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Three Teams Exceeded 2019 Luxury Tax Threshold

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The Red Sox, Yankees, and Cubs were the three teams to exceed the luxury tax threshold in 2019, as Jorge Castillo of the Los Angeles Times noted over the weekend. MLBTR has confirmed that is the complete and final list of organizations identified by Major League Baseball as owing competitive balance obligations.

Each of those clubs exceeded $206MM in 2019 payroll, as calculated by Major League Baseball pursuant to the rules governing the competitive balance tax. Generally, the CBT calculation looks to the average annual value of player contracts while also accounting for bonuses and other payroll-related expenses. The CBT threshold rises to $208MM in 2020 and then to $210MM in 2021.

Last year, the Red Sox and Nationals surpassed the spending threshold and paid taxes. The D.C. organization managed to duck under the line but could again be in that tax bracket if it spends to defend its World Series title. The Red Sox are expected to try to duck under the limbo bar in 2020. Meanwhile, the Dodgers have now gone two straight years without paying after a five-season streak of tax bills.

Precise calculations aren’t yet available, but Cot’s on Contracts has estimates of the complicated CBT tabulations. Their figures show both the Nats and Dodgers over the line, though obviously those organizations were able to sneak in just below. The Astros and Phillies appear to have been the next-biggest spenders, though both were a fair sight shy of any tax bills.

The Cot’s figures allow us to make some rough estimates of the actual amounts due. The Red Sox will pay the most, as they were the only team to incur tax liability for consecutive seasons, thus raising the rate. With an estimated payroll of just under $240MM, the Boston org will pay 30% on their first $20MM in overages and 42% on the rest, resulting in an estimated bill of just under $12MM.

The Cubs also ran up a tab that came in just shy of the $240MM mark by Cot’s reckoning. They are not a repeat luxury level team and therefore pay the base rate of 20% for the first $20MM and 32% for the next $20MM in salary over the threshold. That would result in a liability of a little under $8.5MM. Cot’s credits the Yankees with $234MM of spending for CBT purposes. Since the Bronx Bombers spent a year shy of the luxury line, they also get first-time treatment and would stand to owe just over $6.5MM.

None of the three teams came close to topping $246MM in payroll, at which point they’d not only have faced a bigger tax rate on further spending but also would’ve seen their top draft pick moved down the board ten spots. But the trio does still face some ongoing impact beyond the money owed. Inking a free agent who declined a qualifying offer will cost a bit more in compensation than it would have otherwise — specifically, $1MM in international amateur bonus pool spending capacity along with the team’s second and fifth-highest draft picks. The rules also suppress the level of compensation available to teams that lose QO’ed free agents after exceeding the luxury line, though none of these three clubs issued qualifying offers this offseason.

Yankees To Name Carlos Mendoza Bench Coach

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The Yankees are engineering a change in their bench coach position, according to Sweeny Murti if WFAN (Twitter link). Carlos Mendoza will slide over from his infield coach role to take over for Josh Bard, who has been relieved of his duties.

In other news involving the staff under manager Aaron Boone, the Yankees are expected to bring on Matt Blake as pitching coach and Tanner Swanson as catching coach. Both hirings were previously reported; ESPN.com’s Jeff Passan reported Blake’s addition (Twitter link), as we previously covered, while Brandon Warne of Zone Coverage tweeted that Swanson was hired away from the Twins.

Mendoza had worked in his prior role for the past two seasons and obviously impressed the organization. The 39-year-old never cracked the majors as a player but now seems in line for a lengthier tenure as a coach. Bard initially stepped into the bench coach role at the same time Mendoza and Boone first joined the Yankees. The former big-league backstop previously spent time with the Dodgers organization, including one campaign as bullpen coach, after the end of his playing career.

