Yankee Lux tax implications

[jacksonianmarch]

All the talk about extensions for the sox got me thinking about the Yanks and their lux tax scenario. Here is how it projects into 2020 and 2021

 

2019-

The Yankees are at $217 mil right now

 

2020-

Things change a bit. Gardner and Sabathia definitely move on. I am assuming Chapman doesn't opt out as Kimbrel's situation is a cautionary tale for any effective closer. Betances becomes a FA, and with his shoulder barking, he might end up moving on too. Didi also hits the market. Right now, the lux tax implications locked in for 2020 are $168 mil. That doesn't take into account arb, which starts getting pricey in 2020 and more so the years after. In 2020, Green, Judge, Montgomery, Paxton and Sanchez all hit arbitration. Sanchez, Green and Judge are first timers. There are other players hitting too, but guys like Bird and Cessa aren't going to be breaking the bank barring a remarkable turnaround. I'm assuming Judge follows a Betts pattern and goes for $10 mil. Paxton will be in his final year and should make upwards of $15 mil assuming good health. Sanchez is really going to depend on this year. Arb looks at the last 2 seasons and with Sanchez having an injury marred and awful 2018, he will need a huge 2019 to tip the scales. My guess is $3 mil or so for him. Green, assuming continued success, should see somewhere in the $3 mil range as well. Add in medicals at $15 mil and the other arb guys adding up to about $5 mil, the Yanks number would jump to $219 mil. It gives us a $29 mil buffer to add one big piece or multiple small ones.

 

2021-

This is probably the most interesting season, barring any major additions in the offseason. Happ (presumably), Lemahieu, Tanaka, and Ellsbury go off the books. Britton can opt out or in. Judge goes into arb year 2, which jumps him up to $20 mil. The rest, who knows. We will have a ton of flexibility, but Andujar and Torres start the arb process. We will have a pen that is expected to contain Green, Holder, Britton, Ottavino and Chapman. We should have a rotation headed by Severino and Montgomery. I assume we would try to extend Paxton. I would also assume any pitching addition from the year prior would carry over. Maybe, we would try to keep Tanaka. Pretty fluid process to this point

[Bellhorn04]

All the talk about extensions for the sox got me thinking about the Yanks and their lux tax scenario. Here is how it projects into 2020 and 2021

 

2019-

The Yankees are at $217 mil right now

 

Cot's has you at $227 mil.

[jacksonianmarch]

https://www.spotrac.com/mlb/new-york-yankees/payroll/

 

This is the best lux tax estimator I’ve seen. Spotrac added the lux tax implication and it’s spot on

[Bellhorn04]

https://www.spotrac.com/mlb/new-york-yankees/payroll/

 

This is the best lux tax estimator I’ve seen. Spotrac added the lux tax implication and it’s spot on

 

Well, now I have to figure out where the $10 million difference comes from.

[notin]

Well, now I have to figure out where the $10 million difference comes from.

 

 

Cashman making payoffs to Stormy Daniels?

[Slasher9]

Cashman making payoffs to Stormy Daniels?

 

miami clinic

[notin]

All the talk about extensions for the sox got me thinking about the Yanks and their lux tax scenario. Here is how it projects into 2020 and 2021

 

 

 

2020-

I am assuming Chapman doesn't opt out as Kimbrel's situation is a cautionary tale for any effective closer.

 

 

That’s funny.

 

So JD Martinez in your eyes clearly learned NOTHING about free agency from his own “cautionary tale” and will definitely opt out a full year before his salary even drops. But Chapman will look at the outrageous demand from a pitcher he undoubtedly thinks is a lesser closer anyway, and decide he will do what’s best for the Yankees? Got it...

[notin]

miami clinic

 

Ah... “pharmaceutical expenses”...

[Bellhorn04]

https://www.spotrac.com/mlb/new-york-yankees/payroll/

 

This is the best lux tax estimator I’ve seen. Spotrac added the lux tax implication and it’s spot on

 

The Cot's number of $227 mill appears to be the right one. Here are their numbers. I added a column for the running total to make it easy to confirm.

