The Yankees’ $189 Million Reality

The mandate the Yankees are under to reduce their payroll to $189 million by 2014 isn’t a capricious decision designed for ownership to maximize profits and for the baseball operations to bolster their credentials in the industry by winning without the limitless payroll that was one of the important hallmarks of the club from 1996 on through 2012 when they won five championships and made the playoffs every year but one. It can’t be avoided: the Yankees won year-after-year, in part, because of their spending power. While it’s an easy argument to say that with George Steinbrenner gone and the more thoughtful and less maniacal Hal Steinbrenner holding the most sway over the pursestrings, the family is trying to line their pockets to a greater degree—a degree that was secondary to the Boss’s bottom line: winning. It’s also an easy argument to make that GM Brian Cashman wants to lower the payroll to get his share of the credit pie that has gone to the new age thinkers in baseball like Billy Beane, Theo Epstein and Andrew Friedman because they were either working under parameters that made it a necessity for them to find bargains, get lucky, or formulate new strategies to compete with the big spenders in baseball; or, in Epstein’s case, were trying to win with a souped up version of Moneyball using stats backed up by a massive payroll.

Both are probably, to a point, accurate. But the Yankees are trying to get under the $189 million threshold by 2014 for the cold hard fact that if they don’t, they’re going to have to pay a penalty of 50% for going over that amount. It also has to be understood that the Yankees payroll will not be permanently limited by that 2014 number. If they’re under $189 in 2014, by 2015, they’ll again be able to spend as the Yankees have spent in the past—with no concept of restraint—because the penalty will revert to the lowest level of 17.5%.

It’s short-term. What this means in the near future, though, is that there won’t be the headlong dive into free agency and by taking huge contracts off the hands of other clubs in trades because right now the Yankees must be cognizant of their payroll. There’s no getting around it.

There are methods to achieve this end. Some clubs, like the Athletics and Rays, let their players play under the constraints of the collective bargaining agreement where they can’t be free agents until they’ve accumulated six years of service time. Or they sign them to long-term contracts that are agreeable to both sides, buy out their arbitration years and perhaps the first couple of years of free agency giving the players a guaranteed payday they might not get if they don’t perform or get injured. This is a method to keep the youngsters they’ve developed.

The Rays have essentially ensured that their star Evan Longoria will be a Ray for the duration of his career with the long term deals he signed as a rookie and the extension he agreed to last week. It’s conceivable that Longoria cost himself an extra $100 million or more with the contracts he signed. That’s his choice and the Rays took on significant risk as well.

Teams can do as Beane did a year ago (and several times before) and clear out the house of veterans who are set to make big money in exchange for the best prospects they can get their hands on and restart the process over and over again.

Or they can do what the Yankees are doing by signing veterans in their mid-to-late-30s to 1-year contracts, pay them handsomely, and hope they stay healthy and perform up to what they were in their primes.

Because the Yankees are saying they’re serious about this “$189 million by 2014” statement and have always backtracked on prior payroll-limiting endeavors, there’s a belief in the Yankees universe that they’re biding their time and waiting; that they’ll open the checkbook once they realize that a playoff appearance is something to be earned and not a birthright and that they’re ill-equipped to win in 2013 and 2014 as they’re currently constructed; that it’s a matter of time before they pull the same trick they did when they acted as if they had no interest in free agent first baseman Mark Teixeira and the Red Sox were widely expected to sign him before the Yankees struck with lightning quickness and decisiveness getting the first baseman and keeping him away from the Red Sox. This completed the 2008-2009 shopping spree with Teixeira joining CC Sabathia and A.J. Burnett to repair the failure of 2008 when they had again tried to lower payroll by going with homegrown pitchers and were rewarded with a missed playoff spot and indignation permeating their organization, the media, and fans.

Here are the numbers to understand the circumstances the Yankees are now in. Their guaranteed contracts for 2014 are as follows:

Alex Rodriguez—$25 million

Mark Teixeira—$22.5 million

CC Sabathia—$23 million

Derek Jeter—$8 million player option ($3 million buyout)

That comes to $75.5 million. There are the players who are movable and exchangeable with other similar contracts such as Joba Chamberlain, Phil Hughes, David Robertson, and Eduardo Nunez. So you can figure that the rest of the starting rotation and filling out the bullpen won’t be super-expensive. Robinson Cano is a free agent at the end of 2013, is represented by Scott Boras and will want somewhere between $190-220 million. Ignoring the risk of giving a lackadaisical player like Cano such a massive contract, they’ll do what needs to be done to keep him with a backloaded deal.

