Yankees sign Matt Holliday: What it means for the payroll and their offseason plans

The Yankees wasted little time as the 2016 Winter Meetings got underway. On Sunday night, they agreed to terms with Matt Holiday, the veteran outfielder-turned-designated hitter. The signing buttresses the lineup while also shedding light on the team’s offseason strategy. The move illustrates what the Yankees value moving forward, in terms of finances, leadership, and roster flexibility.

Payroll Flexibility and Luxury Tax Implications

In the shadow of a new Collective Bargaining Agreement, it makes sense to look at the Holliday signing from a financial perspective. At one year and $13 million, the move is an indication that the organization continues to prioritize payroll flexibility while maintaining an eye towards the future. One of the ways the Yankees aim to do this is by resetting their luxury tax rate.

According to Cot’s Baseball Contracts, the Yankees currently have $136,150,000 on the books for 2017. That’s before factoring in arbitration players. That number rises to $158,250,000 after plugging in MLB Trade Rumors’ projected arbitration salaries. Holliday’s contract brings the payroll to $171,250,000. That would spell doom under the previous $189 million model, but things get interesting for the upcoming season.

Under the new CBA, the luxury tax threshold for 2017 will be $195 million, and continues to climb after that. This window is where the Yankees have the best chance to reset their rate. Holliday’s contract will come off of the books further facilitating this. Signing a designated hitter to a multi-year deal, the likes of which Edwin Encarnacion will command, wouldn’t help the front office achieve this goal. It remains to be seen if the front office will reinvest the savings into the team, but the Holliday signing shows they’re committed to the plan.

Holliday’s Veteran Leadership

Believe it or not, Holliday will be the oldest player on the Yankees once he’s added to the roster. He will turn 37 in January, making him six months older than CC Sabathia. The organization has truly gone all-in on the youth movement. The 2017 roster is a far cry from 2012, when the team fielded the oldest lineup in club history.

In their quest for youth, however, the Yankees have found themselves with a bit of a clubhouse leadership void. The 2016 team began the season with Alex Rodriguez, Mark Teixeira, Carlos Beltran, and Brian McCann in the locker room. All had reputations for being strong leaders, but none will don pinstripes in 2017.

Holliday can fill some of that leadership void. He has a reputation for being a good clubhouse guy, and he can mentor some of the young bats. Guys like Greg Bird, Gary Sanchez, and Aaron Judge can all benefit from Holliday’s guidance. This is especially important if the Yankees ultimately trade Brett Gardner. Having a young lineup is exciting, but it’s very helpful to have a veteran presence in the mix.

Moves on the Horizon?

The Holliday signing showed that the Yankees are ready to act swiftly at the Winter Meetings. They got right down to business Sunday night. This suggests that more moves could be looming. In fact, General Manager Brian Cashman indicated as much when news of the deal broke.

Sifting through the typical Cashman obfuscation, that quote reveals the Yankees have a budget prepared to address their needs. We know the team is focusing on pitching, adding an elite closer and perhaps a starter. Adding Holliday was the first notable splash. Cashman is talking money and possibilities which means that they’re not done yet.

It’s also worth nothing that the team didn’t wait out the designated hitter market. They got to the Winter Meetings and closed this deal. The aggressive timing of the signing leads one to believe that the Yankees will be fairly active over the course of the next few days.

A one-year deal for a nearly 37-year-old designated hitter might not seem that exciting. It does fill a need, however. It also reveals a larger plan in place. It sheds light on the Yankees’ offseason strategy. It gives the team future payroll flexibility and adds veteran leadership to the clubhouse. This looks like a solid deal. A team can do a lot worse than Matt Holiday for a stopgap DH.