The Associated Press is reporting that the Boston Red Sox and the Washington Nationals will be the only teams to pay the luxury tax this offseason. For the first time since the advent of the luxury tax in 2003, the New York Yankees will not be paying the tax.
Baseball teams pay a 17.5 percent luxury tax for going over the designated threshold. If those teams stay over for a second, third, and fourth consecutive year, those penalties rise to 30, 40, and 50 percent, respectively. Those thresholds for 2018-21 are $197 million, $206 million, $208 million, and $210 million, respectively.
August 31st payroll levels are what trigger the tax. Boston’s luxury tax payroll as of that date was $238.4 million. It is projected that they will pay $11.3 million in luxury tax as a result. The Nationals’ payroll is $203.9 million, forcing them to pay a projected tax of $2.1 million. The Yankees are just under the threshold at $192.1 million. The Giants and Dodgers are even closer to that threshold than the Yankees. San Francisco’s August 31 payroll is at $195.3 million, L.A’s is at $194.5 million.
By getting under the $197 million mark, the Yankees reset their luxury tax rate going forward, so if they exceed it next year, their tax rate will be down at that 17.5% rate instead of the 50% rate they’d be paying if they remained above it in 2018. That means they’re more likely to be a player for free agents this offseason than if they hadn’t tightened their belts a bit down from 50% for being multi-year offenders of MLB’s soft salary cap.
The Yankees appear to have moved on from free agent Manny Machado this winter, but could they be turning their attention to Rockies superstar Nolan Arenado? That’s the idea floated by Andy Martino of SNY, who hears that GM Brian Cashman has been involved in recent discussions concerning the third baseman. No official comments have been made to the press yet, though, and it’s not clear whether the Yankees would prefer to pursue Arenado prior to the 2019 season or partway through it.
The 27-year-old infielder earned his fourth consecutive All-Star nomination, Silver Slugger, and Gold Glove award in 2018 after slashing .297/.374/.561 with 38 home runs, a .935 OPS, and 5.7 fWAR across 673 plate appearances. There’s no question he’s provided immense value to Colorado’s lineup over the last half-decade, and his consistency and incredible power at the plate helped form the basis of the record $30 million arbitration figure he presented to the team last week. The Rockies countered at $24 million, however, and in doing so may have jeopardized their chances of convincing the infielder to forego free agency in 2020 and take a long-term deal instead.
Assuming he declines to negotiate an extension with the Rockies, Arenado’s decorated résumé and career-best 2018 numbers should attract plenty of interest around the league — a reality that could put considerable pressure on the Yankees (or any other interested party) to finesse a deal sooner rather than later. For now, the club is prepared to enter the 2019 season with hot-hitting third baseman Miguel Andújar, whom Martino speculates would be the “centerpiece” of any trade with Colorado.