With all of that comes the vicious truth that for 2013, the Yankees are not jumping in on Zack Greinke; they’re not signing Josh Hamilton; and they’re not trading for Justin Upton (his no-trade clause includes the Yankees, so they’d have to redo his long-term contract). They let Russell Martin leave when it was widely reported that they wanted him back when the Pirates—the Pirates—gave him 2-years and $17 million. These are the same Pirates that once functioned as a big league farm club for the Yankees to take their stars off their hands for whatever crumbs of prospects the Yankees deigned to give them.

Losing Martin isn’t that big of a problem, but their current catching depth chart consists of Francisco Cervelli, Chris Stewart, Eli Whiteside, and minor leaguer Austin Romine. They don’t have a right fielder with the pending departure of Nick Swisher and the talk of bringing Ichiro Suzuki back comes more from the fans, media and Ichiro himself than it does from the Yankees. Maybe—maybe—they’re downplaying possible interest in Mike Napoli and will sign him to a team-friendly deal in which he’s paid well for 2013, has a reduction in salary in 2014, and has a back-end raise in years 3 and/or 4. This would be done based on need and to keep up appearances as the club is under expanding ridicule and anger for their lack of action.

This concept that their offense is still good enough is ignoring that they don’t have a catcher; they don’t have a right fielder; they don’t have a DH; Jeter won’t repeat 2012; and A-Rod and Curtis Granderson spent most of the second half of 2012 in a fog. They can’t go into 2013 with an offense looking like it does right now and logically believe they’re title contenders.

The 2013 team is elderly by athletic standards and the days of a 35-43-year old player posting numbers better than he did when he was 28 ended with drug testing. As much as Yankees apologists refer to the annual playoff appearance and utter pompous statements of “World Series or failure,” extolling the self-proclaimed “specialness” of the Yankees brand, the reality is that the Yankees are currently, on paper, the third best team in the AL East behind the Rays and Blue Jays; are in the same predicament with the Red Sox of clinging to what was; and have a resurgent Orioles club glaring at them from their wing rather than their posterior.

Jeter and Rivera are recovering from severe injuries; A-Rod is breaking down physically and when he can play is a threat emeritus rather than a mid-lineup basher—and now it’s being reported that A-Rod needs more hip surgery and may miss part of 2013; they have to rely on Hiroki Kuroda and Andy Pettitte to anchor the rotation behind Sabathia, who is also coming off of elbow surgery and has a massive amount of wear on his tires.

Is all of this likely to yield the same results it has in the past?

These are the Yankees of today and for the next two seasons. They have money, but it’s tied up. They’ll spend it, but it’s not going to be for long term improvements via the not-so-free market until after the 2014 season. By then they might be dealing with two years of missed playoffs, mediocrity or, if things go worst case scenario, finishes at or under .500. There’s a sense of disbelief among the media and fan that this is the way the Yankees are doing business; that it’s a ruse and everything will go on as before once they’ve grown tired of teasing their fans.

Don’t say the worst happen because it just happened to the Red Sox and, to a lesser degree, the Marlins, Phillies, and Angels. No one thought the Red Sox would ever fall to the depths that they did in 2012 and it can happen to the Yankees in 2013-2014. Dynasties—including that of the Yankees—have collapsed before. It’s not farfetched to predict their downfall again because the pieces are in place and getting more entrenched by the day. In fact, it’s inevitable.

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Longoria, the Rays, and…Wright

On the heels of Evan Longoria agreeing to a contract extension with the Rays that will guarantee him $100 million through 2022, the news is out that the Mets offered David Wright a 6-year, $100 million extension. Naturally, as is the case with anything the Mets do, this is cast as a lowball, “show me,” “look we tried,” proposition when the offer is legitimate and reasonable considering what comparable players have received.

