State of the Yankees payroll: Will team surpass $300 million for the first time ever?

The New York Yankees are in unsettling territory this offseason. They’re almost always in the postseason. It’s just the fifth time since 1995 that the Yankees missed out on October baseball altogether.

The last time the Yankees missed the postseason, in 2016, there was hope 2017 could be different because of Aaron Judge, Gary Sánchez and the rise of the rest of the Baby Bombers. The Yankees did not go on a wild spending spree that offseason other than returning Aroldis Chapman on a five-year, $86 million deal. Outside of Chapman, only one-year deals to Matt Holiday and Chris Carter were notable.

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The Yankees were also relatively quiet after the 2014 season. That offseason saw the team trade for Didi Gregorius, and a midsized contract was extended to Andrew Miller. They spent big in 2013, shelling out over $500 million to Masahiro Tanaka, Jacoby Ellsbury, Brian McCann, Carlos Beltrán, Hiroki Kuroda and Derek Jeter, among others. Brett Gardner also signed a four-year extension.

None of those offseasons amounted to much of anything for the Yankees. But in 2008, the first season under owner Hal Steinbrenner’s control, the Yankees pursued stars and the strategy worked. Mark Teixeira, CC Sabathia and A.J. Burnett were signed to mega-deals, and the Yankees won the World Series the next season.

The strength of the Yankees, or what it at least should be, is their spending power. They have the highest valuation for any franchise in MLB, but they haven’t fully flexed that muscle since 2008. This isn’t to say they haven’t signed any massive deals, but they haven’t spent on several stars in one offseason since 2008.

Acquiring the most amount of star talent is generally a good strategy to have the best chance of winning in October. Will this be the year that rivals the 2008 offseason? Let’s take a look at the state of the team’s payroll.

Guaranteed contracts

The core of this roster has $173.55 million committed for 2024, which would have ranked 16th in total payroll this season. The true core members of the Yankees — Aaron Judge, Gerrit Cole, Giancarlo Stanton, Carlos Rodón and DJ LeMahieu — are all under contract through at least 2026.

Cole has a player opt-out in his contract that he can exercise at the end of this upcoming season, but it can be voided if the Yankees tack on a 10th year to his contract in 2029, at an extra $36 million, when the presumptive American League Cy Young winner is 38 years old. Cole has been one of MLB’s most durable pitchers and has pristine mechanics that should hold up well throughout the rest of his career, so adding a 10th year shouldn’t be too difficult of a decision for the Yankees to make if Cole decides to opt out. His former teammate, Justin Verlander, won the Cy Young last season at 39 years old. But Max Scherzer, who turned 39 in late July, has shown signs of breaking down.

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This coming year is the final season of a guaranteed contract for Anthony Rizzo, who has a club option in 2025. Rizzo was one of the best first basemen in the sport this season before his production crumbled after he suffered a concussion. If he returns to his previous production levels, picking up his $17 million option for 2025 should be a no-brainer. Japanese star corner infielder Munetaka Murakami, 22, widely considered the best international hitter, is expected to be posted after the 2025 season. That’s when Rizzo would become an unrestricted free agent and give the Yankees a clear path to pursue Murakami in free agency.

Stanton is the albatross of this group. With four years and $98 million owed, Stanton’s contract is largely immovable. The Yankees have to hope he can return to form next season; otherwise, the front office will have a difficult decision to make about possibly eating the money he’s due and opening a roster spot for more flexibility.

Dead money

After designating Aaron Hicks and Josh Donaldson for assignment this season, the Yankees will pay just over $15 million to players who no longer wear the pinstripes. The Yankees will pay Hicks in 2025, too, and Donaldson has a buyout in his contract for this season the Yankees must pay to complete the split.

Combining the dead money with the team’s guaranteed salaries, the Yankees have just over $188 million in money committed next season before securing deals with their arbitration-eligible players. That would have ranked as the 11th-highest payroll in the sport this season, and that’s just for seven players.

