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How will Aaron Judge’s contract impact Brian Cashman’s spending room?

The answer lies in Hal Steinbrenner’s willingness to surpass the second luxury tax threshold.

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Toronto Blue Jays v New York Yankees Photo by Adam Hunger/Getty Images

Rejoice, rejoice. Aaron Judge is officially returning to the Yankees on a nine-year, $360 million contract. To put it bluntly, that number is higher than I expected any team would go to at the beginning of the offseason, but I am glad that owner Hal Steinbrenner knew the value that Judge brings to the Yankees both on and off the field and put his money where his mouth is to bring back the superstar. By all accounts, the number will probably be straight-up on a $40 million per year basis. The Yankees aren’t known for front- or back-loading deals, so I think it’s safe to assume that will be the yearly hit (for luxury tax purposes, that’s what it will be anyway).

Now, it’s important to state the $40 million salary that Judge is set to earn needs to be understood with the appropriate context. First, median salaries increase over time: $40 million per year may seem high right now, but by the end of the contract, there will likely be more salaries in the league closer to the mark than there are right now. Ten years ago, the only man in baseball making anywhere close to $30 million was Alex Rodriguez; 15 different players had a $30 million deal on the books in 2022.

Next, there is a certain understanding with players like Judge who performed so well before hitting free agency that means you have to compensate them on the back end to make up for what you saved while the player was under team control. The $/WAR framework is flawed, but in the six seasons that Judge has played, his production is estimated to have been worth around $289 million according to FanGraphs. In that same span, Judge only earned $36.1 million. If a player is still killing it upon hitting the market, you better believe you’ll have to eat some money on the back end of the contract. And for some further context, players who have Barry Bonds seasons deserve to set records, age be damned.

With that context out of the way, let’s move on to the impact it will have on the Yankees’ luxury tax situation and the potential for additional moves. According to Roster Resource, the Yankees’ committed money for 2023 with Judge added is $266,496,667. That is well north of the first luxury tax threshold, which they would have needed to surpass with or without Judge, but around $6 million-ish short of the third threshold, where penalties really increase.

If Steinbrenner’s actions this offseason prove anything, it’s that the checkbooks may be more open than we all expected. Usually, when there is this much smoke and chatter from national reporters, beat reporters, and even GM Brian Cashman himself, there is valid reason to believe moves will be made. That doesn’t mean the Yankees will necessarily go past this second threshold, but oh man, the rumors around Carlos Rodón and a potential Andrew Benintendi return are hard to ignore.

Right after the Judge signing was announced this morning, Ken Rosenthal also reported that the Yankees are actually expected to accelerate the pursuits of Rodón or Benintendi rather than hit the brakes on spending. This makes me believe that that they are confident they can move some money around elsewhere on the roster, whether that be Josh Donaldson, Aaron Hicks, Isiah Kiner-Falefa, or possibly Gleyber Torres. At this point, we’re in the area where $6-$10 million means a lot to Hal Steinbrenner. Moving one of the players with salaries in that area — while replenishing the pre-arb talent at the major league level — could be the difference between taking on a significant player like Rodón.

It’s only a matter of time until we know more. The last three-to-five days have moved very quickly for the top end of the free agent market. With the winter meetings winding down, I expect the moves to keep coming. Fingers crossed Hal is willing to go further to guarantee this team a championship contender. With Judge back, the window is still right now.

Note: The original version of this article referenced Masataka Yoshida as another potential outfield option to sign, but he has since come to terms with the Red Sox.