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Yankees blow past luxury tax line to sign DJ LeMahieu

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We hoped the Yankees would abandon their self-imposed salary cap in order to sign a big-name infielder, but LeMahieu wasn’t the one we had in mind.

Darren Yamashita-USA TODAY Sports

Yankees fans have been looking forward to this winter for a long time. This was the offseason when generational talents Bryce Harper and Manny Machado would finally become free agents. This was the year that one or both could finally don the fabled pinstripes.

Doubt about the Yankees’ intentions began to creep in about a year ago, when the front office announced that the organization’s number one goal was to duck under the Competitive Balance Tax threshold. We yearned to hear that winning the World Series remained the club’s priority above all else, but we didn’t get what we wanted. Instead, we watched the rival Red Sox spend their way to yet another championship, while our beloved Yankees came up short once again.

We hoped against hope that getting under the luxury tax line in 2018 was just a one-time event for the franchise, in order to reset the penalty rate in advance of this year’s super free-agent class. We got our wish, sort of. Unfortunately, the Yankees didn’t blow past the luxury tax line to sign Machado or Harper. They did it to sign DJ LeMahieu.

Who?

LeMahieu is an eight-year MLB veteran who came up with the Cubs in 2011, but was traded to the Rockies after the season with his rookie eligibility still intact. The 30-year-old right-handed hitter is a two-time All-Star who won three Gold Glove Awards. LeMahieu won the National League batting title in 2016 with a .348 average, and finished 15th in the MVP Award voting as a result.

He’s logged 7,460 innings at second base throughout his big-league career. LeMahieu also has 245 innings under his belt at the hot corner, plus four frames at shortstop and 13 at first base. He boasts an .834 career OPS at Coors Field, but only .673 on the road.

LeMahieu’s reported two-year deal is worth $24 million. With LeMahieu’s salary included, the Yankees projected 2019 payroll for luxury tax purposes stands at approximately $212,017,500. That figure includes $141.255 million committed to the ten players under contract, $45.4625 million for the eight arbitration agreements that were announced, $5.1 million that MLB Trade Rumors estimates will be awarded to Luis Severino in arbitration, and $5.7 million for pre-arbitration players under team control and 40-man roster players in the minors. It also includes the estimated $14.5 million in player benefits.

The $212.0175 million payroll estimate puts the Yankees over the $206 million luxury tax line by about $6,017,500. Remember, projected payroll isn’t subject to luxury tax, neither is Opening Day payroll, nor payroll from any other point during the season. The only thing that matters and is ultimately subject to a possible penalty is where the team’s payroll stands at the end of the season.

If the Yankees’ final payroll end up being $212.0175 million, then they would pay a 20% tax on the overage. In that case, their projected penalty would be $1,203,500.

The team can add about $13,982,500 more to the payroll without seeing an increase in their 2019 tax rate. Once their payroll hits $226 million, they would pay a 32% tax on every dollar spent over that $226 million threshold. If their payroll exceeds $246 million, they would be required to cough up a 62.5% tax on every dollar spent above that $246 million threshold.

The LeMahieu signing does not necessarily preclude the Yankees from signing Machado. LeMahieu projects to serve in the utility role handled by Neil Walker last year. Walker produced -0.1 WAR in 113 games for the Yankees in 2018, while LeMahieu compiled 3.0 WAR for the Rockies in 128 games. He produced 2.9 WAR in 2017 and 5.3 WAR the year before, so LeMahieu’s signing could represent a significant upgrade for the Yankees at the utility spot.

I’m not ready to jump to any conclusions about whether LeMahieu’s signing signifies the end of the organization’s pursuit of Machado. I must admit, though, it would be richly bizarre if the Yankees are willing to go over the luxury tax line to sign LeMahieu, but not a superstar like Machado. Stay tuned.