The stars, literally and figuratively, have lined up for the Yankees to make a splash this winter.
The burden of heavy league taxes has been removed and a robust free-agent market is before them. The Yankees worked for years to diminish payroll expenditures with an eye toward the 2019 season.
Yet, the Yankees are not obligated, nor do they need to drastically overshoot the luxury tax in order to win a World Series. This mindset infuriates fans of the league's highest revenue producer that proclaims to enter each season with a World Series title as the ultimate goal. Many fans feel anything short of a $500-plus million overall commitment and $250-plus million overall outlay would be double talk by the Yankees.
The Yankees don't appear to see it entirely the same way.
Farm system giveth
Let's face it, the Yankees' farm system is churning out everyday players and impact pitchers, and they potentially have more coming. In the last two-plus seasons, the Yankees have incorporated Gary Sanchez, Aaron Judge, Miguel Andujar and Gleyber Torres (albeit a product of a trade while in the minors) into their starting lineup.
While it's been lighter on the pitching side -- Luis Severino and Jordan Montgomery cracked the starting rotation in recent seasons -- the Yankees have a trio of pitchers -- Domingo German, Michael King and Justus Sheffield -- knocking on the door.
If the Yankees continue to populate the 25-man roster with a large share of homegrown or pre-arbitration players acquired via trade, then the overall expenditure inevitably declines even with large contracts like Giancarlo Stanton's on the books. The fact that the Yankees have and will continue to be able to utilize farmhands as trade chips for controllable players also holds down payroll costs without sacrificing performance.
Cannot ignore international free agent spending
The Yankees and other teams are judged based on what the bottom line payroll shows, but the amount of money spent in the international free agent market should not be ignored. The Yankees plopped down $4.7 million in bonuses for just four of the top international free agents in this summer's signing period. Keep in mind, these are extremely young and completely untested players with hopes that one them reaches his projected ability.
Where the amateur draft is a bit easier to predict, the international free agent market has enormous questions and large cash outlays that represent more of a risk. The Yankees do not hold back when the system allows them to spend past the "limit," and this current signing period has been no different. Further, the Yankees have had recent success in the international market with Sanchez, Severino and Andujar all being Bombers signees.
Yanks don't have to blow by the luxury tax to improve
The Yankees will gladly remind you that they spent about $195 million (including benefits, taxes and payments minor leaguers that made major league appearances) this season and won 100 games. The 2017 World Series champion Astros spent under $140 million and the 2016 champion Cubs spent about $185 million, so very recent history suggests while the Red Sox model of blowing past the luxury tax and incurring an overall spend of about $260 million works, it may be unnecessary.
The Yankees could conceivably improve the roster while staying under the luxury tax again in 2019, yet spend about $9 million more in actual payroll year over year. The Yankees will have some flexibility if they can trade Sonny Gray, who figures to receive around $9.1 million via arbitration according to MLB Trade Rumors' estimates, and find a home for Jacoby Ellsbury where the new club picks up a nominal portion of the cost. Anything helps.
In a very rough estimation considering returning players (removing Gray, paying large sum of Ellsbury's deal), arbitration eligible salaries and raises for pre-arbitration players suspected to be retained the Yankees have approximately 18 players likely to have a roster spot in 2019. Add $14 million for benefits/taxes and $2.25 million for 40-man roster costs (both estimated by Cot's Baseball Contracts), and the Yankees would have approximately $60 million to spend before reaching next season's $206 million threshold.
In theory, the Yankees could add Manny Machado at $30 million (tax hit), Patrick Corbin for $22M, J.A. Happ for $15M and David Robertson $10M, and all else considered, come in around $220 million (all-in), which would incur a tax charge of $2.8 million (20 percent of the overage).
Eliminate Machado, whom the Yankees claim to have soured some, and it is easy to see them adding another quality starter (their truest need) for half the cost, thus coming in just under the tax threshold.
The methodology of creating balanced rosters with high-performing pre-arbitration players and solid, veteran contracts is successful. The Yankees won 100 games in 2018 and we've seen recent World Series titles delivered for under $200 million.
None of this is to say that the Yankees shouldn't spend near or just beyond the luxury tax threshold -- they can certainly withstand the tax payment at a lesser rate -- however, the notion that they are obligated to spend as much as the Red Sox did this season to win a championship is baseless.