The Yankees have long sought to reset their luxury tax penalty clock, and with payroll now finally nearing the tax’s cutoff point, GM Brian Cashman tells Joel Sherman of the New York Post are committed to getting under the $197MM threshold this winter.
“We haven’t had [offseason] meetings like this, but the exclamation point is we are getting under the threshold next year,” Cashman said. “[Greg] Bird is our first baseman moving forward because obviously we believe in him and also because of the cost control. The most important factor is if Bird is worthy enough to be our first baseman and our answer is yes.”
Since the modern luxury tax system was instituted prior to the 2003 season, the Yankees have been over the tax limit every single year, which cost them a whopping $325MM in penalty costs over those first 14 years. Between their financial means and their desire to always be competitive, exceeding the tax threshold was seen as a necessary evil. For instance, the Yankees planned to be under the tax limit several years ago, but after missing the postseason in 2013, they splurged on $555MM in player salaries that offseason to make another push in 2014.
Now, however, the Yankees can realistically aim to avoid the tax thanks to the number of big contracts finally coming off the books this winter (Alex Rodriguez and C.C. Sabathia) as well as $20.4MM for Matt Holliday and Michael Pineda.
Masahiro Tanaka can also opt out of the three years and $67MM remaining on his contract this winter, though “the strong likelihood is that he does not,” according to Sherman. This is noteworthy of itself, as Tanaka would be one of the top pitchers on the open market this winter if he did exercise his opt-out clause. MLBTR’s Connor Byrne examined some of the pros and cons of Tanaka’s decision in a reader poll in early September, as Tanaka’s 4.74 ERA was somewhat inflated by some early-season home run problems, though his health issues and the qualifying offer could impact his market value. (MLBTR readers polled, by the way, were almost split on Tanaka’s decision, with a slim 52.59% voting that he will opt out.)
Beyond just escaping some large contracts, the bonus for the Yankees is that they’ve been able to stay competitive thanks to pre-arbitration players like Aaron Judge, Gary Sanchez and Luis Severino posting star numbers. Bird missed all of 2016 recovering from shoulder surgery and was limited to just 48 games this season due to ankle problems that required a surgical procedure, though Cashman clearly considers Bird to be another key part of the Yankees’ youth movement.
In counting on Bird as the regular first baseman in 2018, Sherman notes that the Yankees are foregoing a pursuit of top free agents options like Eric Hosmer. Chase Headley or Tyler Austin are on hand as in-house first base options if Bird is hurt again or just struggles, with top prospect Miguel Andujar knocking on the door to take over third base and Gleyber Torres potentially on track to make his big league debut in 2018 if he recovers as expected from Tommy John surgery. The Yankees will have positional flexibility with the DH spot open, and could use it to hand out more at-bats to players on rest days, or to lure Shohei Otani to New York.
Beyond just Hosmer and the other first basemen, the firm intent to avoid the luxury tax would seem to take the Bronx Bombers out of the running for most of the biggest free agents available this winter. Many of the most high-priced trade candidates could also be off the table, unless the dealing team is willing to eat some money or if the Yankees are able to unload a big salary back in return. This isn’t to say that New York couldn’t still be active in free agency, perhaps attracting veteran depth pieces who could be willing to play at a relative discount for a shot at a World Series.
Getting under the luxury tax threshold just once would send the Yankees from the highest level of tax payments all the way back to zero. In true Yankees fashion, of course, the team seems likely to exceed the level once again in the 2018-19 offseason, when the likes of Bryce Harper, Manny Machado, Josh Donaldson, and several other superstars hit the market in arguably the most distinguished free agent class of all time. The new CBA imposes stiffer penalties for exceeding the tax limit, both by how much a team exceeds the threshold and if it is exceeded in multiple years, though even that may not necessarily be an issue for the Yankees given their wave of young talent both now and in the near future, plus even more high-priced veterans (Headley, David Robertson, Brett Gardner) coming off the books after 2018.