After a half-decade during which the biggest splash the Yankees made in free agency was the ill-advised $153 million splurge on Jacoby Ellsbury, and during which they skipped out on bidding wars for the game’s best available targets, the Yankees have landed the top player on my team’s wishlists for the second year in a row. After nabbing Gerrit Cole for a gargantuan sum of $324 million over nine years last offseason, the Yankees have signed DJ LeMahieu to a team-friendly deal of $90 million across six seasons.
Not only is the return of LeMahieu’s stabilizing offensive presence a boon to the 2021 Yankees lineup, but represents a huge win for the club as they retain some financial flexibility below the Competitive Balance Tax line with a couple additional areas of need to address. Though Jake recently outlined the contextually minuscule cost to the club of paying the repeater’s tax, the team, so far at least, seems intent on resetting their luxury tax clock this season, paving the way for a potential splurge in the next offseason.
The immediate cost to the Yankees would be relatively limited without a huge addition, Jake pegged a possible Yankees tax bill on a $15 million overage at just $7.5 million, as a third-time CBT payor who exceeds the tax by less than $20 million. However, the Yankees’ free agency spending plans over the next two seasons could significantly complicate Jake’s prediction.
Let’s say the Yankees intend on exceeding the tax by $50 million as early as 2022 or ’23. Though that expenditure might seem extravagant at first glance, it could easily become a reality if the Yankees still wanted to add a star infielder (i.e. Nolan Arenado, Corey Seager, or Trevor Story) or another ace arm (i.e. Noah Syndergaard, Justin Verlander, or Trevor Bauer if he were to sign a one-year deal this offseason). The cost of just one of those players would push the Yankees into the CBT’s middle tier ($20-$40 million in excess of the $210 million tax line), a 32% first-time tax, or without a reset this offseason, a 62% tax.
Signing any of those players without a tax reset could cost the club as much as $12 million extra in 2022. Add in Aaron Judge’s free agency after the 2022 season, and the Yankees would jump into the top tier of CBT payors, paying a bare minimum of an additional $8 million without a reset on top of an already staggering greater than $30 million 2023 tax bill. While the cost of rolling past the luxury tax this offseason, as Jake explained, is relatively negligible, that cost compounds to a much higher total if the Yankees are unable to reset their CBT clock, and end up deciding to purchase significant personnel upgrades in addition to retaining their current stars.
After the Yankees re-signed LeMahieu, and have come to agreements with their outstanding arbitration eligible players, they were left with, by my calculation, approximately $16 million in room below the tax line. With Corey Kluber in tow for a sum greater than $10 million for this coming season, the Yankees will likely be left with just over $5 million to address their last couple of positional needs.
First, and always, the Yankees need more pitching. While Kluber certainly beefs up their starting rotation, the team still needs an innings-eater who can be relied upon to start at least 25 games, given that Luis Severino won’t be back at full strength until at least mid-August. A reunion with Masahiro Tanaka is looking very unlikely given the Yankees’ current fiduciary constraints, barring Masa’s willingness to accept an extreme discount. Recently, I argued that Julio Teherán could serve as plausible stopgap so long as his signing doesn’t require more than half of the Yankees’ remaining room.
Otherwise, the team might be best off spending that money on a reliever to complement their power trio of Aroldis Chapman, Chad Green, and Zach Britton. Kirby Yates would be a familiar face, and an exceptional fit, but it might be hard to squeeze him in below the Yankees remaining cash, even after a down year.
With LeMahieu locking down second base for the better part of the next decade, the Yankees are implicitly betting on Gleyber Torres as their shortstop of the future. He’s not quite as bad defensively at second as he is at short, but he’s basically a sieve at either spot, and the lesser of those two evils is now out of the question. Unless Torres shores up his defensive deficiencies, he’ll seriously hamper the Yankees’ championship chances in the near future. Further, his presence in the infield precludes the team from securing an upgrade, like Trevor Story or Corey Seager, lest they find a new home for Torres. The Yankees likely have already made up their mind regarding Torres’ future on the team or elsewhere, but re-upping with LeMahieu likely eliminates the less drastic alternative of sliding Torres to second.
In DJ LeMahieu, the Yankees were able to retain their best player of the past two seasons for an extremely palatable price, especially on the front-end of the deal. With a couple question marks remaining, and a complex set of financial implications for their next few moves, they’ll need to decide whether they want to save some bullets for the following two offseasons, or go all in (or close to it) in 2021.