Analyzing the Yankees' payroll situation for 2021 and beyond

The Yankees head into another offseason looking to bolster their roster to get back into the World Series. They had a roster capable of doing so in 2020, but fell short yet again.

Now managing general partner/co-chairperson Hal Steinbrenner, GM Brian Cashman and the rest of the front office will be analyzing their payroll to see what kind of decisions need to be made regarding their current roster, and what flexibility they have to dip into the free agent market.

The Yankees have been close, but of course, that only counts in horseshoes. So let’s break down the payroll for 2021 and beyond to see what New York's situation is…

SALARY ALREADY COMMITTED FOR 2021

The Yankees have multiple contracts coming off the books this offseason, including three starters in James Paxton, Masahiro Tanaka and J.A. Happ. DJ LeMahieu is also one that will hit the open market, but the Yanks will likely be quick to offer him a good amount of money to keep him on board for next season and beyond.

So, according to Cot’s Baseball Contracts, the Yankees currently have $135,217,000 already committed in payroll for next season.

The highest-paid is Gerrit Cole, who is averaging $36 million until 2028. After him is Giancarlo Stanton at $29 million and then Aroldis Chapman at $16 million.

Here’s who else is guaranteed:

• Zack Britton: $13 million
• Aaron Hicks: $10.789 million
• Luis Severino: $10.750 million
• Brett Gardner: $2.5 million (buyout money if Yanks don’t want to exercise $10 million 2021 option)
• Adam Ottavino: $8.850 million

EXPECTED ARBITRATION RAISES FOR 2021

That committed $135 million will definitely be going up with money needing to go to 12 arbitration-eligible players for the Yankees this offseason. Of course, the Bombers would love to hammer out deals with players before they reach arbitration, but we know that doesn’t always work out that way (i.e. Dellin Betances in the past).

Here are the expected arbitration raises, per MLB Trade Rumors:

• Aaron Judge: $10.7 million
• Gary Sanchez: $6.4 million
• Luke Voit: $7.9 million
• Gio Urshela: $5.2 million
• Gleyber Torres: $3.4 million
• Tommy Kahnle: $2.7 million
• Jordan Montgomery: $2 million
• Clint Frazier: $2.6 million
• Chad Green: $2.2 million
• Luis Cessa: $1.3 million
• Jonathon Holder: $1 million
• Ben Heller: $800K

Add that all up and you get a grand total of $46.2 million in arbitration contracts, bringing the overall payroll to $181.42 million. Subtract that from the $210 million luxury tax threshold this upcoming season, and you get $28.58 million to work with. It isn’t much, but the Yankees also aren’t afraid to go over the luxury tax. 

However, the uncertainty of the coronavirus pandemic might lead to the Yankees remaining a little more conservative this offseason.

Also, the above figures are for if the Yankees reach deals with all of these players.

POTENTIAL QUALIFYING OFFERS

The Yankees have a few starters who are hitting the free agent market this offseason, as we mentioned. But the one they might think about extending a qualifying offer to would be Tanaka.

Tanaka has been a centerpiece in the starting rotation since he made the jump to MLB from Japan, but other teams will have a crack at his services if they choose so this offseason. The Yankees would need to be OK with extending him a qualifying offer of $18 million, which would be his price tag if he decides to return. If he signs elsewhere on the market and doesn’t accept the qualifying offer, the Yanks get a compensatory pick in the 2021 MLB Draft.

It’s hard to see Tanaka getting a deal worth $18 million per season on the market, so the Yankees may not extend that offer and wait to negotiate a deal in free agency.

POTENTIAL EXTENSIONS TO 0-TO-3 PLAYERS AND/OR ARBITRATION PLAYERS

Judge, like Sanchez, has just one year of arbitration left before he becomes a free agent in 2023. So, a Judge extension could definitely be a topic of conversation for Cashman & Co., while Sanchez is a whole other discussion because of his lack of production over the past few seasons.

Kahnle would also be a good player to possibly extend. He is set to become a free agent in 2022 and has proven to be a solid bullpen arm for the Yanks. He underwent Tommy John surgery on Aug. 5, so the Yankees would need to make sure that his arm is all good to go. That power changeup is a valuable weapon to have in relief.

Also in the bullpen is Chad Green, who is a free agent in 2023. Locking him down for the foreseeable future may be even more in the cards than Kahnle. Green has served in multiple roles for the Yanks, which includes working as an opener at times for Aaron Boone.

PAYROLL SITUATION IN 2022 AND BEYOND

The Yankees may be able to stay under the luxury tax threshold depending on what happens with their arb-eligible players as well as what they decide to do in the free agent market. Cashman could be tempted to go after a Trevor Bauer or another starting pitcher who would increase payroll moving forward.

As for the future, a few contracts start to come off the books, but extensions will need to come for the young stars on the team. Ottavino and Kahnle are free agents in 2022 followed by Chapman and Green in 2023. But Judge should be receiving a hefty extension before the 2023 season, while Torres is a free agent in 2024. So he should be getting one as well.

As of now, the committed payroll for seasons after 2021 are as follows:

• 2022: $113,717,000
• 2023: $86,750,000
  
• 2024: $87,250,000
  

Cashman will certainly be keeping this in mind while he maneuvers his payroll in the short-term.