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PKB's Hot Stove Season: Part 2: Next Season Obligations and the Competitive Balance Tax

Yeah yeah yeah, get to it already. I hear ya. But I think the groundwork needs to be fully laid before I even want to get into the nigh unlimited depth of the free agent market. The Yankees are a bit weird about the Competitive Balance Tax. Don't take my word for it, here's CBS Sports columnist Mike Axisa writing at the trade deadline:

New York Yankees

CBT payroll: $262.2 million
CBT status: First-time offender

The Yankees are an interesting CBT case study. Last year they stayed under the threshold and reset their tax rates, and to do it, they got the Cubs to pay Anthony Rizzo's salary and the Rangers to pay Joey Gallo's salary at the deadline. They had to give up extra/higher-quality prospects in those trades to get those teams to eat that money, but the Yankees did it, and they managed to stay out of the CBT penalty box. As such, the Yankees are a first-time offender subject to the lowest tax rates this year.

In 2019 and 2020, the Yankees treated the third CBT threshold, the threshold that incurs the draft pick penalty, as a hard cap. If they do that again this year, they have less than $8 million in wiggle room at the deadline. They could always get the other team to eat money a la Gallo and Rizzo last year, but wouldn't you rather just move next year's first-round pick back 10 spots than give up more/better prospects in a trade? The Yankees have a history of treating the third CBT threshold as a cap. Given the season they're having and their needs heading into the deadline, I would guess they're willing to go over the threshold to improve the team.

If you'd like to read the full article: https://www.cbssports.com/mlb/news/2022-mlb-trade-deadline-how-competitive-balance-tax-could-impact-big-spenders-including-yankees-and-padres/ It has a great explanation of how the CBT works and how various high spending teams tend to regard it. The Yankees tend to view the third tier as the salary cap, which was $270 million in 2022. The Yankees final salary for CBT purposes appears to have been $276,505,154.

If you're interested in how that number works: https://www.spotrac.com/mlb/new-york-yankees/payroll/2022/

That actually puts them above the third luxury tax threshold, but not above the Steve Cohen line at $290M. As First Time Offenders, it's gonna be under $10M in tax penalties, which none of us are sympathetic to. Also, our first round draft pick will be bumped into the second round.

Assuming the Yankees exercise their option on Severino and Rizzo doesn't opt out: the Yankees will have $151M committed to 8 players: Stanton, Donaldson, Rizzo, LeMahieu, Hicks and Bader among the everyday players and Cole and Severino as the pitchers.

The Arbitration folks would be: Gleyber, IKF, Trevino, Higashioka, and Tim Locastro among the everyday players, and Trivino, Cortes, Holmes, Peralta, German, Loasiga, Luetge, Michael King, and Montas among the pitchers. It's estimated that they will cost about $42.5M, according to Sportrac.com.

The Pre-arb folks, coming in at $3M+ are: Cabrera, Effross, Florial, Deivi, Luis Gil, Yoendrys Gomez, Marinaccio, Peraza, Everyson Pereira, Ridings, Rortvedt, Clarke Schmidt and Weissert. Not all of them will be on the ML roster, which is how they get the $3M number, I guess.

That would work to $197 million for the retention of the players mentioned above. With the first CBT threshold at $233M, the Yankees essentially have $35M to work with, while remaining under the CBT. And roughly $90M to stay under the Cohen line.

Putting it on the diamond:

C: Trevino/Higgy/Rortvedt

1B: Rizzo

2B: Torres

3B Donaldson

SS: Peraza/IKF

Util: DJLM

LF: Hicks/Cabrera

CF: Bader

RF: Stanton

Rotation: Cole, Sevy, Cortes, Montas, German, Gil

Pen: Holmes, Loaisiga, King, Peralta, Trivino, Ridings, Luetge, Schmidt.

Bench: IKF, Higgy, Hicks?

That's what you start with before you resign any free agents (like the Big Guy), improve the rotation, fortify the bullpen, make any trades, DFA a bum, or swap some bad contracts. As I noted in part one, some players have some trade value, some might have to be sold low if they are sold at all because of the unique timing in their career, and some might have to be bad contract swaps or DFAs, or encouraged to retire, maybe with some Bonilla type of deferral.

This post is to set the baseline for discussing the roster.

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