Yankees Notes: Givens, Galvis, Lefty Hitting, Spending

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Some items from the Bronx…

  • The Yankees “tried hard” to land Orioles reliever Mychal Givens at the trade deadline, the New York Post’s Joel Sherman reports.  The right-hander was a popular figure on the rumor mill last July, with such clubs as the Indians, Dodgers, Braves, Phillies, and Nationals all reportedly showing interest in acquiring his services.  It isn’t any surprise that the Yankees were also involved given how New York is constantly looking to reinforce its already strong bullpen, and it isn’t out of the question that the Yankees could ask about Givens again this winter.  The 29-year-old is under team control for two more seasons (and projected to make $3.2MM in arbitration this winter), though Givens is coming off the worst of his five big league seasons.  Givens posted a 12.3 K/9 and 3.31 K/BB rate over 63 innings but his ERA ballooned to 4.57, due in large part to a lot of problems keeping the ball in the park (1.9 HR/9).
  • Sticking with Sherman’s piece, he wonders if the Yankees could perhaps try to land both Givens and Jonathan Villar from the Orioles in a package deal that would also address another team need — a lack of left-handed hitting.  Interestingly, Sherman writes that there is some strategy behind this lineup imbalance, as the Yankees have preferred to deploy right-handed bats with opposite-field power rather than actual left-handed hitters, as lefty bats can be more easily hampered by defensive shifts.  If the Bronx Bombers did decide to add more pop from the left side, however, Sherman feels the best possible solution would be switch-hitting superstar Francisco Lindor, if the Indians made him available in a trade.  Beyond Villar, Sherman lists a few other players (old friend Didi Gregorius, Freddy Galvis, Tucker Barnhart, Jason Castro) who could be signed or acquired in trades to add left-handed balance to either the lineup or bench.  In Galvis’ case, Sherman reports that he was the Yankees’ second choice as shortstop depth last offseason before they landed Troy Tulowitzki.
  • The Yankees’ decision to exercise some financial restraint has drawn criticism from some fans and pundits, particularly since the club has now gone 10 full seasons without a World Series title.  As Fangraphs’ Craig Edwards observes in a look at the last 20 years of Yankees spending, the franchise made a gigantic payroll spike in 2003-2004 (up into the $200MM-$240MM range, around three times as much as the average payroll) that possibly “outstripped what might have been reasonable compared to their revenues and financial status, and that staying at around $240 million reflected a necessary correction.”  The Yankees’ average payroll increase hasn’t matched the rest of the league’s overall increase over the last decade, however, even while the Yankees franchise has increased its revenues.

Latest On Domingo German

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Yankees right-hander Domingo German enjoyed a quality 2019 season before it ended in undignified fashion in late September. German went on administrative leave under the MLB-MLBPA Joint Domestic Violence Policy, thus preventing him from participating in the Yankees’ playoff series against the Twins and Astros. Although the league still hasn’t interviewed German, a resolution to his case should occur “in a matter of weeks,” not months, Ken Davidoff and Dan Martin of the New York Post write.

As is always the case with a player involved in a domestic issue, it’s up in the air whether his team will welcome him back. However, the Yankees are the same club that acquired closer Aroldis Chapman from the Reds in December 2015 when he was amid serious domestic troubles of his own. The league ultimately suspended Chapman for 30 games to open the 2016 season. Now, regardless of whether the Yankees keep German, he could face a ban to start the 2020 campaign after sitting out the last couple weeks of 2019.

The status of German may help inform the Yankees’ offseason plans, as he was one of the team’s most effective rotation options in 2019. The 27-year-old pitched to a 4.03 ERA/4.72 FIP with 9.63 K/9 against 2.45 BB/9 across 143 innings. The Yankees look like a team in need of starting help right now, and the problems in their rotation will become even more acute if they’re unwilling or unable to pencil German into the group for at least the beginning of next season.

Latest On Yankees, Didi Gregorius

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  • The Yankees decided against issuing a one-year, $17.8MM qualifying offer to Didi Gregorius, leaving SNY.tv’s Andy Martino wondering if the shortstop’s days in the Bronx could be over.  One industry source describes the chances of Gregorius returning to New York in 2020 as “a very close call,” especially since Martino notes that Gregorius and his representatives believe they can find a multi-year deal in free agency.  Even after an injury-shortened down year, Gregorius is still the best shortstop option on the free agent market; MLBTR ranked him 12th on our list of the winter’s top 50 free agents and predicted he’d land a three-year, $42MM contract.  It’s worth noting that this deal would work out to less in average annual value than the one-year cost of the QO, so it isn’t out of the question that the Yankees could still try to bring back Gregorius for multiple years, though at a smaller hit to their 2020 luxury tax number.

