Tuesday, November 13, 2012
IIATM: Explaining the luxury tax, revenue sharing refunds, and the Yankees
Unfortunately for the Yankees, the $189,000,000 goal will be difficult for the team to get under without some very shrewd maneuvering and getting a bingo on a minor league prospect or three. The 2014 Yankee club, as viewed through a luxury tax lens, looks like the following:
Team must be at or under $189,000,000 for entire season costs
Alex Rodriguez -$27,500,000 (Average Annual Value of contract)
Mark Teixeira -$22,500,000 (Average Annual Value of Contract)
CC Sabathia -$23,875,000 (Average Annual Value of Contract [Original + Extension])
Player Benefits -$10,799,590 (Or more!)
Remaining budget room: $104,325,410
These are known costs, but there is 1 more cost that will definitely factor in to 2014. It is variable. If Derek Jeter accepts his player option for 2014 he will cost $15,500,000 (14 AAV+1.5 silver slugger bonus). If Derek Jeter declines his option, he will count as $9,000,000 for 2014, due to the rules of the CBA. Derek Jeter’s $8 million player option for 2014 counts as a guaranteed year and is included in the AAV calculation, which lowered the AAV of Jeter’s deal from $16mm to $14mm. The Yankees will owe $2mm each in back pay for 2011, 2012, and 2013. They will also owe $3mm for his buyout.
Without doing anything significant via trade, the Yankees 2014 operating budget will be either $88,825,410 or $95,325,410 depending on what Jeter does. This does not include anyone in arbitration or minor leaguers on the 40 man roster.
Can the Yankees fit ~21 players under that salary amount while still competing for the playoffs?
Well worth a read if you want to understand just how big of a task the Yankees face if they want to get under the payroll limit in 2014 while remaining competitive.
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