At the GM Meetings down in Scottsdale, Yankees GM Brian Cashman spent some time talking to reporters on Monday night to discuss a plethora of topics. None, though, were more important than his comments on the luxury tax.
Whether or not Cashman will be allowed to exceed the $208 million luxury tax for 2020 will determine who he can go after in free agency. And by who, it would be a player like Gerrit Cole or Stephen Strasburg -- the top two pitchers on the market.
At the moment, Yankees managing general partner Hal Steinbrenner has not given Cashman a directive for managing his offseason spending, so passing that luxury tax threshold to sign an elite free agent could be in the cards.
"I've got no mandate from him as we move forward, but I would think that if I do, we'll be transparent about that as well," Cashman said. "If there was an issue with it for us, we would communicate it.
"Had a lot of conversations and they'll be ongoing. I think Hal's always open-minded regardless. Certainly we've got some heavy investments, whether they're short-term or long-term that collectively add up to a lot right now."
The Yankees' committed payroll for next season is currently $154.6 million, which includes the high contracts of Giancarlo Stanton ($26 million), Masahiro Tanaka ($23 million) and Jacoby Ellsbury ($21.1 million). But there are also arbitration-eligible players like Aaron Judge and Gary Sanchez on the roster, and it is expected that all 12 players eligible could add $33.8 million to the payroll. That's $188.4 million already.
However, their luxury tax payroll -- which accounts for the average annual value of player's contracts -- is currently expected to be $209.7 million for their full 40-man roster, per Cot's Baseball Contracts. It breaks the threshold already.
But, if we don't hear from Cashman regarding the luxury tax, that should mean he will have carte blanche to sign who he pleases to create the best 2020 roster he can. Getting a starter is the obvious move, and Cashman admitted that Cole and Strasburg will be on their radar.
"Of course, we're going to have to talk to Strasburg. We'll talk to Cole," Cashman said. "We'll talk to the higher-end guys clearly and have conversations there. Then, we'll also talk about some surprise guys I'm sure. Our staff will get together, and again, dealing with agents, dealing with clubs. It'll take two to tango."
The Yankees made a concerted effort to stay under the luxury tax in the past, and that helps them this time around if they do go over. The amount paid resets for the Bombers now, and they will be taxed 20 percent on every dollar their payroll exceeds the threshold.
So, for example, if the Yankees' payroll becomes $225 million for next season, that extra $17 million will be the only thing taxed at 20 percent. In turn, they would dish out $3.4 million.
Cashman and the Yankees haven't been the biggest spenders recently as they have in the past. However, with such dynamic players on the market that fill an obvious need, being able to outbid the competition would be a great advantage this winter.
But, in typical Cashman fashion, he wouldn't delve into his intentions. Instead, we'll just have to wait and see.
"You'll have to wait and watch this stuff play out and see how the dust settles," he said. "Obviously time will tell what our roster will look like as we get through this winter."