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Yankees Offseason Notes: Yanks slapped with $18.9 Million Luxury Tax

For the 10th consecutive year, the Yankees will have to pay a luxury tax for once again overspending. The amount? $18.9 Million. The Yankees finished with $222.5 Million on their payroll according to the Associated Press. The numbers were calculated by including the average annual values of contracts on the 40-man rosters, the earned bonuses, adjustments for cash and trade and  $10.8 Million per team in benefits. Over the last 10 years, the Yankees total for luxury tax has been $224.2 Million and the Yankees finished as the top spending team for the 14th year in a row. The LA Dodgers can take the top spot next year as they have already have $207.9 Million in signed contracts–for 21 players. Most of it has to do with the trade from the Boston Red Sox that happened in July that sent Josh Beckett, Carl Crawford and Adrian Gonzalez to LA. The Yankees are only at $182 Million for 14 players (that includes Ichiro’s not yet completed deal).

Checks to the commissioner office  must be sent in by January 21.

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Sherman says extensions could help with 2014 budget

Joel Sherman wrote an article today offering up some ways to lower the Yanks Luxury Tax bill in 2014.  He thinks they could restructure and/or extend the contracts of ARod, Cano & Granderson right now to help out the Annual Average Value of their deals.

He writes:

“Creativity has not really been a Yankees strong suit when it has come to contracts.Their financial caveman ethos has been: See what like, buy it.In recent years they have tried to employ some financial discipline. Now creativity also will be a requirement if they are to honor a vow to drop under the $189 million luxury tax threshold in 2014.”

Since ARod will make less money starting in 2014, the final 4 yrs on his deal will only pay him $86 Million. However he also has $24M in milestone incentives he may hit.  He recommends guaranteeing $14M of that $24M and adding another yr to ARod’s contract, essentially signing a new 5yr - $100M deal starting in 2014 that would lower ARod’s potential Luxury Tax number from $33.5M in 2014 to $20M.  Interesting thoughts but then you have ARod for even another year in 2018 when he’s 43 years old. I like the idea but I wouldn’t add the extra yr, keep it 4 years and his cap number would be $25M instead of $33.5M – still a big savings and you don’t add another year of a 43 yr old player.

For Cano & Granderson, he recommends extending them right now.  I supported this for Cano a week or so ago although not quite the same as Sherman wants.  I definitely would not tie up Granderson with an extension now.  He’ll be 33 in 2014 so I would not sign him til he’s 36-37 right now.

But give it a read….contains some interesting thoughts though I don’t know how well it would go over with the MLBPA, Bud Selig or the players involved, but it’s food for thought.

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