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  1. #1

    What is the exact benefit of getting under $189 mil?

    I have been wondering what exactly are the benefits of getting under $189 million. Are we talking about the difference of 17% or 50% on the amount over $189? If so then with the most revenue why are we so worried about what amounts to what is going to be $10-$12 million. ($220 mill as a payroll) I would worry about the lost revenue and continued alienation of the fan base and season ticket holders more....

  2. #2

    Re: What is the exact benefit of getting under $189 mil?

    luxury tax

  3. #3
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    Re: What is the exact benefit of getting under $189 mil?

    Sticking it to the man.

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    Re: What is the exact benefit of getting under $189 mil?

    RAB did a good analysis of the various scenarios around this a year or two ago. Basically, there was the luxury tax savings (which isn't for a single year but, because falling below the threshold basically resets the tax, means savings for several years), the straightforward payroll savings of dropping to $189 million and, I believe, some increased participation in revenue sharing.

    The big question they posed was whether this was a one-year or multiple year strategy, which hasn't been communicated by the Yankees and certainly impacts the savings.
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  5. #5

    Re: What is the exact benefit of getting under $189 mil?

    The biggest benefit is to resetting the luxury tax rate. Get under once and you can drop your rate from 50% to around 17% the following year with gradual increases from there.

    The benefit of staying under isn't that great. Get under this year and the team can comfortably go over the next few years with minimal consequence.

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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by primetime714 View Post
    The biggest benefit is to resetting the luxury tax rate. Get under once and you can drop your rate from 50% to around 17% the following year with gradual increases from there.

    The benefit of staying under isn't that great. Get under this year and the team can comfortably go over the next few years with minimal consequence.
    This is the way I understand it. The second biggest benefit is not having to hear about getting under $189 million anymore.
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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by primetime714 View Post
    The biggest benefit is to resetting the luxury tax rate. Get under once and you can drop your rate from 50% to around 17% the following year with gradual increases from there.

    The benefit of staying under isn't that great. Get under this year and the team can comfortably go over the next few years with minimal consequence.
    Depends on what Hal is thinking. The benefit of being under includes a long-term reduction in payroll, which I am sure he'd appreciate.

    I can see the long-term goal to be to actually have a productive farm system that allows them to stay close to the luxury tax number annually (in a few years, after they get rid of the bloated contracts). They have a lot of work to get there, of course.
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    Re: What is the exact benefit of getting under $189 mil?

    It would have been helpful if the organization had been more forward thinking about this strategy a couple of seasons ago instead of suddenly slamming on the brakes now. This is a viable goal, but just like ripping of the band aid, it's going to hurt for another season or two or three.
    Yankee fan living in Maine.

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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by apalradio View Post
    It would have been helpful if the organization had been more forward thinking about this strategy a couple of seasons ago instead of suddenly slamming on the brakes now. This is a viable goal, but just like ripping of the band aid, it's going to hurt for another season or two or three.
    This is my issue with management as well. I don't blame them for the farm system's lack of productivity (if they truly address it this offseason), but they played a key role in taking on these long-term contracts and then changing direction and try to get below the luxury tax number. I'm supportive of a long-term plan that puts more emphasis on developing players, but there's going to be some short term pain that is going to affect interest in the team and revenues. I just hope they can commit to a plan and not prolong the situation.
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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by Yankee Fan in Boston View Post
    Depends on what Hal is thinking. The benefit of being under includes a long-term reduction in payroll, which I am sure he'd appreciate.

    I can see the long-term goal to be to actually have a productive farm system that allows them to stay close to the luxury tax number annually (in a few years, after they get rid of the bloated contracts). They have a lot of work to get there, of course.
    The financial benefit of a long-term payroll reduction is greater than the benefit from the luxury tax. If they look to reduce payroll without worrying too much about whether they're under $189M or not, the difference in luxury tax will get very small.

    As kan_t said in the other thread, the revenue-sharing benefits are probably greater. Unfortunately, the formula is complicated, and we don't know the numbers in the first place, so I don't know how to even estimate it intelligently.
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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by JL25and3 View Post
    The financial benefit of a long-term payroll reduction is greater than the benefit from the luxury tax. If they look to reduce payroll without worrying too much about whether they're under $189M or not, the difference in luxury tax will get very small.

