Yankees Reportedly Reluctant To Surpass Fourth Luxury Tax Tier

The Yankees have had an aggressive offseason, retaining Aaron Judge on a record free agent deal while bringing in Carlos Rodón on a six-year contract. Those additions, plus a new two-year deal for Anthony Rizzo, accomplished most of the club’s heavy lifting.

It also positioned the organization to top last year’s franchise-record spending level. New York has roughly $272MM in player payroll commitments, per Roster Resource, handily above last year’s $254.7MM figure. The club’s luxury tax number is right up against the $293MM line that marks the highest tier of CBT penalization. Roster Resource projects the organization at $292.3MM at present.

That latter number seems particularly important to the organization. Jon Heyman of the New York Post reports the Yankees don’t want to exceed the $293MM threshold. Considering where their payroll stands, rigidly sticking to that goal would rule out any other notable addition unless the club finds a way to shed some money.

The Yankee roster looks strong, with Rodón replacing Jameson Taillon in the rotation for a team that won 99 regular season games and made it to the AL Championship Series. Left field seems their biggest question mark, as last summer’s deadline acquisition Andrew Benintendi departed on a five-year free agent deal with the White Sox. The Yankees currently have veteran Aaron Hicks and youngster Oswaldo Cabrera as their top left field options. Hicks has posted below-average offensive numbers for the past two seasons. Cabrera showed well as a rookie but has only 44 games of MLB experience under his belt.

Heyman reiterates the Yankees’ previously reported interest in free agent left fielder Jurickson Profar but casts doubt on their chances of actually landing him in light of the club’s payroll stance. Heyman reports that veteran utilityman Josh Harrison is also of interest — presumably as a depth infield target who could also factor into the left field mix — but even a low base salary for Harrison would figure to push them past the $293MM CBT mark.

The fourth tax tier was introduced during the most recent round of collective bargaining. Set $60MM above the season’s base figure ($233MM this year), it involves at least an 80% tax on every dollar spent past the fourth tier. Teams paying the luxury tax for a second consecutive year — as the Yankees will be — are taxed at a 90% clip on additional expenditures.

One can argue whether it’s prudent for the Yankees to treat the $293MM figure as a strict cutoff as they look to repeat as division winners in another competitive AL East. As thing stand, the club is set to pay around $29MM in CBT fees. They’re already slated to see their top selection in the 2024 draft moved back ten spots for surpassing the $273MM mark. There’d be no additional draft penalties for surpassing the fourth threshold, though the financial disincentives are even higher. The Yankees certainly haven’t been frugal this winter, guaranteeing upwards of $570MM overall and pushing to second in 2023 spending. The crosstown Mets have proven thoroughly undeterred by the final tax tier, running a CBT payroll north of $360MM that’s easily the league’s highest.

A club’s competitive balance tax figure isn’t calculated until the end of a season. The Yankees could go above $293MM during the offseason while subsequently dipping below that threshold before year’s end. Alternatively, they could stick below the marker for now but reconsider going over at the summer trade deadline if they’re in contention as expected.

If that threshold is truly the line in the sand, trades would be the primary means of clearing additional breathing room. New York would surely welcome the opportunity to reallocate some of the $25MM CBT hit on the Josh Donaldson deal or the $10MM number of Hicks’ contract, but they’ve seemingly found little interest around the league. Players like Gleyber Torres or Isiah Kiner-Falefa would draw more interest if New York wanted to make them available, though doing so would obviously deal a hit to their infield depth. Starter Frankie Montas is making $7.5MM and may have been a potential trade target after the club added Rodón; that’d be tougher to do now that Montas is a couple months behind schedule because of continued shoulder troubles.

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