Yankees insider says quiet part out loud about luxury tax and free agency

Hey, here’s something that absolutely no Yankees fan wants to hear: a sobering reminder that the luxury tax threshold will be guiding their team’s spending for the foreseeable future!

As Yankees insider Sweeney Murti pointed out on Monday, supporters should be paying special attention to what happens to the tax as the players and owners go back and forth in their currently contentious CBA discussions.

Because, yes, facts are facts. The Yankees’ decision-making — at shortstop, at catcher, and on the mound — depends largely on resetting the tax every few years and avoiding spreading the wealth, even at the expense of surrendering depth.

That affects Carlos Correa. It halted Max Scherzer talks before they began. Hell, it even changes the calculus of an Aaron Judge extension, something the NEW YORK YANKEES should not be waffling over whatsoever.

Alas, the luxury tax has been working as nearly a hard cap for several years now, as the penalties for payroll transgressions have grown steeper, starting in 2017 when the most recent CBA was finalized.

This offseason, with so much else to work out between the players and owners, nobody’s likely to budge on something that hurts the richest teams and aids in creating parity, theoretically.

So, while Yankee fans must keep an eye on the No. 1 determinant of their future, they shouldn’t get their hopes up that anything is about to change.

Yankees’ free agent spending depends on the luxury tax and CBA.

Don’t shoot the messenger! According to Murti:

"And that brings us back to the ultra-important part of the current CBA negotiations: the new thresholds, the structure of the penalties, and the disbursement of the collected money will all be key in determining where the Yankees go with their payrolls in the near future. There are 29 other teams that like seeing some sort of cap on the Yankees spending, and that’s exactly what they created – a soft cap treated like a cap nonetheless. And the players’ union agreed to it.The last CBA introduced penalties involving draft picks, international money, and subsidies. If all of these are unchanged in the new CBA, with only moderate increases to the thresholds, it is likely to be more of the same from the Yankees going forward, despite revenues that continue to grow."

Essentially, one of very few things that ownership and the MLBPA agrees on is that the Yankees can get too powerful when unchecked. Awesome! Very helpful.

Amid all their other disagreements, don’t expect the two sides to do the Yankees any favors by decreasing the penalties they introduced last time.

We were told New York’s front office planned to spend this offseason after ducking below the tax last year — and they basically have to surpass the number if they do anything. The only way to skirt the threshold at this point would be to field half a roster of minor-leaguers, which absolutely no one should suggest to Hal Steinbrenner. In fact, delete that.

The bottom line is that New York can’t fathom watching their draft slot fall 10 spots or losing draft pool money, rendering it near-impossible for them to overpay late-round sleeper picks they believe in. And this is not to mention international free agency, which might move to a draft system soon, but currently is restricted by passing the tax, too. This is the Yankees’ bread and butter.

As long as things stay complicated in the new negotiations and the rest of MLB demands more than just cash from the Yanks, expect a “ducking” year below the limbo pole every few seasons.

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