Arbitration projections

Before diving into the players who are due raises in arbitration, it’s important to note the Yankees have just over $31 million coming off the books in free agency if they choose not to bring anyone back. Luis Severino, Frankie Montas, Isiah Kiner-Falefa and Wandy Peralta are the team’s main free agents, and it does make sense on some level to bring back Montas and Peralta.

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The main player who’s arbitration-eligible is second baseman Gleyber Torres, who’s projected by MLB Trade Rumors to make just over $15 million in his final year of team control before hitting free agency next offseason. It’s a significant raise for Torres, who made just under $10 million in 2023. If the Yankees feel like they need to create additional salary relief for this coming season, trading Torres would be a move they’d likely consider. But trading the team’s second-best hitter in 2023 wouldn’t be a wise decision because of how badly the Yankees need offense — removing a hitter of his caliber would only make things more difficult for the team next season. The Yankees haven’t given any indication they view Torres as a part of their core beyond 2024, and whether they do believe they will not reach an extension next season, moving on from him now and maximizing his value would make sense. Again, losing a quality hitter would be tough to swallow. It might be more beneficial to let him walk in free agency for nothing than to lose him now.

Also due for a substantial raise is closer Clay Holmes, whose 2023 salary of $3.3 million is set to almost double. Holmes is one of the most underrated players across the sport and really should have more respect among the fans. He’s been a phenomenal addition since the team acquired him from the Pittsburgh Pirates in 2021.

The clear locks for the Yankees to tender contracts out of this group of 17 players, the largest in MLB, are Torres, Holmes, Nestor Cortes, Jose Trevino, Michael King, Clarke Schmidt and Jonathan Loáisiga. Let’s say each player gets his projected salary for 2024; that’s an additional $35.6 million in payroll. Combine that with the $188 million in guaranteed contracts plus dead money and that’s $223.6 million for 14 players. Ian Hamilton and Anthony Volpe, pre-arbitration players, will make close to the minimum next season. That’s 16 spots for the Yankees’ 26-man roster and roughly $14 million to spend on 10 spots before hitting the first luxury tax threshold of $237 million.

Lou Trivino, Domingo Germán, Kyle Higashioka, Jake Bauers, Franchy Cordero, Billy McKinney, Matt Bowman, Albert Abreu, Ryan Weber and Jimmy Cordero are all candidates to be non-tendered by the team; however, because of their cheap salaries, cases can be made for either Bauers or McKinney and Abreu to return with the 2024 Yankees. Germán and Cordero are difficult to project because both have off-field issues that cloud their futures.

In 2018, the Yankees stayed under the luxury tax threshold for the first time since there was a tax penalty implemented in 2003. They stayed under once again in 2021. If the Yankees follow a pattern dating to 2018, this would be the year they’d reset payroll, but I don’t see how they can justify it after this season. It would be stunning if they weren’t a tax-paying team in 2024.

The Yankees have been heavily linked to Chicago Cubs outfielder Cody Bellinger and Japanese pitcher Yoshinobu Yamamoto. If we use The Athletic’s Jim Bowden’s free-agency contract projections, Bellinger would add $24 million to the payroll and Yamamoto would add just over $30 million in 2024. Bellinger’s total projected salary by Bowden is $144 million, but a league source told The Athletic the center fielder’s ask will be more than the $162 million Brandon Nimmo received this past offseason. Just those two players alone would have the Yankees over the $277 million tax threshold, which, at that level, would see the team’s 2025 first-round draft pick get moved back 10 spots.

The front office will have to get creative to field a competitive team if the payroll will be less than the $277 million payroll from this season. Because of the team’s locked-in commitments, I also don’t see a realistic pathway for the Yankees to field a competitive team if they were to stay under the first luxury tax level. Depth was a major limiting factor for the 2023 Yankees. Slashing payroll by over $40 million in 2024 would only exacerbate that problem.

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One consistent theme over the past few years from the Yankees is Steinbrenner’s expressing how he believes a team doesn’t need to spend over $300 million in payroll to win a World Series. But with where the roster stands in payroll commitments, it might just be that the team has to come close to that number, or even exceed it, if it’s serious about winning in 2024.

(Top photo of Hal Steinbrenner: Dustin Satloff / Getty Images)

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