It’s only been a few days, but details about the new MLB Collective Bargaining Agreement have been slowly trickling through the media. Of course, as this is a Yankees site, assessing how this affects the Yankees and their future spending is always an interesting point of conversation. At face value, this will help the Steinbrenners and their pockets, because this is a largely pro-owner agreement. The qualified offer system remains in place in a small way; the luxury tax cap only increases 11% total through 2021; international amateur spending is capped at $5 million and is extended to players up to 25 years old.
These may sound like bad things for the Yankees, but they’re really not. Ever since 2012, when I believe the Yankees dynasty truly ended, Hal Steinbrenner made it clear what the team’s payroll strategy would be under current ownership:
"I'm a finance geek... I guess I always have been. That's my background. Budgets matter. Balance sheets matter. I just feel that if you do well on the player development side, and you have a good farm system, you don't need a $220 million payroll. You don't. You can field every bit as good a team with young talent... I'm looking at it as a goal, but my goals are normally are considered a requirement."
To their credit, the Yankees are trending in the right direction. The farm system has made a complete 180-degree spin since that point, and they now have a young group of players and prospects that could very well carry a team with a slightly smaller payroll.
But if you don’t take that comment at face value, and understood what it truly means, then you’re deluding yourself. What have been the major free agent contracts since that comment? The Brian McCann deal really ended up being a three-year deal for $62 million; the Brett Gardner extension is four years and $52 million; the Masahiro Tanaka contract likely goes four years before an opt-out; the Chase Headley deal is the same size as Gardner’s deal; and, the only big deal will be Jacoby Ellsbury’s clunker.
That’s still a lot of money, don’t get me wrong, but you can see that follows a completely different pattern than 1996 to 2012. This is partially due to a dearth of talent in free agency and increases in competitive balance, but it’s very difficult to look at, for example, allowing Robinson Cano to walk, and to say that the Yankees haven’t significantly shifted how they’ve done business in free agency.
This is why I would say to be very wary of these CBA details as some harbinger of major spending to come. George A. King III certainly thinks so, and he said that because of the multiplier effect that reduces their revenue sharing pay, as well as a tax benefit because of paying for their own stadium (which all teams should do, but that’s besides the point), the Yankees are going to net a ton of cash over the next five years. In his view, this could allow the Yankees to bump up spending when the likes of Bryce Harper, Matt Harvey, Josh Donaldson, and Manny Machado hit the market after the 2018 season.
Here’s the thing, though: despite these two facts, that the Yankees will make more money and that their payroll is freeing up, the organization still has the philosophy that they should get under the luxury tax. The popular belief is that if they were to reset some penalties by getting under the cap, they would then use the extra money to boost their spending when the team flourishes. I just don’t buy it.
In my opinion, this is a ruse. Hal Steinbrenner wants to have a younger team not because he wants to only spend when the moment is right and to build from within, it’s because he wants to have his cake eat it, too: he wants a yearly contender without having to spend more than he is required. They want the financial benefits of making the playoffs without the financial risk of pushing the envelope. Remember, their reported gross revenue is around $500 million, so the idea they are somehow strapped for cash is an illusion.
You are all going to hear a lot of talk about the CBA giving the team all of these financial benefits, tantalizing fans with the idea of a lineup with all of those stars in the future. Don’t buy it. The Yankees will have more money to spend, but don’t expect that spending to exceed a number that is beyond mere appeasement. It is entirely true that these agreements are meant to limit the financial flexibility of a team like the Yankees in free agency, but don’t be mistaken: there’s nothing ownership loves more than a passable team and a low payroll. If they could, they would maintain that model in perpetuity.