The Payroll Takes Shape

The Yankees have settled three arbitration cases today so far- Didi ($5.1M), Warren($2.29M)

Long ago, the site MLB Trade Reference pegged those three to almost exactly those numbers. In fact, they missed by a sum of $120,000. In total, they estimated the Yankees to have just about $22M in arbitration awards. With the payroll at about $166M, that puts them right around $188M if they continue to be right.

But, luxury tax thresholds are calculated by the average annual value of contracts, not the actual dollars earned. For example, A-Rod will earn $21M from the Yankees this year to stay home (or $20.5M if he signs with another team for the ML minimum) but his AAV figure is $27.5M.  You also need to figure in the guys who are on the 40-man earning either the major/minor league minimum. And, player benefits count.  Add it all, up and the Yankees are probably around $210M, or $15M over the luxury tax for 2017.

2018 looks a lot better. Right now, the Yankees are probably about $70M under the threshold assuming Tanaka doesn’t opt-out. If he does, that’s another $22M you can add to their space. They will have many of the same guys in arbitration, so they probably will spend at least $30M of that space there. They will also have to retain/replace the following free agents besides Tanaka- Pineda, Sabathia, Holliday, and Clippard. Together those guys are about $53M in AAV.  But, it looks very likely that the Yankees will be able to duck under the threshold in 2018 and therefore reset their potential penalties to the minimum if they go on a free agent binge before the 2019 season.