Yankees general manager Brian Cashman recently claimed that previous collective bargaining agreements (CBA) "hindered" the organization's ability to carry out its business model. As Major League Baseball and the Players Association work to hammer out a new CBA, would rumored changes work to the benefit or detriment of the Yankees?
Plenty of gossip has posited some changes to the next CBA. Among the chief alterations is a new threshold value for the competitive balance tax (or luxury tax as is it commonly coined), adding an international draft, and the elimination of draft pick compensation.
At the heart of the Yankees' restraints is the competitive balance tax. The tax's purpose is to curtail, as best it can, the spending of large market teams like the Yankees. The Yankees have surpassed the competitive balance threshold in every season since it began in 2003, with the 2002 iteration of the CBA. The tax has cost the Yankees just under $300 million overall through the 2015 tax, according to Forbes.com.
The rumored amount of the competitive balance tax threshold might reach the $200 million mark according to FanRag Sports' Jon Heyman, meaning the Yankees will not be completely out of the woods in the upcoming 2017 season.
The Yankees' payroll currently sits at $136.15 million according to Cot's Baseball Contracts, with seven players under contract, plus the $21 million they owe Alex Rodriguez and the $5.5 million they are contributing to Brian McCann's salary. As the club plans for the 2018 season, they instantly drop $45 million from the books with Rodriguez and CC Sabathia's contracts coming to an end.
The Yankees are currently in the market for an elite closer and a designated hitter. I would estimate that the team will succeed in adding a new closer to the books for $15-18 million per season and a DH with a similar value. So, the Yankees could conceivably add $30-to-36 million for two players, which will bring them near or just above $170 million with 16 players left to fill roles.
Seven players on the current roster are arbitration eligible, so it would seem rather difficult for the Yankees to stay under the $200 million mark. The Yankees might try to trade Brett Gardner (owed $12.5 million in 2017 and $11.5 million in 2018, with a $2 million buyout for a $12.5 million option for the 2019 season) before spring training to alleviate payroll. Otherwise, I do not see any other cost-cutting before the 2017 season.
The Yankees have wanted to stay under the threshold for some time, but signing multiple long-term contracts have impeded that ability. Since the Yankees might be at the edge of the rumored threshold as early as 2018, I would expect that they will continue to push the recent youth movement, but with an eye toward some free agent signings while trying to stay just under the new threshold.
For the first time in a long time, the Yankees actually have the ability to slide young players into full-time roles, and the depth of the system will allow more of the same for the next few seasons if they stick with the methodology. The Yankees can further balance high-end expenditures by trading some assets from their revamped farm system for cost-controlled stars.
Cashman also acknowledged that limits pressed on the Yankees in the international market prevented them from fully participating in the last couple of seasons. I would not feel sorry for the Yankees here considering they willingly blew by the spending threshold set by the CBA during the 2014-15 international signing period, when they felt they could garner the most talent available in the international market. Once the Yankees eclipsed the mark, they became unable to spend more than $300,000 on international bonuses in each of the last two seasons.
The rumor surrounding the international market is that an international draft is being considered. I would assume that such a draft would work similarly to the current First Year Player Draft in that there will be bonus pools and suggested slot values. Teams would likely be positioned in the draft based on their finish in the previous season.
The Yankees could seemingly benefit from a draft. First, they would not miss the chance to add talented international players to the organization. However, the Yankees might want to overshoot their pool value. If doing so means a monetary tax, then the Yankees could feel comfortable knowing they will be able to sign their player(s) in the following season(s).
However, if the penalty for spending beyond the allotted pool is to lose a pick or picks, then the Yankees would have to be wise with international expenditures in order to maintain a yearly selection of a player with true potential for a return on investment.
The final area in which the Yankees might see some significant value is with the potential removal of draft pick compensation in signing premium free agents. Many clubs, including the Yankees, have avoided signing players with qualifying offers because the loss of a first-round draft pick (if the team was outside the worst 10 teams in the league, whose picks are currently protected) was considered detrimental to the club's organizational plans.
If draft pick compensation is completely eliminated, it would allow the Yankees to spend on the premier stars and continue to make their first-round pick in the subsequent draft. The Yankees have stressed being better at drafting players, so losing picks was surely an obstacle in recent free agent markets. Of course, despite maintaining their first-round pick, the Yankees would still need to be cognizant of overall free agent spending with the competitive balance tax still in play.
The Yankees are certainly interested in the changes in the next CBA, but I do not believe they will significantly change the organization's mindset in conducting business. They will find the right moment to spend on the free agent market, only now those contracts might not hinder the club as they did in the past because of the prospects they hope to reach the big leagues and perform to the level presumed they can reach.
Add the potential to maintain international signings on a yearly basis via a draft, plus the elimination of draft pick compensation for any of their possible premier free agent signings and the Yankees surely stand a chance to benefit from rumored changes coming along in the new CBA.