A look at the Yankees payroll entering the offseason

Payroll has been a hot button issue for the Yankees for roughly a decade now. It’s amazing to write that sentence, but it’s true. For far too long we as fans have had to wonder whether or not the Yankees, the richest organization in the sport, would flex its financial might. We probably shouldn’t get our hopes up anymore.

Hal Steinbrenner’s mantra is that the Yankees should be able to win with payrolls below the luxury tax threshold, of course. I think everyone reading this knows how we here at the blog feel about that at this point, so no need to beat a dead horse. All I’ll say is that the team’s payroll is largely unchanged since 2005 while revenues have skyrocketed. The club has decided to treat the luxury tax as a de facto salary cap, but in what I’ll illustrate below, you’ll see that it will be difficult for the team to avoid the tax in 2022 (pending CBA negotiations).

It’s important to note that there is no new collective bargaining agreement in place yet for 2022 and beyond, so the luxury tax system as we know it is likely to change (I sure hope so). The minimum threshold (currently $210 million) should go up significantly, though I’m not going to hold my breath. With all that in mind, let’s take a look at where the team’s payroll stands ahead of this winter’s activity.

Guarantees

PlayerSalary ($M)AAV ($M)
Gerrit Cole$36.000$36.000
Giancarlo Stanton*$29.000$25.000
Aroldis Chapman$16.000$17.467
DJ LeMahieu$15.000$15.000
Zack Britton$14.000$14.000
Rougned Odor*$12.333$8.250
Aaron Hicks$10.786$10.000
Luis Severino$11.500$10.000
TOTAL$144.619$135.717
*See the “Other” section for more details.

Options

Brett Gardner: The 38 year-old outfielder has a player option worth $2.3 million, but if he declines, the Yankees can exercise a $7.15 million club option to retain him. I anticipate both Gardner and the Yankees declining those options, which will result in the Yankees paying a $1.15 million buyout. I think Gardner could get something a bit closer to his 2020 salary ($5.15 million) and will try to negotiate a new deal with the Yankees.

Joely Rodríguez: The Yankees hold a $3 million team option on the lefty reliever. Should the team decline, a $500,000 buyout is due to Rodríguez.

Darren O’Day: Odds are that O’Day will exercise his $1.4 million player option after missing most of the season due to injury. In the off chance that he declines, the Yankees can either exercise a $3.15 million club option or pay a $700,000 buyout. Again, bet on the player option being picked up.

Arbitration

MLB Trade Rumors published Matt Swartz’ projected 2022 arbitration salaries yesterday. The Yankees have 19 arbitration eligible players. Here are their projected salaries for 2022:

PlayerSalary ($M)
Aaron Judge$17.1000
Joey Gallo$10.200
Gary Sánchez$7.900
Gio Urshela$6.200
Gleyber Torres$5.900
Luke Voit$5.400
Jordan Montgomery$4.800
Jameson Taillon$4.700
Chad Green$4.100
Clint Frazier$2.400
Domingo Germán$2.100
Miguel Andújar$1.700
Wandy Peralta$1.700
Jonathan Loáisiga$1.700
Kyle Higashioka$1.200
Lucas Luetge$1.100
Clay Holmes$1.000
Tyler Wade$0.700
Tim Locastro$0.700
TOTAL$80.600

Keep in mind that not all of these players will actually be on the team next season. Guys like Voit, Andújar, and Frazier could be dealt before the non-tender deadline. The Yankees almost certainly will DFA Locastro once he comes off the injured list after the World Series. Other guys could go too.

Assuming the Yankees move Voit, Andújar, and Frazier via trade and DFA Locastro, the total salary estimate for arbitration eligible players decreases to $70.4 million.

Other

Marlins payment: The Marlins owe the Yankees $30 million to be paid in installments. Those installments don’t actually start until 2026. From a luxury tax standpoint, this reduces the Yankees’ Competitive Balance Tax payroll by $3 million annually. So Stanton’s net CBT hit is really $22 million.

Rangers payment: Texas is covering the entirety of Odor’s contract, so those guaranteed amounts I cited above are effectively reduced to zero at the end of the day.

Player benefit costs: Cot’s estimates $16.0 million in player benefits for the 2022 season, which covers things like health and pension benefits. This counts toward the CBT payroll under the current CBA, but that could change depending on this winter’s negotiations.

