The New York Yankees are in first place, but the team’s owner says the financial situation is not quite as good. Hal Steinbrenner is not the first owner you would suspect to take issue with the stratospheric amount of money Major League Baseball players take home.
“What I always say to you guys like a broken record: I don’t believe I should have to have a $300 million payroll to win a championship,” Steinbrenner said.
The issue that has the Yankee front office a bit anxious right now is – what will it cost to keep Juan Soto in pinstripes after this season? $300 million, $400 million, or will the bidding go past a half a billion dollars?
Yankees Problem Number 1: The Luxury Tax
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Major League Baseball calls it a Competitive Balance Tax. It’s the toll teams with high payrolls pay that incentivize them to spend less. It isn’t working for big-market teams like the Yankees.
To say the tax is oppressive doesn’t do oppression justice. Teams that spend above the threshold pay an increasing tax rate depending on how many consecutive years it has gone over that dollar amount.
First year: 20 percent tax on all overages
Second consecutive year: 30 percent
Third consecutive year or more: 50 percent
The New York Mets paid the highest luxury tax in history for its 2023 team. That’s the team that finished fourth in the national league east, owner Steve Cohen paid a $101 million tax on its $374.7 million payroll. That more than doubled the previous record holder (the 2015 Dodgers paid $43.6 million).
Yankees Problem Number 2: Keeping Juan Soto
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The Yankees are on the hook right now to pay about $60 million on their $313 million payroll. That’s just too much for Steinbrenner.
“I’m gonna be honest, payrolls at the levels we’re at right now are simply not sustainable for us financially,’’ Steinbrenner said Wednesday at the owners meetings about the payroll. “It wouldn’t be sustainable for the vast majority of ownership [groups], given the luxury tax we have to pay.”
Keeping Soto with the Yankees has to be a priority for the team. Soto says he’s interested in talking about an extension. The problem is Soto’s agent, Scott Boras. His clients usually don’t sign extensions before they become free agents. Soto is hitting .312 with 41 RBI and an OPS of 0.972. Those numbers put him in the elite category that demands an elite paycheck.
Remember, Soto turned down a 15-year $440 million offer from the Washington Nationals. The Athletic’s Chris Kirschner writes that Boras will try to get Soto the highest average yearly salary by a position player.
What Will The 2025 Yankees Look Like?
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Yankee fans will be nervous listening to Steinbrenner this week. “I believe I need a good mix of veterans who are going to have a lot more money, but also, we put a lot of money into our player development system in the last five to 10 years,” Steinbrenner said
Decisions on other players have to be made this offseason. Anthony Rizzo has a club option of $17 million, Gleyber Torres has a $14.2 million salary and Alex Verdugo is making $8.7 million, both will be free agents when the season ends.
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Bradley Tachco is a career journalist. I spent 12+ years at CNN as a writer and producer. My sports are the NHL, MLB, and NFL. My goal: unique content. And my teams are the Buffalo Sabres, Buffalo Bills (yes, I’m a masochist), and the Los Angeles Dodgers. I have been a Dodgers fan since I was old enough to think. I have gone through decades of despair with all three franchises. You can follow Bradley on X @p09691
