For years, the New York Yankees operated seemingly without a financial ceiling. What George Steinbrenner wanted, he pretty much got, rarely letting other teams get in the way of inking any of the team’s targets. Now, it’s a new era for the Bronx Bombers. Before he passed away, The Boss transferred power to his sons, Hank and Hal. Under the new regime, the team has become significantly more financially conscious.
This newfound concern for the luxury tax barrier stems largely from the new CBA, which modified the tax so penalties for repeatedly finishing above the threshold increase drastically. If a team exceeds the luxury tax for their fourth straight year, it will pay a 50 percent tax on any overage, a huge figure that has clearly contributed to the decision-making of the team’s brain trust.
Yankees brass knew that given their existing contracts it was not reasonable to attempt to drop below the $178M threshold imposed by the CBA for 2012 and 2013. However, the luxury tax threshold increases to $189M in 2014 and through the expiration of the CBA, and by 2014 Hal has publicly stated that he expects the team to be below that threshold.
The result is a Yankees team operating on a smaller free agent budget (relative to the rest of the league) than they have in decades. The team has over $70M guaranteed for 2014 already in Alex Rodriguez, Mark Teixeira, and CC Sabathia. On top of that, Derek Jeter’s option will pay him at least $8M, and likely more based on escalators within his contract, and you have to imagine the team hopes to sign Robinson Cano long-term, as his contract expires after 2013. Assuming a Cano extension would pay him $20M+ per year, the team would already be more than halfway to the luxury tax threshold with only a fifth of their roster in place.
For this reason, the Yankees don’t have much wiggle room, especially in adding dollars for 2014 and beyond. However, they do have quite a lot of holes to fill. Rightfielder Nick Swisher and catcher Russell Martin both hit the free agent market, as did much of their rotation, and stand-in closer Rafael Soriano opted out of his contract in order to see what kind of contract his 42 saves can bring him on the open market. Martin’s already signed with the Pirates, who outbid the Yankees on a player for the first time I can remember, and the team doesn’t have enough financial flexibility to seriously pursue the Swisher or Soriano.
The team has solved its problem in the rotation with two excellent one-year deals, and I believe this model will allow them to fix several of their problems around the diamond without creating a longer-term cash crunch. While the most valuable free agents will obviously generally command multiyear deals, I believe that there are enough talented players who are willing to sign one-year deals that the Yankees may just be able to fill out a competitive roster without saddling themselves with additional future commitments. Clearly, the team will likely fill some of these positions through trades or decide to rely on their internal options, but these are some of the more interesting one-year options of the free agent market. Some of these players have signed with the Yankees already, the team has shown interest in others, and several are simply speculation on my part.
Hiroki Kuroda: Kuroda is going to be the best starting pitcher to sign a one-year deal, and could very well be the best player overall to shun a long-term contract this offseason. Kuroda had a chance at a multiyear deal but decided to sign on a one-year contract with the Yankees because of his familiarity with the franchise and the higher per-year value than he would have received on a multiyear pact. Kuroda turned down a qualifying offer and then signed for $15M, likely the most money any free agent will receive on a one-year deal.
Andy Pettitte: Like Kuroda, Pettitte was a deal that the Yankees pretty much had to get done. It was reported throughout the offseason that Pettitte was deciding between donning the pinstripes and retirement. With Michael Pineda still making his way back from the shoulder injury that cost him the 2012 season, the Yankees needed a fifth reliable starter so they can take their time and make sure Pineda is completely healthy. $12M was enough to entice the 40-year-old to give it a go once more. While he was excellent on the stretch run in 2012, surviving the rigors of a full season is another challenge entirely.
Brandon McCarthy: Because their rotation still contains a few question marks, I’m guessing the team would ideally want another starter to give them some cover and perhaps offer a little upside. Among the pitchers who might be willing to take a one-year deal, I think McCarthy is by far the most attractive option. The former White Sox top prospect has been an excellent starter over the past two years in (admittedly pitcher-friendly) Oakland, and could have commanded a multiyear deal had his season not ended the way it did. After being drilled in the head by a line drive off the bat of Erick Aybar on September 5, McCarthy wasn’t able to contribute to his club up to and in the playoffs. All signs point to McCarthy being ready to go for Spring Training, so he could be an excellent value buy. Reports suggest he’s willing to take a one-year deal to rebuild his value after the injury. If there are no residual effects from his fractured skull (as weird a sentence to read as it is to type, I’m sure), he could be one of the steals of the offseason.
Brian Wilson: With Mariano Rivera back and their young relievers maturing into elite back-of-the-pen arms, the Yankees may feel they don’t need to replace the departed Soriano. However, if they decide they do need to make an acquisition, there are a number of options. Most late-inning relievers will want multiyear pacts, but Wilson could be a rare exception. He was non-tendered by the Giants after losing the 2012 season to a Tommy John procedure, and will likely be looking for a one-year deal with significant incentives similar to the one Ryan Madson received from the Angels. Wilson appears to prefer to stay on the West Coast, with the Dodgers rumored as his desired destination. He may have some reservations about returning to the Giants after the non-tender, and the Dodgers may decide that Brandon League was their big bullpen signing of the offseason. Wilson is clearly not afraid of the spotlight, and the team could use some bullpen help with Soriano departing, but he would need to be content with setting up for Mariano Rivera. Further complicating things, Wilson is a native of Winchester, Massachusetts who grew up rooting for the Red Sox, and the Yankees’ rule prohibiting facial hair could be a deal-breaker for the Wooly Willy look-alike. Overall, this is probably the biggest longshot on this list.
