Opportunity Cost

The word is that Andy Pettitte will return next year for $12 million. The rumor is Mariano will shortly do a similar deal.

As a Yankee fan, there is probably nothing more that I want to see than Mariano take the mound again in 2013. Watching Pettitte pitch is somewhere behind that, but not too far behind. The problem is, I am not sure these are very good baseball moves.

Now in the old days, George would have signed these two guys and wouldn’t have attached those costs to the budget. The problem is, these aren’t the old days. For the last few years we have repeatedly heard Hal and Cashman talk about a budget and how they had to stretch to get to that budget. Well, if there is a similar budget for 2013, the Yankees just made a big mistake.

The fact is Andy Pettitte is 40-years old and hasn’t thrown more than 129 innings in the bigs since 2009. He was brilliant in 2012, but his brilliance was only over 75 innings. Yes, it was a freak liner that put him on the DL, but in 2010 it was his groin. These are risks you could take when he made $2.5 million, but at $12 million this is a very expensive gamble.

And that brings me to Mariano. He is the last guy I would bet against, but the fact remains that he is 43 and coming back from a major injury. Giving him $12 million is another very expensive gamble.

Now none of this matters if there isn’t really a budget for next year. But, if we hear Brian Cashman say that he had to expand the budget or couldn’t make a move because of the budget, I hope some reporter asks him why he spent almost $25-million on two pitchers with big question marks hanging over them.

Step One

Buster Olney is reporting that the Yankees have reached an agreement with Hiroki Kuroda on a one-year deal for $15-million plus incentives that are less than a million. This is very good news.

Now the Yankees know they head into the season with Kuroda and Sabathia atop their rotation. They will probably bring back Andy Pettitte and they still have Hughes, Nova and Phelps all ready to go as well. This gives them options. They could dangle Hughes in the trade market and see if someone will give them something good back. They can bring Pettitte back and go into camp with six starters. (Not a bad idea as we saw this year.) And, when Swisher and Soriano leave, which is almost a certainty, the Yankees will rack up two additional draft picks.

Hang In There

I can’t begin to describe the scenes of destruction I have seen in the NYC area the past few days. While my family and I were spared the worst of the storm, there are many people I know who were not so lucky. My thoughts and prayers are with everyone affected by this storm and I encourage people who can to volunteer their time or money to organizations like the American Red Cross which are trying to support communities destroyed by Sandy. We’ll get back to baseball soon, but for now just take care and be safe.

All the best,

Peter

My Plan

It is never a good idea to overreact to a small sample and the 2012 playoffs are a small sample. Sure, the Yankees didn’t hit, but they didn’t hit over 9 games. In the previous 162, they hit plenty. But, I also think the Yankees are at a turning point here. For the first time in ages, we can’t assume that either Derek Jeter or Mariano Rivera will be productive members of the upcoming team. Jeter’s ankle should be fine, but he isn’t a kid anymore. And Rivera is even more of an enigma since he is trying to come back from a much more serious injury. In addition, the Yankees have a lot of potential free agents so the chance to make significant changes to the team has arrived.

In a perfect world the Yankees would have players ready to step in and fill the roles of the players leaving. That isn’t really the case. Through a combination of bad luck and bad drafting, there are simply not a lot of AAA ready players ready to jump into the starting lineup. In fact the only guy who you could argue is ready, Eduardo Nunez, has serious defensive questions.

And there is the goal of being below $189 payroll in 2014. This will be exceedingly hard because the Yankees are already have a lot of money committed to 2014. Between Sabathia, A-Rod, Teixeira and Jeter, you have around $88 million tied up once you figure out the AAV’s of each deal. Add in the fact that the $189-million figure includes health insurance and other miscellaneous cost which add up to around $10-12 million per team and it means you have $89-million left to fill out the entire 40-man roster. In addition the following players become free agents after 2013- Cano, Granderson, Hughes, Joba, Logan and Soriano (if he doesn’t opt-out this year.) Brett Gardner and David Robertson will be in their third years of arbitration. And Pineda, Nova, Cervelli, Nunez, Stewart and Rapada will all be in arbitration.

So, I find it almost impossible to see how the Yankees meet that figure and sign both Granderson and Cano. Even signing one of them will be tough. Consider the following. If the Yankees have 20 players making the minimum in 2014 and Cano gets a deal of $18-million per, the Yankees have an average of $4-million to spend on the remaining 15 players, some of whom would be significant pieces of the 2014 team.

Furthermore, the Yankees have to think long and hard about how much they want to be in the long-term deal business. The complaints about A-Rod are valid to an extent, but what can the Yankees do about him? Maybe they can trade him, but they would have to pay a lot of money to get rid of him and that counts against the luxury tax. What they can do is learn that it is a bad bet to sign players to ultra-long contracts when they are over 30.