    As kan_t said in the other thread, the revenue-sharing benefits are probably greater. Unfortunately, the formula is complicated, and we don't know the numbers in the first place, so I don't know how to even estimate it intelligently.
    Yes, and from that perspective, there's probably not a more cost effective spend they could make than to invest is bringing in top talent to revitalize the draft and player development folks. You'd have to think those guys make relatively little, the long-term payoff could be huge for this team. Given their financial resources, and recent acknowledgement that the farm isn't producing, they almost have to do something significant this offseason.
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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by apalradio View Post
    It would have been helpful if the organization had been more forward thinking about this strategy a couple of seasons ago instead of suddenly slamming on the brakes now. This is a viable goal, but just like ripping of the band aid, it's going to hurt for another season or two or three.
    A few years ago, as in say before 2009? The deals that are bludgeoning them at the moment were all signed between '07 and '09. That's more than a few years ago. And those signings led to a WS championship in '09. So unless you are saying go back to '07 and undo A-Rod's deal, back to '09 and undo CC and Tex' deals, and hope the team did better with that cash on hand then they've actually gotten from those 3, I don't get the point you're making.

    I think it's less about looking backwards, and more about looking forwards. To your point, do you slam on the brakes now or do you make changes that incrementally reign in costs over time versus doing it all in one offseason.

  13. #13

    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by Yankee Fan in Boston View Post
    Depends on what Hal is thinking. The benefit of being under includes a long-term reduction in payroll, which I am sure he'd appreciate.

    I can see the long-term goal to be to actually have a productive farm system that allows them to stay close to the luxury tax number annually (in a few years, after they get rid of the bloated contracts). They have a lot of work to get there, of course.
    Yea I mean Hal has always said that the team shouldn't need to spend as much as they have to be competitive. That said they don't and won't have the farm system in the next couple years to appropriately allow them to achieve this goal.

    With that in mind their best short term strategy is to get under this year and spend big the following year(s) until they can source from the farm system and more sustainably be able to keep a reasonable payroll while staying competitive.

    Long term you're absolutely right that Hal would love to consistently maintain a lower payroll. That said I don't see the Yankees decreasing much especially with the way the rest of the league has been starting to spend thus increasing player costs.

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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by False1 View Post
    A few years ago, as in say before 2009? The deals that are bludgeoning them at the moment were all signed between '07 and '09. That's more than a few years ago. And those signings led to a WS championship in '09. So unless you are saying go back to '07 and undo A-Rod's deal, back to '09 and undo CC and Tex' deals, and hope the team did better with that cash on hand then they've actually gotten from those 3, I don't get the point you're making.

    I think it's less about looking backwards, and more about looking forwards. To your point, do you slam on the brakes now or do you make changes that incrementally reign in costs over time versus doing it all in one offseason.
    I guess I have the same reaction to your point. Are you suggesting that after that WS championship in '09, they could not have begun to move toward rolling back payroll and building up the farm anytime in '10, '11, or '12, and were correct in waiting until '13 to slam on the brakes?
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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by apalradio View Post
    I guess I have the same reaction to your point. Are you suggesting that after that WS championship in '09, they could not have begun to move toward rolling back payroll and building up the farm anytime in '10, '11, or '12, and were correct in waiting until '13 to slam on the brakes?
    Like for starters, there was no reason to trade the one good minor leaguer (Austin Jackson) we've seen come along in a while for Curtis Granderson. Then not retain Chavez but then sign Youklis for more $.

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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by Yankee Fan in Boston View Post
    Yes, and from that perspective, there's probably not a more cost effective spend they could make than to invest is bringing in top talent to revitalize the draft and player development folks. You'd have to think those guys make relatively little, the long-term payoff could be huge for this team. Given their financial resources, and recent acknowledgement that the farm isn't producing, they almost have to do something significant this offseason.
    Not trying to single out your post but I wanted to comment on some comments similar to this, regarding how to "fix" the drafting/player development departments.

    I'm certainly no expert, but somehow I doubt the solution is to throw more money at the problem. If everything starts with drafting, doesn't it make sense that since the Yankees are normally at the bottom of the pecking order due to having one of the better records in MLB from the previous season, their draft picks are more susceptible to being "hit and miss" picks?

    The highest first-round pick they've had since 2006 is #21 (Ian Kennedy,2006), with most of them being at or higher than #30. Also, out of 12 total first-round picks, six have been high-school players. Not only will they need more time to develop, but the odds of success become even more improbable. It feels like I have a better shot at winning the lottery than the Yankees have of adding young inexperienced players each year that are ready to contribute at the MLB level.