Yankees To Hire Matt Blake As Pitching Coach

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The Yankees will hire Matt Blake as their new pitching coach, ESPN.com’s Jeff Passan reports (Twitter link).  Blake is being hired out of the Indians front office, as he was promoted to the role of Cleveland’s director of pitching development just two days ago, after working as a pitching coordinator and assistant director of pitching development for the previous three seasons.  Blake also has past ties to the Yankees, as he worked for the Bronx Bombers as an area scout before heading to Cleveland.

At only 33 years old, Blake will provide the younger and more analytic-based approach that the Yankees were seeking to find as they looked to replace longtime pitching coach Larry Rothschild.  Of the four known candidates for the job, three (with former Yankees star David Cone as the outlier) were younger names in their 30’s without much any direct coaching experience on an MLB staff.  University of Michigan pitching coach Chris Fetter and Arkansas pitching coach Matt Hobbs were the two other names linked to the Yankees’ search.

It’s difficult to say the Yankees pitchers exactly struggled last year, as both New York’s starters and relievers ranked in the top half of the league in most major statistical categories despite some key names (Luis Severino, Dellin Betances) lost to injury for virtually the entire season.  However, a lack of reliable innings from the rotation quickly became an issue in the ALCS, as the Yankees leaned hard on their bullpen and ultimately came up short to the Astros in six games.

It will be up to Blake to modernize the Yankees’ handling of their arms, and it perhaps isn’t surprising that New York hired someone from a Cleveland organization that has excelled at developing homegrown pitching in recent years.  Indians manager Terry Francona recently praised Blake’s work in preparing young hurlers such as Jefry Rodriguez, Zach Plesac, and Aaron Civale, with the latter two making their Major League debuts in 2019.

Yankees, Brett Gardner Discussing New Contract

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The Yankees and Brett Gardner have already begun talks about a new contract, MLB Network’s Jon Heyman tweets. A new arrangement between the two sides would bring Gardner back to the Bronx for at least a 13th season.

Gardner, 36, had a career year at the plate in 2019, hitting .251/.325/.503 with 28 home runs, 26 doubles, seven triples and 10 steals (in 12 attempts). The power surge should likely be taken with a grain of salt, thanks to the supercharged ball that led to record-setting home run levels throughout the league, but Gardner still demonstrated that there’s life left in his bat and once again displayed a quality approach at the plate (9.5 percent walk rate, 19.5 percent strikeout rate).

A reunion between the two sides has long looked plausible, but the recent revelation that Aaron Hicks will miss a substantial portion of the 2020 season after undergoing Tommy John surgery only increased the likelihood of a new deal. With Hicks shelved and Jacoby Ellsbury more than two years removed from his last MLB appearance, the Yankees have a clear need in center field. The free-agent market features little in the way of enticing options at the position (beyond Gardner himself), and Gardner was motivated enough to stay in New York last winter that he took what amounted to a $3MM pay cut to return to do so. Given all that context, it’s hardly a surprise to see the two sides proactively begin negotiations.

Gardner isn’t the burner that he once was on the basepaths and in the outfield, but he still remains a quality defender that is capable of handling center field work. He logged 820 innings in center in 2019, plus another 348 in left field, drawing positive marks for his glovework on the whole (+5 Defensive Runs Saved, +3.0 Ultimate Zone Rating, +2 Outs Above Average).

Gardner checked in at No. 32 on MLBTR’s Top 50 free agent rankings this week. As noted within, Gardner’s outstanding season and the thin market for center fielders could seemingly combine to get him a two-year deal elsewhere, but a one-year pact — and a raise on this year’s $7MM salary — to return to the Yankees seems likeliest.

As currently constructed, the Yankees have roughly $158.5MM committed to 10 players for the 2020 season. Add in another $35.9MM of projected arbitration salaries (via MLBTR contributor Matt Swartz) for another 10 players plus a handful of pre-arbitration players to round out the roster, and the Yankees are looking at a payroll around $198MM before making any additions. They’re already at or over the luxury line as it is — luxury payroll, unlike actual payroll, is calculated based on contracts’ average annual value and also includes money for player benefits — though that doesn’t seem likely to be a major roadblock with regard to Gardner.

Offseason Outlook: New York Yankees

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MLBTR is publishing Offseason Outlooks for all 30 teams.  Click here to read the other entries in this series.