 

Tanaka, Masahiro 22,142,857

Stanton, Giancarlo 22,000,000 44,142,857

Ellsbury, Jacoby 21,857,143 66,000,000

Chapman, Aroldis 17,200,000 83,200,000

Happ, J.A. 17,000,000 100,200,000

Britton, Zack 13,000,000 113,200,000

LeMahieu, D.J. 12,000,000 125,200,000

Gregorius, Didi 11,750,000 136,950,000

Hicks, Aaron 10,000,000 146,950,000

Severino, Luis 10,000,000 156,950,000

Ottavino, Adam 9,000,000 165,950,000

Paxton, James 8,575,000 174,525,000

Sabathia, CC 8,000,000 182,525,000

Gardner, Brett 7,500,000 190,025,000

Betances, Dellin 7,250,000 197,275,000

Romine, Austin 1,800,000 199,075,000

Kahnle, Tommy 1,387,500 200,462,500

Bird, Greg 1,200,000 201,662,500

Judge, Aaron 684,300 202,346,800

Sanchez, Gary 669,800 203,016,600

Andujar, Miguel 617,600 203,634,200

Torres, Gleyber 605,200 204,239,400

Green, Chad 598,650 204,838,050

Montgomery, Jordan 596,600 205,434,650

Holder, Jonathan 580,300 206,014,950

Cessa, Luis 578,975 206,593,925

German, Domingo 577,500 207,171,425

Voit, Luke 573,200 207,744,625

Tarpley, Stephen 557,250 208,301,875

Tauchman, Mike 557,000 208,858,875

Tulowitzki, Troy 555,000 209,413,875

Heller, Ben 555,000 209,968,875

40-man players-minors 2,250,000 212,218,875

Est. Player Benefits 14,500,000 226,718,875

[jacksonianmarch]

Now that we are past the trade deadline, the 2020 picture comes into clearer focus. The guaranteed contracts with AAV's are as follows for 2020

 

Stanton- $22 mil

Tanaka- $22.1 mil

Ellsbury- $21.8 mil

Chapman- $17.2 mil (if he doesn't opt out)

Happ- $17 mil

Britton- $13 mil

Hicks- $10 mil

Severino- $10 mil

Ottavino- $9 mil

Lemahieu- $12 mil

 

Arb cases

Something to keep in mind about arbitration. They take into account the past year's salary AND the last 2 years of production. This will help us in terms of Judge since his best year was his rookie campaign and he has missed a big chunk of time two years in a row. It will also help us with Sanchez who has had a good 2019 but had a miserable 2018

Green- $2.5 mil

Judge- $7 mil (better than most first timers, won't see the $10 mil Mookie saw due to the time lost)

Sanchez- $5 mil (also better than most first timers, but big hit for 2018 performance)

Kahnle- $3 mil (his 2018 was a disaster)

Montgomery- $1 mil (missed all of 2018 and now 2019)

Paxton- $10 mil (moderate jump on 2018 after a disappointing first year in pinstripes)

Hale- $1 mil

Bird- $1.5 mil

Player benefits- $15 mil

Last 7 roster spots- $4 mil

 

Heading into 2020, the Yanks will have $204 mil on the books. As for the team under contract, it will look something like this

 

C- Sanchez, Higashioka

1B- Voit

2B- Lemahieu

SS- Torres

3B- Andujar. Urshela

LF- Tauchman, Frazier

CF- Hicks

RF- Judge

DH- Stanton

 

SP1- Severino

SP2- Paxton

SP3- Tanaka

SP4- Montgomery

SP5- Happ

 

CL- Chapman

SU- Britton

SU- Ottavino

MR- Hale

MR- Green

MR- Kahnle

MR- Cessa

 