    I can't imagine that the organization's player development program is flawed - my guess is it is similar to the other 29 teams' programs. I do believe that because of the perennial "win now" philosophy that seems a bit unique at the parent club level, perhaps the folks at the player development level feel pressured to produce talent without having a lot of patience with their talent pool. With no real "stamp of approval" being given to the upcoming talent, is it any wonder that Cashman and Girardi tend to favor veterans over rookies?

    I guess what I'm trying to say is it's very improbable for the Yankees to put a championship-caliber team on the field each season and mix in young, unproven talent at the same time, because of their mindset. This is one area that it seems the Boston organization has excelled at over the past decade - I wonder what they are doing differently.
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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by sjb23 View Post
    Not trying to single out your post but I wanted to comment on some comments similar to this, regarding how to "fix" the drafting/player development departments.

    I'm certainly no expert, but somehow I doubt the solution is to throw more money at the problem. If everything starts with drafting, doesn't it make sense that since the Yankees are normally at the bottom of the pecking order due to having one of the better records in MLB from the previous season, their draft picks are more susceptible to being "hit and miss" picks?

    The highest first-round pick they've had since 2006 is #21 (Ian Kennedy,2006), with most of them being at or higher than #30. Also, out of 12 total first-round picks, six have been high-school players. Not only will they need more time to develop, but the odds of success become even more improbable. It feels like I have a better shot at winning the lottery than the Yankees have of adding young inexperienced players each year that are ready to contribute at the MLB level.

    I can't imagine that the organization's player development program is flawed - my guess is it is similar to the other 29 teams' programs. I do believe that because of the perennial "win now" philosophy that seems a bit unique at the parent club level, perhaps the folks at the player development level feel pressured to produce talent without having a lot of patience with their talent pool. With no real "stamp of approval" being given to the upcoming talent, is it any wonder that Cashman and Girardi tend to favor veterans over rookies?

    I guess what I'm trying to say is it's very improbable for the Yankees to put a championship-caliber team on the field each season and mix in young, unproven talent at the same time, because of their mindset. This is one area that it seems the Boston organization has excelled at over the past decade - I wonder what they are doing differently.
    I agree that the Yankees have disadvantages because of their consistent low draft picks and annual focus on winning, yet that's not an excuse for their poor track record. This year was a striking reminder of how barren the upper levels of the farm system have been, and I think part of the "veteran strategy" is driven by the lack of capable prospects. We've seen plenty of minor league pitchers be given shots, and guys like Nunez hanging around because their isn't a better option.

    Given their resources, the Yankees should be doing better in this area. I don't see hiring the best personnel as "throwing money at the problem" -- I think they need to address this thoughtfully, as any other business would. I can't tell you whether the biggest weaknesses are in drafting, development, scouting, etc.... I'd like to see them bring in someone from outside (a retired or out of work development guy, for instance) to help review their processes and benchmark against teams like Tampa, St. Louis and Boston.

    At the end of the day, they need to do better in this area if they want to reduce payroll and win. I'd like to see them follow a thoughtful process to get there.
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  18. #18

    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by sjb23 View Post
    Not trying to single out your post but I wanted to comment on some comments similar to this, regarding how to "fix" the drafting/player development departments.

    I'm certainly no expert, but somehow I doubt the solution is to throw more money at the problem. If everything starts with drafting, doesn't it make sense that since the Yankees are normally at the bottom of the pecking order due to having one of the better records in MLB from the previous season, their draft picks are more susceptible to being "hit and miss" picks?

    The highest first-round pick they've had since 2006 is #21 (Ian Kennedy,2006), with most of them being at or higher than #30. Also, out of 12 total first-round picks, six have been high-school players. Not only will they need more time to develop, but the odds of success become even more improbable. It feels like I have a better shot at winning the lottery than the Yankees have of adding young inexperienced players each year that are ready to contribute at the MLB level.

    I can't imagine that the organization's player development program is flawed - my guess is it is similar to the other 29 teams' programs. I do believe that because of the perennial "win now" philosophy that seems a bit unique at the parent club level, perhaps the folks at the player development level feel pressured to produce talent without having a lot of patience with their talent pool. With no real "stamp of approval" being given to the upcoming talent, is it any wonder that Cashman and Girardi tend to favor veterans over rookies?