The 2019 season didn’t end in ideal fashion for the Yankees, but there is no debating that they posted one of the most impressive years of any team in baseball. A litany of major injuries threatened to torpedo their campaign from Day 1, but the club seldom faltered in the face of that overwhelming adversity. Instead, the Yankees plugged in one surprisingly effective cog after another en route to 103 victories – the third-highest total in the game – and their first AL East title since 2012. The Yankees once again made easy work of the Twins in the ALDS, but just as New York has toyed with Minnesota in October, Houston has done the same to the Bronx Bombers. The Astros eliminated the Yankees for the third time since 2015, cutting them down in a six-game ALCS. Now, general manager Brian Cashman has to continue trying to figure out how to get his team over the Houston hump and back atop the sport.

Guaranteed Contracts

Arbitration-Eligible Players (projections via MLBTR contributor Matt Swartz)

Option Decisions

Free Agents

The offseason is only in its infancy, but Cashman has already gotten a couple key orders of business out of the way. For one, there won’t be any question as to who will be closing games for the Yankees in 2020. The Yankees were facing the departure of star closer Aroldis Chapman, who had a chance to opt out of the last two years and $30MM left on his contract, but the two sides prevented that from happening last weekend. New York added a third year and $18MM to Chapman’s deal, giving him a pact worth $48MM over three seasons. It’s a reasonable deal for the Yankees, as Chapman – despite the series-losing home run he allowed to Houston – remains one of the majors’ premier relievers. Considering Chapman’s lengthy track record of excellence, it wouldn’t have been a surprise to see him break Wade Davis’ average annual value record for a reliever ($17.33MM per annum) had he gotten to free agency, but the Yankees managed to retain their game-ending southpaw for less.

Turning to the position player side, Cashman had noteworthy calls to make at shortstop and at designated hitter/first base the past few days. And he may have opted to say goodbye to two of the Yankees’ most recognizable players in shortstop Didi Gregorius and slugger Edwin Encarnacion. Gregorius is a revered Yankee who was one of the league’s elite shortstops from 2017-18, but he fell flat this year after sitting out the first few months while recovering from Tommy John surgery. As a result of the underwhelming production Gregorius mustered, the Yankees decided not to issue him a $17.8MM qualifying offer. He’s now on the open market without draft compensation weighing him down.

Whether to qualify Gregorius looked like the type of decision that could have gone either way, whereas it’s no surprise the Yankees pulled the plug on Encarnacion’s $20MM option in favor of a $5MM buyout. Encarnacion remains a serious home run threat and a formidable offensive player, but for a soon-to-be 37-year-old with no real defensive value, his option was unpalatable.

Now that Gregorius and Encarnacion aren’t on the Yankees’ roster anymore, it’s fair to wonder what the team will do to replace them. It’s entirely possible they’ll re-up either or both if their markets don’t materialize as hoped. But if not, the Yankees are seemingly in the luxurious position of having ready-made replacements on hand. They could slide budding star second baseman Gleyber Torres to short to replace Gregorius, thus leaving the keystone to versatile infielder DJ LeMahieu. Alternatively, if the Yankees want to make their latest enormous offseason splash on the trade market, they could at least inquire on the Indians’ Francisco Lindor or the Rockies’ Trevor Story. Finding a way to trade for either, albeit at would surely be a sizable cost in assets, would enable the Yankees to keep Torres at second and continue to move LeMahieu around the infield.

The Yankees may need LeMahieu at first and/or third, as there’s an argument their options there aren’t incredibly trustworthy. Third baseman Gio Urshela had an out-of-nowhere breakout season in 2019, but is it sustainable? And the player he replaced, Miguel Andujar, missed almost the entire season with a shoulder injury and wasn’t exactly a source of defensive brilliance as a rookie the previous year. The Yankees may be able to live with Andujar’s defensive shortcomings if he regains form at the plate, especially if they can rotate him in at DH on occasion, but who’s to say he’ll be the same hitter in 2020?

At first base, the Yankees have a pair of sluggers – Luke Voit and Mike Ford – who look capable of holding down the fort (that’s assuming the Yanks abandon their long-running dreams of a Greg Bird breakout and don’t make any other moves like bringing back Encarnacion). Voit’s coming off an injury-wrecked season in which he tailed off badly toward the end, though, and the 27-year-old Ford has just 163 major league plate appearances to his name. LeMahieu would continue to make for nice insurance at both corners, then, though how often he lines up there could depend on whether there’s a Gregorius re-signing or a different middle infield acquisition.

