The Yankees have long been viewed as the “evil empire” because of the organization’s willingness to use its financial muscle to bring in baseball’s best players. That changed this past year, as the Yankees opened the 2018 season with a $161,305,917 payroll — only the 10th-largest Opening Day payroll in baseball. The Yankees had either the No. 1 or No. 2 40-man roster payroll at the end of each season dating back to 2000, according to Cot’s Contracts.
After signing CC Sabathia to a one-year deal on Tuesday, reportedly for $8 million, the Yankees’ payroll currently stands at about $157 million. The luxury tax threshold, otherwise known as the competitive balance tax threshold, is set for $206 million in 2019, leaving the Yankees roughly $49 million to play with before being penalized. A club penalized for exceeding the CBT pays a 20 percent tax for the amount of money over the threshold. If a team exceeds it two years in a row, the penalty is 30 percent. Three seasons in a row bumps the penalty to 50 percent. There are also surtaxes based on the amount of money by which a team exceeds the CBT.
Cashman’s preference is for the Yankees to remain under the luxury tax threshold, per Arash Madani, so as not “to line the pockets of opponents to use that [revenue] against us.” What happened to that “evil empire” we used to know and loathe?
When the details of the CBT were revealed in the new collective bargaining agreement in December 2016, Craig was among those to point out that it would be used as a “soft salary cap” and that’s exactly how it has been used. The Yankees were valued by Forbes in April this year at approximately $4 billion. This is not a team that should be concerned about the CBT, especially not to the point where they have dropped almost out of the top-third of the league in payroll, and certainly not to the point where the organization is willing to miss out on big-name free agents like Bryce Harper and Manny Machado. The division rival Red Sox just won a championship largely due to the front office’s willingness to spend — free agent signings like David Price and J.D. Martinez made a big impact. Cashman’s comment should be seen as anti-competitive.
There have been various issues over the last couple of years pointing to strife between ownership and the players’ union. The current CBA expires on December 1, 2021. The competitive balance tax could be one of the items the union works to get rid of or alter.