    I guess what I'm trying to say is it's very improbable for the Yankees to put a championship-caliber team on the field each season and mix in young, unproven talent at the same time, because of their mindset. This is one area that it seems the Boston organization has excelled at over the past decade - I wonder what they are doing differently.
    Just look at what they've done with their top pick each year and you'll realize that it's a lot more than draft position that is keeping the farm system from being useful:

    CJ Henry
    Cito Culver
    Andrew Brackman
    Gerrit Cole- great pick, but failed to sign him
    Dante Bischette

    All huge reaches and flame outs

    If they don't clean house with the drafting and development crews now, there's little hope for salvaging the farm. Hal recognizes it's failed, now we see whether he'll manage to right the ship
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  19. #19
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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by ieddyi View Post
    CJ Henry
    Cito Culver
    Andrew Brackman
    Gerrit Cole- great pick, but failed to sign him
    Dante Bischette

    All huge reaches and flame outs
    Henry - drafted out of high school, #17 (flop)
    Culver - drafted out of high school, #30 (too early to tell, he's only 21!)
    Brackman - #30 (flop)
    Cole - #28, failed to sign
    Bischette - drafted out of high school, #51 (too early to tell he's only 21!)

    That's 3 high school kids and two of them still have quite an upside, considering they're both only 21. Four out of the five are picks #28 or higher.

    When you're picking high school kids or get past the top 30, odds are against developing productive players at the MLB level - that's exactly my point.
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  20. #20

    Re: What is the exact benefit of getting under $189 mil?

    It might not be to early to tell when it comes to Culver and DBJ. Yes they are 21 and time is on there side to sooner rather than later they are going to have to show something. The picks were panned but everyone as reaches.

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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by Kingofkings19 View Post
    The picks were panned but everyone as reaches.

    Once again, this is exactly my point: There are no "sure-thing" picks at #30 or higher

    My uneducated guess is that in most cases it's all a crapshoot after the top 10 are picked.
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    Re: What is the exact benefit of getting under $189 mil?

    hal, randy, and lonn get to wipe their asses with 100 dollar bills
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  23. #23
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    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by sjb23 View Post
    Once again, this is exactly my point: There are no "sure-thing" picks at #30 or higher

    My uneducated guess is that in most cases it's all a crapshoot after the top 10 are picked.
    That's why we shouldn't focus on individual picks. Brackman, for instance, was a high-risk, high-reward pick -- didn't pan out, but I understand the strategy. But the issue for me isn't a few picks -- it's the state of the farm as a whole. The vast majority of MLB players are not top ten picks in the draft and, at the end of the day, draft position isn't the sole reason the Yankees system is in its current state.
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  24. #24

    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by sjb23 View Post
    Henry - drafted out of high school, #17 (flop)
    Culver - drafted out of high school, #30 (too early to tell, he's only 21!)
    Brackman - #30 (flop)
    Cole - #28, failed to sign
    Bischette - drafted out of high school, #51 (too early to tell he's only 21!)

    That's 3 high school kids and two of them still have quite an upside, considering they're both only 21. Four out of the five are picks #28 or higher.

    When you're picking high school kids or get past the top 30, odds are against developing productive players at the MLB level - that's exactly my point.
    The point is that there were many kids taken after our top pick that turned into productive ML players. Is it just luck that Tampa is able to turn late round picks into players able to be a part of their rotation? Maybe, just maybe it's their scouting and development people that are superior to the folks we have running our farm that makes the difference? The top 10 draft slots are pretty self evident. It's as you get lower in the order that the scouting skill comes in to play. The Yanks are lacking there and it's a big part of why the farm is in the state it is- not any crapshoot theory of the draft position. Just look at the Pirates andhow long they've sucked despite having top draft choices
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  25. #25

    Re: What is the exact benefit of getting under $189 mil?

    Quote Originally Posted by sjb23 View Post
    Once again, this is exactly my point: There are no "sure-thing" picks at #30 or higher

    My uneducated guess is that in most cases it's all a crapshoot after the top 10 are picked.

    In cases it is but with those choices the Yankees shot themselves in the foot. Not every kid picked is going to make it but the Yankees literally set themselves up to fail when they took DB and Culver. It was so out of left field ppl wondered if they picked the names out of the hat.

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