Are there any other splashy scenarios in which the Yankees could give their infield a boost? Sure, they could sign Anthony Rendon to play third base for $200MM-plus or maybe even Josh Donaldson for something in the vicinity of $60MM-$80MM. But if the Yankees, who are always mindful of the luxury tax, are going to spend an exorbitant amount on a free agent, it seems more likely to be a pitcher than a position player.

Meantime, it wouldn’t be remotely surprising to see the Yankees re-sign outfielder Brett Gardner, their longest-tenured player, to what should be another relatively affordable short-term contract. The 36-year-old stuck around on a $7.5MM guarantee last offseason and then proceeded to record one of the most productive seasons of his career. Gardner also showed he’s still capable of manning center, which is hugely important for a New York team whose starter, Aaron Hicks, recently underwent Tommy John surgery. With Hicks set to miss a large portion of 2019, the Yankees need a viable center fielder to slot in alongside corner options Aaron Judge, Giancarlo Stanton, Mike Tauchman, Clint Frazier and, if he re-signs, Cameron Maybin. Free agency’s not teeming with appealing possibilities, though, and trading for Pittsburgh’s Starling Marte may not make sense with Hicks due back in several months and under team control for the long haul. With that in mind, it seems realistic to expect Gardner back in the Bronx in 2020.

Let’s shift to catcher, where Gary Sanchez is coming off another year in which he drew fan and media ire for his strikeout tendencies at the plate and his defensive troubles behind it. Could the Yankees now try to deal Sanchez and look for an upgrade? Possibly. But where would they get this upgrade? Sanchez is hands down a better choice than every free agent but Yasmani Grandal, who’s four years older and looks likely to command a guarantee worth more than $60MM. And unlike last offseason, there’s no J.T. Realmuto on the trade market. What does that mean? Expect Sanchez back in pinstripes next year, possibly with Kyle Higashioka as a backup to replace free agent Austin Romine.

And now we arrive at the pitching staff, a source of frustration for Yankees fans in 2019. The Yankees had to go through almost the entire year without their ace, Luis Severino, whose shoulder and lat injuries held him to 12 regular-season innings. The good news is that he should be ready to lead their starting staff again in 2020, while James Paxton and Masahiro Tanaka will continue to provide a pair of nice complements. But what about the rest of the rotation? There’s no more CC Sabathia, who called it a (Hall of Fame?) career. Meanwhile, unless they swap him for another bad contract, the Yankees are probably stuck with the aging J.A. Happ for the last season of a two-year, $34MM pact. There’s a chance they may never get another pitch from 2019 standout Domingo German, whose season ended in September when he landed on administrative leave under the MLB-MLBPA Joint Domestic Violence Policy. Deivi Garcia’s the organization’s No. 1 prospect, though he’s still just 20 and has thrown a mere 40 innings at the Triple-A level (where he posted a 5.40 ERA/5.77 FIP this year). Jordan Montgomery (a 2018 Tommy John patient) and Jonathan Loaisiga could be wild cards, but the Yankees might be pressing their luck by locking either of them into rotation jobs.

Frankly, if the Yankees want to go into Evil Empire mode and try to steal a high-priced free agent from the rest of the league, the rotation seems like the place for it. There happen to be a couple aces on the table in Gerrit Cole and Stephen Strasburg, but whether the Yankees would crush the $200MM mark for the former and go well above $150MM for the latter is in question. While it’s well-documented that the Yankees have coveted Cole in the past, it’s worth noting they haven’t reeled in a free agent for anything close to the type of money he’s about to receive since they re-signed Alex Rodriguez to a $275MM deal entering 2008. George Steinbrenner was still alive at that point. That doesn’t mean today’s Hal Steinbrenner-run Yankees won’t sign Cole, Strasburg or at least someone like Zack Wheeler, Madison Bumgarner or Hyun-Jin Ryu, but it would be difficult to call the Yankees favorites in any of those cases.

It may be easier to envision a trade for a starter coming together, considering Cashman has swung deals for the likes of Paxton, Happ, Sonny Gray and Lance Lynn over the past couple years. Would he do it again, this time for someone like Corey Kluber or Matthew Boyd? It’s doubtful anyone but a Cole or a Strasburg would suffice for a high number of Yankees fans, but with Severino back at full strength, there’s a case the team doesn’t have to pick up a true front-line type before next season.

