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Implications of the Rizzo reunion on Judge, payroll, and other signings

Did the Yankees bring back Anthony Rizzo in part to entice Aaron Judge to stay?

Championship Series - Houston Astros v New York Yankees - Game Three Photo by Elsa/Getty Images

By now, you’ve all read the news that the Yankees re-upped with Anthony Rizzo on a two-year deal. Josh provided an immediate reaction shortly after the signing was announced, and earlier today Jeff analyzed the merits of the move. Now that we’ve had some time to collect our thoughts, let’s break down how the reunion specifically impacts payroll, future roster considerations, and the pursuit of Aaron Judge.

First, the nuts and bolts of the contract. Rizzo is signed for two years and $34 million, and the Yankees hold a $17 million club option with a $6 million buyout for 2025. For the purposes of the Yankees’ Competitive Balance Tax (CBT) calculation, Rizzo’s deal carries a $20 million hit in each of the next two seasons. The contract gives Rizzo a $1 million raise annually over last season’s salary in the first two years and a chance to hit the free agent market again as a 35-year-old at the latest.

FanGraphs’ Roster Resource has Rizzo’s signing taking the Yankees’ payroll a shade under $223 million after factoring in projected arbitration salaries. This puts the team $10 million below the first CBT threshold of $233 million. If the Yankees want to re-sign Judge, they’re going to have to enter tax offender territory.

But don’t panic Yankees fans! Ownership was never under any illusion that they’d be able to retain Judge and avoid paying the luxury tax (besides, they haven’t reached the reset portion of their payroll cycle). We all know that the team prioritizes payroll flexibility. Since ducking below the tax in 2018, they’ve demonstrated a clear pattern of behavior of resetting their tax offender status every three years to avoid the worst of the tax penalties that escalate for teams over the threshold in three consecutive seasons.

Qualifying as a first-time offender in 2022 after resetting in 2021, we can expect the Yankees to go over the tax again in 2023 with an eye on dipping back below in 2024 or 2025. This means we need to look at their pattern of spending in the years that they exceeded the threshold since they started targeting triennial resets. In 2019 and 2022 (CBT penalties were put on hold in the COVID-shortened 2020 season), the Yankees exceeded the threshold but remained in the first tax bracket of $20 million to $40 million over the threshold to avoid the steepest tax surcharges and potential draft pick penalties. This leaves them with roughly $50 million to play with before bumping up against that $273 million threshold, and I wager the Yankees have the majority of that money earmarked for one player.

I’m not sure if we can completely dismiss the possibility that the Yankees brought Rizzo back as part of the strategy to give themselves every edge in the Judge sweepstakes. We know how much the Yankees value a close-knit clubhouse and there’s no doubting that Judge and Rizzo were not only the two leaders of the team but also enjoyed each other’s company. If they find themselves in a scenario where another team matches their high bid for Judge and Rizzo’s return to the Bronx pushes them over the edge, then Rizzo’s contract may have already paid for itself without a game being played.

The other consideration we have to address is the impact of this signing on prospects in the pipeline. Andres Chaparro is one of the fastest rising bats in the the Yankees’ system, and while he’s a third baseman now, the other corner is likely his long-term home (and he’s already made appearances there). Chaparro turned in a 158 wRC+ in 64 games for the Double-A Somerset Patriots with some of the highest exit velocities in the minors. Rizzo’s re-signing means we likely won’t be seeing Chaparro start in the bigs in the next two years, if at all; he’s also Rule-5 eligible. Elsewhere as Josh mentioned, bringing back one of the best defensive first basemen in baseball allows the Yankees to be perhaps even more aggressive in handing starting time to youngsters Oswald Peraza and Oswaldo Cabrera and possibly even promote Anthony Volpe for his big league debut.

Time will tell whether Rizzo’s signing foreshadows a bigger signing to come, but for now the Yankees have their staring first baseman for at least the next two years. It was a win-win deal for both sides — Rizzo got a raise over his previous contract and gets to stay in the Bronx. The Yankees keep a familiar face at a sensible cost — a left-handed slugging first baseman and elite defender whose biggest asset might be his friendship with Aaron Judge.