But, 2014 is also not 2013. The Yankees can spend freely in 2013 and still cut in 2014. What they should focus on in 2013 is collecting as many assets as they can and using them in various ways. They can spend big now and then trade away assets at the deadline if that is the prudent thing to do. The key is to remain flexible, which means short-term deals only. Anyway, here is my plan…

1- Offer Swisher arbitration. To me this is obvious. If he accepts, he is signed for 2013 at $13.3 million. If he declines, the Yankees get a draft pick. I’m not against signing Swisher either for say three years at $12-million per, but I suspect he will get much more in the open market.

2- Assuming Soriano opts out, do the same thing and offer him arbitration. There is little downside to this move because Soriano would get paid about the same he was due to make in 2013 and is only signed for 2013. If he declines, which seems likely, the Yankees have another draft pick because I would let him walk.

3- Offer Kuroda arbitration. If Kuroda accepts, you have him locked in at $13.3 milion with no commitment beyond 2013. Hiroki was everything you could have asked for and I see no reason, or any young pitchers on the horizon that should or could displace him from the rotation next year. But, if Kuroda wants more than a one-year deal I say let him go.

4- Exercise the option on Granderson and then see what you can get for them on the trade market. Outfielders generally don’t hold up as well as infielders as they age and Granderson will be 33 after the end of the 2013 season. We focus on his flaws too often in New York, but this is a guy who has 40-plus homers each of the past two years and should be in line for a fairly big contract when he hits the free agent market. I don’t want to pay that price if I am the Yankees and while the draft pick they would get from losing him would be nice, I bet they could get a couple of young players right now. And, they have his replacement, Gardner, under control through 2014.

5- Tell Andy Pettitte you are happy to have him back, if he takes $5-million or less. Andy was great this year, but he is three-years older than Kuroda. I don’t particularly want both of them in the rotation next year, but I would take another flier on Pettitte if he agreed to a smal salary. $5-million is only one-million more than Freddy Garcia earned in 2012.

6- Speaking of Garcia, he is gone. So is Andruw Jones. Eric Chavez can come back on the same contract as 2012. Russell Martin gets a one-year offer that will allow the Yankees to break Austin Romine in for full-time duty in 2014. If he doesn’t accept, I go with Cervelli and Stewart to start the season with Romine moving up later on in the year.

7- That brings me to two lefty outfielders, Ichiro and Ibanez. I want to keep both, on one-year deals. Ichiro was a perfect fit for the Yankees’ lineup and I would bring him back for $5-million in place of Swisher. I would also bring Ibanez back for a small deal similar to what he earned this year.

8- I am going to figure out a way for Eduardo Nunez to get 500 AB’s next year. I would send him to winter ball and have him play third and short. I still think his ultimate destination is the outfield, but for 2013, the left side of the infield is the best spot for him.

9- Offer Mariano a contract, but make it one loaded with incentives and a low base salary. I would never bet against Rivera, but he is 43 and coming off of a major surgery. However, I wouldn’t spend any money in the bullpen beyond this because you already have Robertson, Joba, Logan, Rapada and Aardsma on the roster.

10- Take a long look at the draft process and strategy that the team employs. If the Yankees are going to save money, they are going to need to produce in the draft. This is especially important now that international free agent signing have been capped. Take a look at the current roster. You have Jeter, Hughes, Joba, Robertson, Gardner, Pettitte and Phelps as the only players drafted by the Yankees. And, Jeter and Pettitte were drafted 20 years ago. The fact is, the Yankees have done a terrible job of drafting since the 2006 draft where they picked Kennedy and Joba 1+2 and followed it up with guys like Robertson, Melancon and Betances. Their 2007 first rounder was Andrew Brackman. 2008 was Gerrit Cole, a great pick, but they didn’t sign him. 2009 pick Slade Heathcott has gotten better, but he still hasn’t moved past A ball. 2010 pick, Cito Culver, just finished hitting .215 in low A ball. The Yankees have to get better results from the draft.

11- Shop A-Rod, but don’t simply give him away. Yes, he was terrible in the playoffs, but that is a small sample. Unless you can get significant savings, say at least $9-million per season it really doesn’t make sense to keep him.

12- And that brings me to the biggest decision the Yankees have to make, Robinson Cano. I love Cano and I think he is a wonderful player, but I am not sure I want to sign him to a long-term deal. His agent is Scott Boras and you know Boras is going to be looking for at least 8 years and possibly 10 years for Robbie. Exercise his option, but then shop him around. Cano is the type of player who could bring back significant pieces for the future. The Yankees have to consider that.

Obviously, my potential 2013 team would not be as good as the 2012 team, but it would be younger and it would have significant salary flexibility going forward. Whatever direction they choose, I am willing to be that we look back at the winter of 2012-13 in the future as a transformational moment for the Yankees.

Season Over

Two stats sum up this mess for me. 1- The Yankees hit .188 in the postseason. 2- The Yankees never had a lead in the entire ALCS. Yeah, CC Sabathia was terrible tonight, but who are we kidding? The Yankees lost this game at 2-0, the rest was simply window dressing. I thought this Yankees team would be great in the playoffs because the starting pitching would be so good. I never expected the hitting to fall off the map.

So, now we enter what should the most interesting offseason in years. The Yankees have some HUGE decisions to make. I am going to formulate my own plan, which I will publish in the next day or so.