Regardless of how the Yankees fill out the rest of their rotation before next year, the offseason heavy lifting in their bullpen already appears to be done with Chapman staying in the mix. The Yankees doled out a combined $66MM in guarantees to Zack Britton and Adam Ottavino in free agency last winter. For the most part, those signings have worked out well so far. Those two will be back, while Chapman, Tommy Kahnle, Chad Green (if he doesn’t fill an opener role next season), Luis Cessa and Loaisiga are among holdovers who could or will join them.

At this point, the main concern centering on New York’s bullpen is whether its relationship with longtime force Dellin Betances is over. The Yankees showed they could succeed in 2019 without the four-time All-Star, whom shoulder problems stopped from making his season debut until Sept. 15. Betances retired both batters he faced that day in Toronto, but he suffered a partial left Achilles tear while hopping off the mound at the end of the inning. That brought a quick and cruel close to a Murphy’s Law season for Betances, and it was especially inopportune during a contract year. However, the injury’s not so severe that it will hinder the soon-to-be 32-year-old from faring somewhat nicely on the open market. MLBTR has Betances in line for a $7MM guarantee, and with the tax-minded Yankees paying close attention to every penny nowadays, they may deem that too expensive for a reliever coming off a lost season.

As always, the Yankees will be one of the game’s most fascinating teams to watch this offseason. Are they a sleeping giant that could swoop in for Lindor, Cole or maybe even both? Perhaps. On the other hand, the Yankees are talented enough that they could mostly stand pat in the coming months and enter 2020 in better shape than just about everyone else. The avenue they take will depend on how much much Steinbrenner’s willing to spend on a roster that exceeded the luxury tax this year and already looks as if it’s on pace to breeze past the $208MM threshold for next season. Unless Steinbrenner’s OK with outspending the second penalty bracket ($228MM) or even the third ($248MM), this might not be a particularly eventful winter in the Bronx.

Yankees Interview David Cone For Pitching Coach Vacancy

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The Yankees have added an interesting name to their search for a pitching coach. Former major league right-hander David Cone interviewed for the position last week, George A. King III of the New York Post reports. He joins college pitching coaches Chris Fetter (University of Michigan) and Matt Hobbs (Arkansas) as the only known candidates for the job.

The Yankees have been in the market for a pitching coach since they parted with Larry Rothschild last week. Rothschild had held the role since 2011, but Aaron Boone – who inherited Rothschild upon his hiring as manager two years ago – elected to go in another direction. Boone and the Yankees are reportedly seeking someone with a more modern approach than what Rothschild offered.

Cone, like Boone, could now join the Yankees’ staff straight out of the broadcast booth. A member of the Royals, Mets, Yankees, Blue Jays and Red Sox from 1986-2003, Cone has been a consistent presence on Yankees broadcasts on the YES Network since his playing career ended. While the soon-to-be 57-year-old Cone is much older than the two 30-somethings Fetter and Hobbs, his expertise as a former star MLB hurler – not to mention the openness to analytics he displays as a color commentator – could make him a real contender for the role.

Yankees Outright Jake Barrett, Tyler Lyons

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The Yankees have outrighted righty Jake Barrett and lefty Tyler Lyons, per the club. Lyons has rejected the assignment in favor of free agency.

Barrett, 28, will evidently remain with the New York organization for the time being. He only made two MLB appearances after being claimed but showed quite a bit of promise in 15 1/3 Triple-A innings. He has had little trouble dominating batters in the upper minors in recent years, but hasn’t consistently recorded outs in the bigs and spent much of the 2019 campaign on ice owing to elbow issues.

As for Lyons, he did compile an eyebrow-raising 12:2 K/BB ratio in 8 2/3 innings in New York. He also coughed up three long balls in that sample and has generally struggled in limited opportunities over the past two seasons.

Lyons, 31, had projected to earn $800K in arbitration. Trimming him from the roster will knock out that potential payout. But the Yankees decided not to move first baseman Greg Bird off of the 40-man today. He projects to earn $1.3MM after another forgettable campaign. Whether or not he’ll be tendered — and, if so, remain with the Yanks — remains to be seen, but is still an open possibility.

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