Pre-arbitration 40-man roster: Entering 2021, the league minimum salary was $570,500. The figure will go up in 2022, but how much depends on the new CBA negotiations. For the purpose of this exercise, let’s assume a $600,000 minimum. Let’s also assume that the Yankees carry 10 pre-arb players on the roster for the majority of the season. That’s approximately another $6 million tacked on to the payroll.

40-man players in the minors: These players salaries count too while down in Scranton or Somerset (or elsewhere). Cot’s puts this figure at $2.25 million.

Grand Total

Let’s put all of this together now with a few assumptions.

First, the buyouts. I think Gardner and Rodríguez will receive buyouts, whereas O’Day sticks around on his own volition. This adds $3.05 million to the team’s payroll. Let’s also assume that the Yankees dump Locastro and trade Voit, Andújar, and Frazier.

With all that in mind, here’s the projection of the Yankees’ payroll going into the offseason:

CategorySalary ($M)AAV ($M)
Guarantees$144.619$135.717
Options$3.050$3.050
Arbitration$70.400$70.400
Marlins Payment$0.000($3.000)
Rangers Payment($12.333)($8.250)
Player Benefits$16.000$16.000
Pre-Arbitration$6.000$6.000
40-man in minors$2.250$2.250
GRAND TOTAL$229.986$222.167

Again, who knows what the new luxury tax system will look like in 2022, but clearly, the Yankees will be above the first tranche ($210 million) if the same system is carried over. Since the team got under the tax threshold this season, they would be treated as a first time offender and pay a 20 percent tax on amounts above $210 million. The luxury tax could look very different next year and beyond.

Regardless of what system a new CBA implements, the Yankees will have no choice but to increase payroll next season. All of the arbitration eligible players are the drivers of the increase. This season, Cot’s estimated the Yankees’ Opening Day 2021 payroll at $197.625 million, with the luxury tax figure just under $208 million. So, the total dollar baseline increase is a bit over $30 million, whereas the luxury tax payroll is up around $14 million.

Sources: Cot’s Baseball Contracts, MLB Trade Rumors

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20 Comments

  1. Steve T

    If you think the Yankees are bad at player development (see regressions of: Torres, Sanchez, Frazier, Andujar, et al.), then you shouldn’t be for waiting a year or 2 for Volpe or Peraza to be the savior at SS. Trade 2 of Torres, Volpe, Peraza for pieces that fit better (cough Olson cough) and sign Seager. The team needs an overhaul up the middle but given their payroll and resistance to spend more, I’m worried the Yanks will just run it back again and keep waiting for things to get better. Hugging prospects got us to where we are now. It’s time to act or get used to 4th place.

  2. JerseyJerry

    I’ll bet that Gardy takes the player option. He then either hangs around as the 4th OF or makes the Yanks “retire” him and he goes home and banks the cash!

    • I’m far from a big Gardy fan but the guy is a lifetime Yankee who has likely played above his talent level for most of his career and plays hard each and every time he’s on the field, why the hatred?

      His player option is very low for someone with so much service time and he was forced into playing so much this year because of Hicks’ injury.

      Do the Yankees need an upgrade in the outfield? Yes, of course.

      Should Gardner get blamed for that shortcoming? Absolutely no

  3. Wire Fan

    I would like to see them make a play for Matt Olson. The A’s have a ton of arbitration guys and probably can’t afford all of them. This would give them good IF depth with Gio, Torres and DJL sharing 2nd and 3rd. And DJL as the backup 1st, Gio or Torres as the backup SS. Also would mean the end of Odor (a backup 2nd base only option is just poor roster construction)

    I don’t see them going big on a SS, more likely a 1-2 year stopgap as they hope Peraza or Volpe are options for 2023. With Stanton, Hicks and DJL all on long term deals, a long term SS locks in half of the position player roster on fairly big money for a while. And they also need to decide what to do long term with Judge. A long term deal to a SS would probably mean the last year for Judge.

    • DZB

      I wonder if Urshela has been too disappointing since his breakout season to go back to the A’s in a deal like that. I suppose that would also make more sense if he was still very cheap, but he is not all that cheap.

