jorge Posada has been a source of drama but not offensive production this season.  I'm guessing the Yankees move on from Posada, who has hit 267 home runs for them to date.
• Former stars Andruw Jones and Eric Chavez are bench players on one-year deals; Chavez was hitting well when he hit the DL for a foot injury.
• Freddy Garcia has a 3.22 ERA on the season, hanging in there in most of his six starts.  Will he do enough to warrant a big league deal after the season?
• Luis Ayala will also be eligible for free agency.    

Contract Options (5)

• Robinson Cano: $14MM club option with a $2MM buyout.  This should be an easy decision to exercise for the Yankees.
• Nick Swisher: $10.25MM club option with a $1MM buyout.  Swisher's option seemed like an easy choice to exercise, but his bat has yet to come alive in 160 plate appearances this year.  He's got time to bounce back, but the option is not a lock.    
• Damaso Marte: $4MM club option with a $250K buyout.  Marte is likely out for the season with October labrum surgery, in which case the Yankees will have gotten 31 innings for their $12MM.
• C.C. Sabathia: Can opt out of remaining four years, $92MM.  Most expect Sabathia to opt out, though he certainly could re-sign with the Yankees.  GM Brian Cashman told ESPN's Buster Olney he'll stick with his policy of avoiding in-season negotiations, but "we fully expect him to be here."  Sabathia's overall numbers look solid, though he's scuffled in May.  If Sabathia does reach the open market, he'll probably be the best available free agent starter, as he was in the 2008-09 offseason when he received the biggest contract ever for a pitcher.
• Rafael Soriano: Can opt out of remaining two years, $25MM.  Even without knowledge of Soriano's current elbow concerns, I wrote two months ago that Soriano is unlikely to opt out of his contract after the season.  This offseason when he does choose to stick with the contract, don't blame the opt-out clause.  Without it, all the money still would have been guaranteed to him.      

Arbitration Eligible (8)

• First time: Brett Gardner, David Robertson, Chris Dickerson
• Second time: Phil Hughes, Joba Chamberlain, Buddy Carlyle
• Third time: Boone Logan
• Fourth time: Russell Martin

From the Yankees' standpoint, none of these cases should be daunting.  This is only Gardner's second full season, and he doesn't have power, so his arbitration reward will probably be $3MM or less.  Hughes' issues will limit his raise to perhaps a million dollars at most.  Raises for relievers Robertson, Chamberlain, and Logan won't be crazy either.  Martin's hot hitting has tailed off this month.  He could still get a bump to $6MM+, depending on how the rest of his season goes.  I'll use a rough estimate of $17MM to retain the team's arbitration eligibles.

2012 Payroll Obligation

The Yankees' 2012 payroll obligation, according to Cot's, is $140.875MM if options for Swisher and Marte are declined, Cano's option is exercised, Sabathia opts out, and Soriano does not.  That goes up to around $158MM with the arbitration eligibles, about $49MM short of this year's payroll before accounting for minimum salary players.  If Sabathia is re-signed at a $25MM salary for 2012, that still leaves $24MM in '12 salaries to work with before raising payroll.  That'd be enough for Swisher or a replacement, as well as some kind of starting pitching signing to go with Sabathia, A.J. Burnett, and Ivan Nova.  Cashman could find $6MM more with a bump to the 2010 payroll of $213MM. 

The Yankees should be able to address their issues without taking payroll much higher.  If Sabathia leaves, it could be another situation where they struggle to find a good way to spend the excess cash.