Tuesday, December 22, 2009

Yanks budget concerns justified

After seeing the latest luxury tax bill for the New York Yankees, I can understand why Brian Cashman and Hal Steinbrenner are so determined to stick to their budget, reportedly set at about $185 million. The Yankees will send Major League Baseball a check for $25.69 million for the 2009 season, bringing their total luxury tax bill to $190 million since 2003. By comparison, the Boston Red Sox have paid nearly $14 million in that timeframe as the runner-up in luxury tax payments.

Going forward, the Yankees' threshold for paying a luxury tax rises to 40% of payroll over $170 million in 2010 and over $178 million in 2011, the last year of the current collective bargaining agreement. If the Yanks successfully keep to that $185 million figure next year, their luxury tax payment would be only $6 million, more than 75% lower than this year's payment. Even if the 2010 payroll goes up to $200 million, that still represents only a $12 million payment, reducing it by more than half.

The team has made several moves this offseason that have reduced payroll dramatically, including not re-signing Johnny Damon and Hideki Matsui, who made a combined $26 million in 2009. Even smaller moves such as promoting Francisco Cervelli to be the back-up catcher saves cash as he made only $400,000 compared to Jose Molina's $2.1 million. Of course, the Yanks have also added about $23.5 million to next year's payroll by trading for Javier Vazquez and Curtis Granderson and signing Nick Johnson.

During the Granderson press conference, Hal Steinbrenner said if the Yankees have the money to spend they will, but also said he is a "believer in budgets." Cashman seems determined to stay below the limit Steinbrenner gave him. Let's see how close they actually come to sticking to their budget. I say they miss it by at least $10 million. After all, it is the Yankees.

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