      Another thought is trading Volpe (probably with other pieces) towards Olson and signing a FA SS, That could make more sense given the window to win is now, but they haven’t been willing to trade high end prospects in recent years (presumably to ensure their longer term competitiveness, which is somewhat understandable I suppose).

      • MikeD

        Disappointing since his breakout season? His breakout was in 2019, when he posted a 133 OPS+. The following season, 2020, he posted an even higher 137 OPS+. This season was definitely down with injuries, but I suspect there would be a decent market for him if they opt to move him.

    • Matt Olson would be a huge bump to this club and there aren’t many players I would be heartbroken to give up to get him.

      Your last paragraph is very disheartening to read. Unfortunately I think you’re right about the Yankees feeling this way. They should absolutely trade Torres, Peraza and/or Volpe or whoever for someone that fits the roster like Olson and then sign Correa/Seagar but they won’t. Why keep those two because they MIGHT turn out to be almost as good as one of those FA SS one day when those exact FA SS are available NOW for nothing but money. It also sucks that you’re probably right about the Judge extension preventing the team from signing who they need to win this year. This is the NY Yankees we’re talking about here, the fact that we have quabble and ring our hands about “if they spend X here they can’t spend Y here” is pathetic.

    • I agree that Olson is the perfect guy for the Yankees if he’s available. Left handed with power, has cut down on his K’s (88 walks and 113 K’s in 2021 is a great ratio for a power bat), and they’d have him for two years before needing to sign him to a bigger contract.

      As much as I like Rizzo he’s older and Olson is also a Gold Glove level 1st baseman.

      I would also agree on keeping SS open for either Peraza or Volpe, all they have to do is look to the past and the way they handled Jeter (signing Tony Fernandez as a stop gap who then got hurt) and, if they truly believe either or both at real prospects, get a good defender like Simmons for a year.

      And they need to keep Judge, period, he’s far and away the best player on the team.

      Here is one more thought for those who think that using your bullpen extensively each and every day is good baseball-how many teams have won a World Series doing that? At the end of the day, a team with strong starting pitching has a big advantage in the playoffs when the opposing team starts seeing these bullpen guys on a daily basis. Just look at the way the Rays started giving up runs to the Sox in the ALDS.

      The Yankees need a strong starting rotation with guys who can go at least 6 or 7 on a regular basis, 4 or 5 innings just isn’t good enough. Of the current staff, only Cole and Montgomery seem to fit that mold-Taillon is a free agent in 2023 and would need to have a very strong season to justify any kind of contract then. You aren’t going to get starters going 6 or 7 unless you let them take some lumps and learn how to get through the order 3X. For 2022, Severino is certainly back in the rotation and of the remaining guys I’d have Gil and King available to start (I don’t like German at all) but they will likely either sign a free agent or trade for an established starter during the off season.

  4. Dan C

    Big changes need to come. Heaney’s already gone and Kluber won’t be back, so that’s two down. With Texas paying the entirety of Odor’s contract, maybe the Yankees can use that as bait to dump Odor and Gallo on some needy team and get prospects in return. Everyone likes Rizzo, but I don’t see it. He’s already rejected 5 years / $70M. Yankees can’t afford him and fill needs at C, SS, CF, and another top P (Ray?). Yankees are stuck with the Hicks headache too. Voit, Frazier, or Andujar hopefully can be moved before Yankees have to decide whether or not to tender them. I don’t see it happening, but would love to move on from both Sanchez and Higgy. Unfortunately, there doesn’t seem to be anyone to replace them with. Let’s hope something shakes out over the winter.

  5. Steve

    Allowing player benefits to be counted toward the LT payroll is the second dumbest thing the MLBPA has ever agreed to…the first being the LT.

    • DZB

      The two are really the same issue – the presence of the LT system. Once you set the thresholds, the inclusion of player benefits basically just reduces the thresholds for the different penalties. So it is not stupid to include it given it is part of the money paid by teams to players, it is dumb for the MLBPA to agree to the LT penalties. Once those are in place, whether or not you include the player benefits makes no difference since it is the presence of thresholds and penalties that drives down salaries (I mean, they would have presumably just reduced the thresholds if they didn’t include benefits in the total payroll value)

  6. Mike

    I truly feel that Hals objectives do not fit what we as Yankee fans truly want or expect. I feel as if he’s using our love for this franchise and some of the players to sell tickets and get ratings on YES. It’s unfortunate that we might need to change the team to win but imo changes need to be made. Maybe it’s Boones fault, maybe it’s Cashman, maybe it’s the analytics department. Personally I would like to see a little more old school ball strikeout less, put the ball in more , and just be over all more athletic. At this point I just hate seeing the team lose and franchise lose.