We would have a full team. We would be saying goodbye to CC, Romine, Gardner, Gregorius, Encarnacion and Betances. This is all assuming we don't lose or extend Chapman, who has an opt out. My assumption is we are going to need to do something with Chap, but my guess is he would get an added year at a lower salary and might actually drop his AAV. The first lux tax line will be $208 mil. The final line will be $248 mil. If Chap stays on, the Yanks will have $44 mil to play with before hitting the final line. My guess is they would like to spend a big chunk of that on Cole

 

The craziest thing is that our tax implications drop after 2020. Tanaka, Ellsbury, Happ and Lemahieu fall off the curve. I’m assuming the Yanks opt in on Britton. I’d assume we would try to keep DJ. We would have some arb contracts to handle, but that’s $75 mil more to play with, with only one player really needing to be re-signed (Lemahieu)

Edited August 2, 2019 by jacksonianmarch

[Meh]

First let me say, f*** Ellsbury. Second, I can see them bringing Romine back. Hell it would only cost them 2.5 million most likely at most.

 

We better sign Cole. I wonder if they offer didi arb

[dgalehouse]

All the talk about extensions for the sox got me thinking about the Yanks and their lux tax scenario. Here is how it projects into 2020 and 2021

 

2019-

The Yankees are at $217 mil right now

 

2020-

Things change a bit. Gardner and Sabathia definitely move on. I am assuming Chapman doesn't opt out as Kimbrel's situation is a cautionary tale for any effective closer. Betances becomes a FA, and with his shoulder barking, he might end up moving on too. Didi also hits the market. Right now, the lux tax implications locked in for 2020 are $168 mil. That doesn't take into account arb, which starts getting pricey in 2020 and more so the years after. In 2020, Green, Judge, Montgomery, Paxton and Sanchez all hit arbitration. Sanchez, Green and Judge are first timers. There are other players hitting too, but guys like Bird and Cessa aren't going to be breaking the bank barring a remarkable turnaround. I'm assuming Judge follows a Betts pattern and goes for $10 mil. Paxton will be in his final year and should make upwards of $15 mil assuming good health. Sanchez is really going to depend on this year. Arb looks at the last 2 seasons and with Sanchez having an injury marred and awful 2018, he will need a huge 2019 to tip the scales. My guess is $3 mil or so for him. Green, assuming continued success, should see somewhere in the $3 mil range as well. Add in medicals at $15 mil and the other arb guys adding up to about $5 mil, the Yanks number would jump to $219 mil. It gives us a $29 mil buffer to add one big piece or multiple small ones.

 

2021-

This is probably the most interesting season, barring any major additions in the offseason. Happ (presumably), Lemahieu, Tanaka, and Ellsbury go off the books. Britton can opt out or in. Judge goes into arb year 2, which jumps him up to $20 mil. The rest, who knows. We will have a ton of flexibility, but Andujar and Torres start the arb process. We will have a pen that is expected to contain Green, Holder, Britton, Ottavino and Chapman. We should have a rotation headed by Severino and Montgomery. I assume we would try to extend Paxton. I would also assume any pitching addition from the year prior would carry over. Maybe, we would try to keep Tanaka. Pretty fluid process to this point

 

Chapman will not opt out . He would be a fool to opt out .

[jacksonianmarch]

Chapman will not opt out . He would be a fool to opt out .

 

He pitched like dog s*** in July for sure, but there was an article about him opting out prior to his downturn. I think he will opt out because I am sure he will right the ship (he does this every year). He's got 2yrs $34.5 mil left on his deal. While he definitely won't see the same AAV, he can look at Kimbrel's deal and believe he can increase his guaranteed take home. These relievers are a single arm injury away from being done or in Chap's case, a drop in velo away from being done. Kimbrel got $43 mil guaranteed for 2.6 seasons and Chapman has been as good or better than Kimbrel the past few seasons and they're the same age (Chapman is 110 days older). My guess is Chapman opts out and the Yanks re-sign him for 3yrs and $45 mil.