Projecting the 2011 Yankee Payroll

Tuesday was a big day for the Yankee Hot Stove. The biggest rumors surrounded top Yankee target Cliff Lee. First, it was rumored that the Yankees were considering offering Lee $115 million over five years, an expensive but fair evaluation of his worth. Yesterday those numbers were revised upwards to $140 million over six years.

Although extravagant, that rumor was plausible because it didn’t quite represent over-paying Lee relative to CC Sabathia or Johan Santana. Also, if it were true then you may as well have fit the lefty for Pinstripes because no team in baseball is matching that offer. Finally, it was reported that all this speculation was bunk because the Yankees hadn’t made an offer to Lee. One thing is certain, the market for Lee looks to be about $23 million a year for five or six years, which is expensive, but probably right about where Lee’s eventual contract will land.

Cliff Lee wasn’t the only free agent in the Yankees’ cross-hairs making waves. Mariano Rivera is rumored to want an extortionate contract of $36 million for two years, while fellow core-four team member Andy Pettitte is said to want back for the 2011 season (I’m STUNNED). No number was reported when it was said that Andy wanted to come back, but he has been surprisingly reasonable the last few seasons with his demands. Here’s hoping he won’t ask for much more than $13 million.

Derek Jeter‘s agent, meanwhile, is baffled at the Yankees’ strategy of dealing with the Captain, a strategy that apparently entails over-paying Jeter for too many years to the tune of three years for $45 million. The rumor is that Jeter wants a five- or six-year contract, which is not going to happen. Suffice it to say $15 million is a floor for Jeter’s salary next season, and a final contract is a ways off.

Finally, Javier Vazquez is the only Yankee who will be offered arbitration. He is expected to decline the offer. So long as he’s honest this is nothing to get concerned about, but it is newsworthy.

Piecing all this together sheds some light on where the Yankees may be headed with their 2011 payroll. Baseball-Reference currently projects the Yankee payroll to be $157.3 million, accounting only for players currently under contract, adjusting for players who are due a pay raise, and using league minimum players to fill out the roster. It is therefore reasonable to estimate that the Yankees have committed to about $150 million in 2011 already, removing the league minimum players who aren’t going to be on this squad. Let’s see where the team winds up if we add in the rest of the free-agent targets, at realistic prices (all dollar figures in millions, obviously):

All of these values are straight from the horse’s mouth, except my estimate of the bench. The Yankees are said to be in the market for at least one lefthanded reliever, and may also be searching for a setup man, so my estimates are probably on the low end. Either way, the Yankees are due to break their own record for the highest payroll in baseball history next season.

This seems to be a certainty because Lee’s contract is the major new addition to the payroll. He’ll get his money from the Yankees, or from another club, so if the Yankees are serious about signing him they’ll have to elevate payroll from its 2010 level. This doesn’t mean, however, that the team can’t extract value from other sources.

Those sources are going to be the Core Four. Of the three name-brand Yankees without contracts only Pettitte is payed his fair value. Jeter just finished the second-largest contract in baseball history and Rivera was overpaid on his last deal, which he signed when he was younger than 40. If both Jeter and Rivera are overpaid, and both are too old to be of much value to other clubs for more than a season, then the only way the Yankees can control payroll is if they take a hard line with both of them. Neither of their families is about to starve, but the Yankees need to reduce their salaries, and make sure they understand that they are being compensated well above market value.

Rivera has more leverage than Jeter because 2010 was one of his best seasons ever, which is to say that he was as good as he always is. Another team is unlikely to enter the bidding for two seasons, but if negotiations get fractious between him and the Yankees he may have suitors for one year at around $10 million, which means that while $18 million may be wishful thinking it is also unlikely Rivera gets much less than $15M a year from the Yankees, and two years is probably a certainty. The contract negotiations with Jeter, meanwhile, will be painful.

As upsetting
as it may be for many die-hard fans, the Yankees are doing the right thing with their veteran talent. Derek Jeter just had the unfortunate timing of coming first. The reality is that if the Yankees are going to avoid entering collective bargaining negotiations next season with a target on their backs for their bloated payroll, and if the team is going to be able to continue to be able to afford new players as many current position players age, then stalwarts like Jeter and Rivera will have to eat humble pie. The alternative is a pair of 40-year-olds on the left side of the infield in a few years, which no one wants. Expect it to be a long winter before all of this is over.