The main differences between Wright and Longoria are leverage, age and perception. Wright is a free agent after 2013; prior to the new contract, Longoria was locked up by the Rays until 2016. Wright is about to turn 30; Longoria just turned 27. Longoria is considered a big game player because many of his hits have been considered “clutch” (with good reason) and Wright is more of a steady performer whose numbers accumulate and he’s unfairly been seen as a central figure in the disappointment of a Mets team that stumbled at crunch time.

In reality, they’re pretty much the same player. In fact, Wright has the advantage of durability that Longoria doesn’t have. Longoria has had quadriceps strains, hamstring tears, and wrist problems. Wright got hit in the head and suffered a stress fracture in his back, both of which he’s recovered from.

In his career, Longoria has traded his arbitration years and window to freedom for security. He signed a contract as a rookie (shortly after he arrived in the big leagues) that guaranteed him $17.5 million and could have made him as much as $44.5 million. Now, as an established star player, he’s got his $44.5 million and an additional $100 million on top of that. There’s not a no-trade clause in the deal with Longoria’s only recourse if the Rays decide to trade him is waiting until after 2017 when he’ll be a 10 and 5 player (10 years in MLB, 5 years with the same team) and subsequently can reject any deal. But before then, if the Rays choose to move him due to financial constraints or because they receive an offer they can’t refuse, there’s nothing he can do about it. It’s a trade-off that both sides made. Longoria gets his guaranteed money, the Rays have flexibility. Because Longoria is locked up until 2022, it doesn’t mean he’ll be a Ray for that entire time. That’s the way the contract was designed and the manner in which the Rays operate. The Rays said, “We’ll give you more security in exchange for flexibility.” Longoria accepted that.

The Mets are not in the position of the Rays where they have a terrible ballpark and limited fanbase. The Mets’ financial problems are not related to baseball’s structure, but are a byproduct of circumstance and will presumably end at some point. For the Mets and  Wright, the offer that has been made public isn’t for public relations purposes, but is a reasonable, market-driven deal. That doesn’t mean Wright’s going to take it. For all the talk that the Mets are dragging their feet, the Wright camp is probably also taking a wait-and-see approach to know where the dollar figures are for players in this year’s free agent class. If there’s a team that tosses a record amount of money at Zack Greinke and rolls the dice on Josh Hamilton; if a club gets crazy for Wright’s childhood friend in Virginia B.J. Upton, then Wright can say he’s going for the big money next winter and unless the Mets pay him and pay him big now, he’s not signing anything. But if the deals these players get aren’t what’s expected; if the number of teams that are still willing to go overboard as the Angels did with Albert Pujols is limited to one or two; if no club other than the Dodgers is spending wildly, then Wright isn’t going to do much better than the 6-years, $100 million and will be more willing to take it.

The Jose Reyes comparisons are simplistic and stupid. Those negotiations weren’t “negotiations” in the truest sense. The Mets wanted Reyes back, but they didn’t want to give him $100 million (money that they didn’t have and certainly didn’t want to spend on him) and they knew they had a reasonable—if significantly less flashy—replacement for him with Ruben Tejada. It’s a different matter with Wright. The Mets want him back and know how hard he’ll be to replace on and off the field.

The common sense approach from the Mets to Wright is to be conciliatory and ingratiating. They should not imply that because Longoria and Ryan Zimmerman took $100 million over six that Wright should know what’s good for him and do the same thing. The Mets should approach Wright with the facts. Those facts are that he’s not going to do much better on the market than 6-years at $100 million with a reachable option to make it 7-years at $125 million and perhaps an eighth year option as well; that the Mets are in position to get markedly better and contend by possibly 2013 and definitely 2014 with all that young pitching and money coming off the books; and that, like the Rays and Longoria, it behooves both sides to come to an agreement. A no-trade clause isn’t even necessary for the new deal because Wright will be a 10-and-5 player after 2013.

The Wright-Mets extension talks aren’t in a holding pattern because the participants staked their positions with no room for compromise and a pure impasse. 6-years at $100 million was a start. If a deal gets done, it won’t be until the other pieces currently making the free agent rounds come off the board and there’s a clue as to what the numbers have to be and could be to make it worthwhile for the Mets and Wright. In that context, the Wright and Longoria comparisons are equal and like Longoria, I’d expect Wright to eventually sign an extension with the Mets, but it won’t be until the new year.

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