The Yankees Are Operating Backwards
The Yankees have had one of the busiest off-season’s of any Major League team this season (save for maybe the Mets). The Yankees entered the offs-season with 2/5 of a starting rotation, and no one to play shortstop. They filled out the rotation with free-agent signings that are not flashy, but are likely to produce good value relative to their contracts in CC Sabathia and JA Happ, and by swinging a trade with the Mariners to acquire James Paxton, who pitches like an ace when healthy and is under team control until 2021. The Yanks dealt good prospects for a player who can help them win now, which is the right move for a team with World Series aspirations. After waiting out the market, the Yankees signed Troy Tulowitzki to fill the gap at shortstop for the league minimum salary. Any positive production Tulo provides this year makes him a worthwhile signing from the perspective of monetary value. Overall, the Yanks have worked to fill holes with free agent signings with good value and trades that look good even with a bit of hindsight. Brian Cashman has done a nice job of leveraging value to fill out the 2019 roster. So how are the Yankees operating backwards?
Much has been written lately by various writers about the growing gap between team revenues and player salaries. Greg Kirkland’s article at Pinstripe Alley summarizes this argument well. There are few teams for whom the growing gap between revenue and player salaries is more true than it is for the New York Yankees, as illustrated by the graph in this Twitter thread. Yankee revenues have grown steeply for the last 15 years. Despite this fact, money spent on player salaries at the Major League level continues to shrink. Much of this austerity is due to the ideology that has expanded throughout the league’s ownership ranks that views the luxury tax threshold as a soft cap of sorts. The Yankees worked for more than a decade to shed large contracts in order to drive player salaries below the luxury tax threshold. Relatively speaking, the luxury tax is not that penal to a team like the Yankees. At the maximum, in the event that a team is more than $40 million above the luxury tax threshold, teams pay a 42.5% tax on the overage in the first year, and 45% on the overage in each subsequent season that they are more than $40 million over the threshold (source: http://m.mlb.com/glossary/transactions/competitive-balance-tax). Additionally, teams that exceed the threshold to that extent have their second pick in the Amateur Draft moved back by 10 spots. In practice, if the Yankees exceeded the 2019 luxury tax threshold by $50 million ($256 million in salaries), the Yankees would owe an additional $21.25 million, bringing their total money spent to field a team to roughly $277 million. Obviously, we do not know what the Yankees’ balance sheets look like with regards to overhead, but it is safe to say that profits would still be plentiful and the Yankees could stand to make even more money from marketing a World Series victory.
The backwards nature of the Yankee off-season was illustrated yesterday by the Mets’ signing of Jed Lowrie for 2 years/$20 million. I think that the Troy Tulowitzki deal was a really nice value signing, and he could have decent upside. There are definitely questions about where he fits when Didi returns, as he has never played a position other than shortstop at the Major League level. Lowrie has put together consecutive seasons of 4.0 and 4.8 bWAR, respectively, and is one of the more valuable middle infielders in the sport. Lowrie can play both up-the-middle positions and third base, so he could be a great super utility guy even after Didi returns. Had the Yanks signed Lowrie, they could have played Lowrie at 2B and Torres at his natural SS until Didi returns.
Also available is Marwin Gonzalez. Marwin Gonzalez has been one of the best super utility players in baseball for the last 3 seasons. He is still on the back-end of his prime. There is no doubt but that signing Gonzalez would make the Yanks a better team right now.
The elephants in the room are Bryce Harper and Manny Machado. We can quibble about Harper’s consistency and Machado’s attitude, but both are generational talents hitting the market at age 26. Every team in baseball can afford their asking prices, and yet both are getting little more than nibbles on the open market. Signing one of Machado or Harper and one of the names listed above would not even cause the Yankees to approach $256 million in salary.
Didi Gregorius is one of the best shortstops in baseball. The Yankees will be without him for at least the first half of the season, and possibly significantly more if his recovery from Tommy John surgery takes longer than expected (certainly a possibility for a player whose value depends on his throwing arm). Troy Tulowitzki is a good value, and may work out for the Yankees. I’m even on record saying that I like the signing. I just look around the free agent market, and I can’t help but think that the Yankees could build a more championship-caliber roster if they were willing to spend on free agents who can probably be had for a bargain, given the fact that the market is, again, moving like molasses. The Yankees have the means to spend more on the roster, and the window to win championships is now. Austerity for a team like the Yankees is backwards.