Kevin Youkilis: A key development at this year’s Winter Meetings was the news that Alex Rodriguez will be having hip surgery and will miss the start of the 2013 campaign. Harold Reynolds said on MLB Network that he expected A-Rod to not play this year, as he likely wouldn’t be ready to jump into the pennant race even when he’s fully rehabbed, and that this injury could lead to his retirement down the road. I’m not nearly that alarmist, but it’s obvious that this isn’t trivial surgery, so with the left side of the infield hurting the Yankees need a player they’d feel at least somewhat comfortable going through the season with as their starting 3B. Even if ARod does come back for a significant portion of the season, expect the team to try to rest or DH him more to ensure his recovery and keep him healthy and ready to erase memories of his October performance this year with a more impressive playoff run.
Youkilis might seem a strange name in connection with the team that was once his biggest rival, but the longtime Boston corner infielder could be one of the best third base options available to the Yankees in an extremely bare third base market. Youkilis clearly knows the AL East, and has proven he can have success in what has been the toughest division in baseball over the past decade. His willingness to consider a contract with the Yankees may depend on if he still feels commitment to the Red Sox, or if his allegiance to Boston is limited to the Epstein era and he wants revenge after having his commitment questioned by his manager and then being unceremoniously dumped for prospects by his new GM in 2012.
Eric Chavez: Chavez was excellent as a stopgap for the Yankees in 2012, appearing in 113 games and putting up a better-than-expected .281/.348/.496 line, his best season in half a decade. The Yankees could bet on a repeat of last year’s success, but given his age and injury history, Chavez is almost certainly better-suited for a part-time role than to be relied on as the team’s starter throughout much of the first half. (UPDATE- Chavez has signed with the Diamondbacks, further thinning the third base market.)
Mark Reynolds: Reynolds was non-tendered by the Orioles after doing just about exactly what he’s always been able to do; bringing some significant pop and drawing a decent amount of walks, while playing terrible defense and putting up a strikeout rate that draws his average dangerously close to the Mendoza Line. Because he’s able to hit 30 homers in a full season, as he did in his last three years before 2012, there is going to be significant interest on the market, but I’d be surprised if he got a multiyear deal, and even if there is a multiyear offer on the table the Yankees might be able to trump it with a one-year deal that offers a significantly higher annual value.
Nate Schierholtz: Two of the three Yankees that led the team in outfield appearances last season hit the free agent market. Raul Ibanez’s departure is solved by the return of Brett Gardner, who lost most of his season to an elbow injury. However, a rightfielder to replace Swisher is a definite need, and Schierholtz might just fit the bill on the cheap. A personal favorite of mine since his time in San Francisco, Schierholtz offers exceptional defense, including a cannon of an arm, but his offensive numbers haven’t been good enough to earn him a starting job. He has shown a little bit of pop in the past, including 9 homers in 362 plate appearances in 2011 in a San Francisco park that is known for muting power production, especially for lefties. While he’d clearly be a significant step down from Swisher, Schierholtz might just find that his swing fits perfectly in cozy Yankee Stadium, making him a possible under-the-radar contributor. (Editor’s note: Schierholtz has signed with the Chicago Cubs.)
Ichiro Suzuki: All reports suggest Ichiro enjoyed his time as a Yankee, and would be up for a reunion. However, recently quotes from his agent came out suggesting that Ichiro wasn’t particularly happy with being put on the back burner while the team figured out its pitching situation, leaving him open as an option to other teams. With the outfield market beginning to develop quickly, the Yankees may have to act fast if they hope to retain the 38-year-old. He can still hit for average and play excellent defense, but the team may not want to count on Ichiro getting into the lineup as consistently as he has in the past, as he’s missed only one game in the past three years. While you’d like to think he’ll be able to keep that up, at some point the workload may start to take its toll.
AJ Pierzynski: With Martin off to the Steel City, the last item on the Yankees’ shopping list is a backstop to replace him. Pierzynski is probably the only catcher remaining on the market worthy of a starting job, so competition for him could drive up the price to the point where he may not be willing to consider a one-year pact. Coming off of a career year in which he put up a line of .278/.326/.501 with 27 bombs representing a career high by far, Pierzynski is going to get paid. However, if the Yankees don’t want to go into the season with Chris Stewart as their catcher, they may not have much of a choice.
Kelly Shoppach: If the Yankees can’t bag Pierzynski, I’d be shocked if they don’t pursue a trade for a catcher, perhaps looking to pry Jarrod Saltalamacchia from the Red Sox or JP Arencibia from the Blue Jays. It’s quite an interesting twist that most of the teams with surplus catching are in the AL East, and may not be looking to deal within the division. If they really need an emergency starter, my top choice on the free agent market would probably be Shoppach. With Shoppach, you pretty much know what you’re going to get; an average in the low .200s, an OBP about .100 points higher, a little bit of pop, and a capable backstop with experience and game-calling ability. That doesn’t add up to a player worthy of carrying the torch once held by Jorge Posada and Yogi Berra, but then again, neither is Stewart.
Overall, watching the market develop this offseason has been quite bizarre, as new television and ownership deals have several teams throwing money at free agents as has traditionally been the role of the Yankees, while Brian Cashman himself has been forced to lie in wait and pick his spots carefully on the acquisitions the team can afford. This strategy will pay off in the long run, as the team will allow its huge deals to veterans to gradually clear and make room for signings that will support what I expect to be a much more productive minor league system than the Yankees have had in the past. With the economics of the game as they are today, teams can no longer rely on free agency as the core aspect of their roster construction strategy. However, if the Yankees are able to develop a crop of significant prospects to fill holes on the Major League roster, filling the gaps with free agent talent will likely be an excellent recipe for success.