Can Yankees Stay Under the New Luxury Tax Threshold in 2017?
While the new Collective Bargaining Agreement raised the threshold for the luxury tax, it may not be high enough for the New York Yankees to get under for 2017 and still remain competitive.
The new CBA made several changes that will impact the way the New York Yankees do business over the next few years, but perhaps none more so than the rise in the luxury tax ceiling. Yankees principal owner Hal Steinbrenner has been very vocal about his desire to get his club underneath the threshold in the near future, to avoid having to essentially pay double on all signings the organization makes.
As if that weren’t incentive enough, the new CBA has added even more penalties for clubs exceeding the ceiling. Bob Nightengale of USA Today reported out the new, harsher system:
Presumably, that will give the Yankees’ owner increased incentive to get under as soon as possible. Steinbrenner has previously said he would like to be below the limit within the next two seasons, meaning for either 2017 or 2018.
ESPN’s Jayson Stark reports that the luxury tax will go up slightly in each season of the new five-year labor deal, starting with $195 million in 2017. It will then progress to $197 million, $206 million, $208 million, and finally $210 million in 2021 in the final year of the pact.
According to the estimate at Baseball-Reference, the New York Yankees currently have seven players signed to guaranteed contracts totaling $136.2 million for next season. When you add in the projected $22.1 million for their seven arbitration-eligible players, you get a $158.3 payroll for 14 players next year.
That leaves 11 spots open on the 25-man roster. Now, the Yankees could choose to fill all of those spots very cheaply with guys from their system. It would cost about $8.48 million to do that, leaving New York with a total payroll of $166.7 million.
That means the front office has about $25-28 million to work with this winter and still get under the luxury tax. The team is said to be pursuing an elite closer, a starting pitcher, and a new designated hitter this winter. Aroldis Chapman, Rich Hill, and Matt Holliday have been the three most connected to the team in the rumor mill lately. Those three guys are predicted by MLB Trade Rumors to sign a combined $45 million annually this offseason.
Even getting just two of those three players would likely put the team over the limit. Unless the Yankees want to completely punt this winter and the 2017 season, it’s hard to imagine them getting under the luxury tax ceiling this year.
However, things look much rosier next year, with Alex Rodriguez, CC Sabathia, and possibly Masahiro Tanaka coming off the books. New York has just $84 million in guaranteed deals for 2018, and that could be even lower if the team moves Brett Gardner and/or Jacoby Ellsbury by then.
Next: Predicting the Yankees' Moves at the Winter Meetings
If I had Hal’s ear, I’d recommend the owner take a deep breath and tough it out one more year, when he’ll be able to get under the limit much more painlessly in 2018.