Yankees well on their way to blowing past luxury tax threshold

Aroldis Chapman #54 of the New York Yankees (Photo by Elsa/Getty Images)
Aroldis Chapman #54 of the New York Yankees (Photo by Elsa/Getty Images) /

Following the Yankees and closer Aroldis Chapman agreeing to add an extra year to his current contract, thereby avoiding an opt-out, one thing is apparent — the Yanks will exceed the luxury tax in 2020.

Remember when the Yankees were reluctant to offer contract extensions to players just to avoid them hitting the open market? Boy, how times have changed.

The latest Yankee to cash in on the new Steinbrenner way of business is closer Aroldis Chapman.

Chapman, who had two years, $30 million remaining on his original contract, told the club that if an extension wasn’t granted, he’d look for a better deal elsewhere.

Therefore, after winning the AL Reliever of the Year Award, the Yankees front office decided that keeping its dynamic bullpen intact was crucial, considering the sometimes unreliable market for starting pitchers.

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The 31-year-old six-time All-Star is now signed through the 2022 season when that final year in pinstripes will pay him a cool $18 million. Overall, since signing with New York before the 2017 season, Chapman has secured the richest deal in baseball history for a closer — six years, $104 million.

The only clause that remains in Chappy’s deal is a modified no-trade agreement that says he can not be dealt to a West coast team between 2020-21.

Whether or not his stuff will be worth that enormous price tag in three years is a topic for another time. Instead, it’s worth taking a look at where the Yankees payroll stands even before the hot stove heats up.

Over the next three years, Chapman will cost the Yanks $17.5M towards the luxury tax. Considering they now have 10 players signed for next season that total $154.5M with that looming threshold of $208M, things are going to get interesting this winter for GM Brian Cashman and company.

According to MLB Trade Rumors, the Yankees have 12 arbitration-eligible players, estimated to make a total of $37.5M in 2020. While the club could non-tender the likes of Greg Bird, Tyler Lyons, and Jonathan Holder — that would only save $2.9M, although it would open up a few 40-man roster spots.

With each MLB club charged an estimated $15M towards the luxury tax for insurance and pensions — that takes the Yankees to $207M — and we haven’t even discussed re-signing any in-house free agents such as Edwin Encarnacion, Brett Gardner, Dellin Betances, Austin Romine or Cameron Maybin.

Let’s not forget about non-arbitration eligible players that need to be paid, such as Tyler Wade, Mike Tauchman and Mike Ford, just to name a few. Hence, the luxury tax is already in the Yanks’ rearview mirror.

Next up would be tier 2 of the luxury tax penalty system ($228M). Without dealing any higher-priced players, New York would have between $20-40M before they trigger a code red — the third level of the threshold ($248M). It’s the one where Hal Steinbrenner’s head explodes.

Should the Yankees decide to offer Didi Gregorius the $17.8M qualifying offer — and he accepts, not to mention, re-signing a few of those key backups to round out the big league roster — and of course, inking a No. 1 pitcher such as Gerrit Cole or Stephen Strasburg for anywhere between $25-35M per season — the Yankees will be paying an exorbitant penalty in 2021.

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However, putting the best team on the field next season — one that ends with a victory parade down the Canyon of Heroes should be the only course of action taken this offseason. But then again, it’s always easy to tell other people how to spend their money.