TAMPA, Fla. — Strange rumblings about fiscal restraint and lower payrolls have been emanating from the Yankees for several months, and Hal Steinbrenner, the managing general partner of the team, confirmed Thursday that he wants the payroll to be cut by about $20 million, down to the critical threshold of $189 million, within two years.
“I’m looking at it as a goal, but my goals are normally considered a requirement,” Steinbrenner said while speaking to reporters in the lobby of George M. Steinbrenner Field, named after his father. “Is it a requirement with baseball that we be at 189? No, it’s not a requirement. But that is going to be the luxury tax threshold, and that’s where I want to be.”
The Yankees have long pushed player salaries and team payrolls ever higher, but with the new basic agreement that was made into baseball law on Nov. 22, teams have been given a huge financial incentive to stay within the $189 million limit by the beginning of the 2014 season. If the Yankees do not get under that figure by 2014, their luxury tax rate could climb to 50 percent.
For a team like the Yankees, the difference can be as much as $50 million, making it almost financially reckless, in their evaluations, not to be under the threshold within two years. Steinbrenner said he badly wanted to avoid that, but he also vowed to remain competitive at the same time. “We always will field a championship-caliber team,” he said. “I’ve said that a thousand times.”
The new collective bargaining agreement includes a provision for the luxury tax, but it also has a component called the market disqualification, which enables teams that pay into the revenue-sharing pot to receive huge rebates if they are under the threshold. For the first two years of the agreement, the threshold is $178 million. It rises to $189 million in 2014.
The Yankees have no hope of getting under the figure this year or next, but they are aiming for 2014.
Steinbrenner said the payroll was expected to be $210 million this year, and he conceded that was about $10 million higher than he had planned. But when General Manager Brian Cashman asked to sign the free-agent pitcher Hiroki Kuroda to a one-year, $10 million contract, he agreed to stretch the payroll.
He also acknowledged that, unlike his father, he is more committed to staying competitive in the framework of a less elastic budget.
“I’m a finance geek,” he said. “I guess I always have been. That’s my background. Budgets matter, and 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.”
The success of several prospects from the Yankees’ farm system over the last few years — including Jesus Montero, who was traded for the right-handed pitcher Michael Pineda, and pitchers Dellin Betances and Manny Banuelos — makes Steinbrenner think the team can field a contender even with a smaller budget.
The Yankees will also be relying on younger (and less expensive) pitchers like Phil Hughes and Ivan Nova to help keep the payroll down while they consider expenditures elsewhere. That would include contracts for players like outfielder Nick Swisher and catcher Russell Martin, both of whom can become free agents after the season.
Steinbrenner indicated the Yankees were not likely to give those players extensions during the season.
The Yankees have $75 million committed to four players in 2014: third baseman Alex Rodriguez, pitcher C. C. Sabathia, first baseman Mark Teixeira and shortstop Derek Jeter. The last time their payroll was less than $190 million was in 2007, when it was $189,639,045.
As the Yankees head into the 2012 season after a disappointing first-round exit in the playoffs last fall, there is a greater sense of optimism based on Rodriguez’s health and the acquisitions of Pineda and Kuroda.
“I’m excited,” Steinbrenner said. “I think we’ve got on paper definitely a better team than we did last year. I think our starting pitching is improved, and that was one of our goals in the off-season.”
The New York Times
The New York Times