Josh Hamilton to the Yankees?

No, the New York Yankees will not, in all likelihood, sign Josh Hamilton. He is looking for a long-term, expensive deal and the Yankees are trying to cut their budget for 2014. But what is the offseason for, if not to wildly speculate about interesting possibilities? 

So if the Yankees can’t pay Hamilton $20 million a year for seven years, then how could they possibly get him? Well, here’s an idea (one that I admittedly stole from Jeff Sullivan on his FanGraphs chat yesterday) — what if the Yankees give Hamilton a one-year deal for some huge sum of money? Like, over $30 million. There would be no options, no incentives, nothing; just one year and a large wad of cash.

The reasons for this are simple. The Yankees don’t need to cut their payroll for 2013 — only 2014. They’re already getting hit with the maximum luxury tax rate (50 percent), and although they would have to pay that rate on Hamilton’s entire contract the cost could pay off with one of the best hitters in baseball in the New York outfield.

Let’s see how this would work practically. A few weeks ago, I wrote about the Yankees’ 2013 payroll, and estimated that they would spend a little over $200 million on their players next season. In my theoretical roster, I had the Yankees signing Ichiro Suzuki for $8 million and signing Casey Kotchman as a DH/utility player for $3 million. If the Yankees got Hamilton, they wouldn’t need Kotchman, as Hamilton would probably switch between DH and corner outfield throughout the season.

That swing would look great in a Yankees uniform. But is it worth the price? (Image: Denny Medley-US PRESSWIRE)

That leaves around $200 million, plus whatever they would give Hamilton. Let’s figure out what New York would need to give Hamilton for one year in order for the deal to be worth it for him. Hamilton is already 31-years-old, and will turn 32 in May of next year. Every year he gets older is less money that he will receive as a free agent. So unless Hamilton absolutely raked for one year with the Yankees, he would likely take a pay cut in the 2013-14 offseason.

That’s a big “unless,” though. Even though Hamilton had a great season in 2012, he was streaky and inconsistent, and ended the season with a very bad taste in the Rangers’ mouths. If he was able to show that he could handle the trials and tribulations of a big market like New York, while also producing at an elite level, he could potentially receive an even larger contract in 2014.

On the other hand, there’s the ubiquitous risk of injury, or simply an off-year, which would significantly decrease Hamilton’s salary in following years. This is probably more likely than the possibility that his performance will increase his salary in 2014 and beyond. Given that, how much more would the Yankees need to pay him for one year to overcome the risk inherent in such a contract?

Say Hamilton produces at a high level in 2013, but still declines from last year, ending the season with about four wins above replacement. That would make him about a 4-win player three years in a row, which, at 32-years-old, would only get worse over time. He would essentially be a slightly better Nick Swisher, and would probably be paid accordingly.

Although Hamilton’s agent is asking for an insane seven-year, $175 million contract, my guess is that he’ll make closer to five years, $110 million ($22 million per year) this offseason. But with one more year under his belt and another year removed from his 8-win season, the contract would decrease significantly in another year.

Let’s say it decreases to four years, $72 million ($18 million per year) if he signs it before the 2014 season. That’s $38 million that he would be missing out on, which the Yankees would have to make up for in 2013. Plus, when you take into account a risk of injury, the number probably moves to $40 million or more.

So would Hamilton be worth $40 million for one year? It sounds like a ton of money, and it is. It would blow every other player’s salary out of the water. The Yankees’ payroll would jump to $240 million or so, the highest team payroll ever. Plus, they would have to pay a 50 percent luxury tax on that money, meaning the one-year Hamilton contract would jump to an absurd overall cost of $60 MILLION! Wow! There’s no way that would be worth it, right?

Well, no, probably not. If Hamilton was a 4-win player, the Yankees would essentially be paying him $15 million per win, about three times the normal rate. On the other hand, in a division that is looking extremely competitive, four wins could make a massive difference. If the Yankees moved from being a 90-win team to a 94-win team with Hamilton, they would essentially be guaranteeing a spot in the playoffs, versus possibly missing it entirely (at least based on last year’s standings). Is that worth $60 million? If it meant a World Series title, then yeah, it would probably be worth it. But that’s a big if. The Yankees could easily lose in the first round of the playoffs, and that $60 million would go down the drain. Hamilton could get injured. Four wins could be insufficient to make the playoffs.

So, paying Josh Hamilton $40 million for one year is probably a bad idea. However, if they could get him for a cheaper cost, maybe $30 million, it’s a very interesting prospect that Brian Cashman should strongly consider. With the current AL East situation, four (or more) wins from Hamilton could make a massive difference, possibly between missing the playoffs entirely to winning the World Series. But due to the risks involved for Hamilton, the Yankees would just need to pay him too much money to be worth this enticing possibility.