    • Steve

      Hal has yet to prove he cares more about winning a championship than staying below the LT. Every year he does just enough to say they’re trying to win and that’s it.

  7. It sure doesn’t look good but expect the luxury tax to be boosted if not eliminated in some way. I agree Rizzo should stay but for no more than two years and maybe an option year. He may get more somewhere else. Andujar could be good guy to move around. Thinking Frazier gets cut and brought back on smaller non guaranteed deal with incentives to see if he’s healthy. Tucker Barnhardt could be catcher of the future. Lefty. Reds have $7M option but doubtful they’ll pick it up. Fmr gold glover. O’day will reject option and take $700,000 buyout. Why not? He only has to get at least $700,000 contract for next year just to break even ($1.4M option) and if healthy he’ll get more. Gardy should retire. And Derek as far as buyouts–don’t they count toward 2021 salary and not 2022?

  8. Anthony Rizzeddardo

    So what you’re saying, Derek, is that there won’t be one single dime to spend on a SS or starter. So many dollars flushed right down the toilet by Cash. Chappy and Britton a combined $30 million when Loisaga and Holmes could do the same thing for peanuts. Giving O’day a player option was dumb. The reason the Rays and Sox are so good is because they don’t waste all this money on crap. $36 million spent on an “ace” with a 6 ERA down the stretch. At least Stanton earned it. I wouldn’t give Gallo one penny more. Trade him to a team looking for a .200 hitter who strikes out 4 times a game and can’t catch a fly ball. I feel like the Rangers suckered Cash into taking Odor and Gallo. If those two are still two key cogs in the lineup next year we might as well resign ourselves to 4th place.

    I wouldn’t bring Gardy back. Florial is ready and can do the same thing better for less. And Greg Allen could be brought back as the 4th OFer. Stanton can play the field more. Gallo should be traded. I would trade Voit, Andujar and Frazier and bring Rizzo back with the cash savings. At least he can put the bat on the ball. We need more average hitters and less .200 hitters that strike out 4 times a game. Speaking of which, Gary Sanchez should be traded. I don’t know if there are any good Cs out there in free agency but it’s time to move on from Gary. He hasn’t improved at all the last few years and Boone’s hands off approach has just made him lazier and there’s no accountability. I’d rather have a great defensive catcher who doesn’t hit as well than a bad defensive catcher who hits .200 and the occasional dinger. Bring back Joeley and the gritty gutty Locastro.

  9. HenryKrinkle

    I don’t see all three (Voit, Andujar, Frazier) being traded. Trading two could leave an opening for the other. With Frazier’s new problem, I think Andujar has the most trade value, but his type of bat is exactly what they need now. You could use him at 1b/DH/LF/3b. Also, I don’t think Gardner gets anywhere near 5mil at this point, from any team — and maybe O’ Day retires.

    • Bill Baxter

      Andujar hasn’t hit since 2018. He might have an option year left though, so it might be worth keeping him around as insurance to see if he can finally stay healthy and return to form. No way he should be counted on for opening day roster though. He’s injury insurance at best at this point.

      • HenryKrinkle

        He hasn’t played enough, but we know he can hit, and he ended the season healthy (and hitting) in AAA. For that price, and that bat, he’s worth something. I’m sure they’ll get more calls on his availability than the other two. And you don’t have to count on him with the rest of this roster. He’d be the perfect bat to play somewhere (1b/LF/DH/3b) 5 games a week. If he gets regular reps, he’ll rake line to line, and he’ll rake without the K rate. And at this point, Voit and his knee can’t be counted on to post either, and he makes more $ and doesn’t give you any flexibility with the glove.

    • Steve

      Voit gets non-tenured. Frazier and Andujar get traded for low level lotto tickets since they have no value. And I’m willing to bet Gallo gets moved in a trade.

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