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Thread: Yankee Lux tax implications

  1. #1

    Yankee Lux tax implications

    All the talk about extensions for the sox got me thinking about the Yanks and their lux tax scenario. Here is how it projects into 2020 and 2021

    2019-
    The Yankees are at $217 mil right now

    2020-
    Things change a bit. Gardner and Sabathia definitely move on. I am assuming Chapman doesn't opt out as Kimbrel's situation is a cautionary tale for any effective closer. Betances becomes a FA, and with his shoulder barking, he might end up moving on too. Didi also hits the market. Right now, the lux tax implications locked in for 2020 are $168 mil. That doesn't take into account arb, which starts getting pricey in 2020 and more so the years after. In 2020, Green, Judge, Montgomery, Paxton and Sanchez all hit arbitration. Sanchez, Green and Judge are first timers. There are other players hitting too, but guys like Bird and Cessa aren't going to be breaking the bank barring a remarkable turnaround. I'm assuming Judge follows a Betts pattern and goes for $10 mil. Paxton will be in his final year and should make upwards of $15 mil assuming good health. Sanchez is really going to depend on this year. Arb looks at the last 2 seasons and with Sanchez having an injury marred and awful 2018, he will need a huge 2019 to tip the scales. My guess is $3 mil or so for him. Green, assuming continued success, should see somewhere in the $3 mil range as well. Add in medicals at $15 mil and the other arb guys adding up to about $5 mil, the Yanks number would jump to $219 mil. It gives us a $29 mil buffer to add one big piece or multiple small ones.

    2021-
    This is probably the most interesting season, barring any major additions in the offseason. Happ (presumably), Lemahieu, Tanaka, and Ellsbury go off the books. Britton can opt out or in. Judge goes into arb year 2, which jumps him up to $20 mil. The rest, who knows. We will have a ton of flexibility, but Andujar and Torres start the arb process. We will have a pen that is expected to contain Green, Holder, Britton, Ottavino and Chapman. We should have a rotation headed by Severino and Montgomery. I assume we would try to extend Paxton. I would also assume any pitching addition from the year prior would carry over. Maybe, we would try to keep Tanaka. Pretty fluid process to this point
    The rebuild is complete.

  2. #2
    Deity Bellhorn04's Avatar
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    Quote Originally Posted by jacksonianmarch View Post
    All the talk about extensions for the sox got me thinking about the Yanks and their lux tax scenario. Here is how it projects into 2020 and 2021

    2019-
    The Yankees are at $217 mil right now
    Cot's has you at $227 mil.
    Championships since purchase by John Henry group: Red Sox 4 Yankees 1

  3. #3
    https://www.spotrac.com/mlb/new-york-yankees/payroll/

    This is the best lux tax estimator Iíve seen. Spotrac added the lux tax implication and itís spot on

  4. #4
    Deity Bellhorn04's Avatar
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    Quote Originally Posted by jacksonianmarch View Post
    https://www.spotrac.com/mlb/new-york-yankees/payroll/

    This is the best lux tax estimator I’ve seen. Spotrac added the lux tax implication and it’s spot on
    Well, now I have to figure out where the $10 million difference comes from.
    Championships since purchase by John Henry group: Red Sox 4 Yankees 1

  5. #5
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    Quote Originally Posted by Bellhorn04 View Post
    Well, now I have to figure out where the $10 million difference comes from.

    Cashman making payoffs to Stormy Daniels?

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    Quote Originally Posted by notin View Post
    Cashman making payoffs to Stormy Daniels?
    miami clinic
    other names i have posted under: none

  7. #7
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    Quote Originally Posted by jacksonianmarch View Post
    All the talk about extensions for the sox got me thinking about the Yanks and their lux tax scenario. Here is how it projects into 2020 and 2021



    2020-
    I am assuming Chapman doesn't opt out as Kimbrel's situation is a cautionary tale for any effective closer.

    Thatís funny.

    So JD Martinez in your eyes clearly learned NOTHING about free agency from his own ďcautionary taleĒ and will definitely opt out a full year before his salary even drops. But Chapman will look at the outrageous demand from a pitcher he undoubtedly thinks is a lesser closer anyway, and decide he will do whatís best for the Yankees? Got it...

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    Quote Originally Posted by Slasher9 View Post
    miami clinic
    Ah... “pharmaceutical expenses”...

  9. #9
    Deity Bellhorn04's Avatar
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    Quote Originally Posted by jacksonianmarch View Post
    https://www.spotrac.com/mlb/new-york-yankees/payroll/

    This is the best lux tax estimator I’ve seen. Spotrac added the lux tax implication and it’s spot on
    The Cot's number of $227 mill appears to be the right one. Here are their numbers. I added a column for the running total to make it easy to confirm.

    Tanaka, Masahiro 22,142,857
    Stanton, Giancarlo 22,000,000 44,142,857
    Ellsbury, Jacoby 21,857,143 66,000,000
    Chapman, Aroldis 17,200,000 83,200,000
    Happ, J.A. 17,000,000 100,200,000
    Britton, Zack 13,000,000 113,200,000
    LeMahieu, D.J. 12,000,000 125,200,000
    Gregorius, Didi 11,750,000 136,950,000
    Hicks, Aaron 10,000,000 146,950,000
    Severino, Luis 10,000,000 156,950,000
    Ottavino, Adam 9,000,000 165,950,000
    Paxton, James 8,575,000 174,525,000
    Sabathia, CC 8,000,000 182,525,000
    Gardner, Brett 7,500,000 190,025,000
    Betances, Dellin 7,250,000 197,275,000
    Romine, Austin 1,800,000 199,075,000
    Kahnle, Tommy 1,387,500 200,462,500
    Bird, Greg 1,200,000 201,662,500
    Judge, Aaron 684,300 202,346,800
    Sanchez, Gary 669,800 203,016,600
    Andujar, Miguel 617,600 203,634,200
    Torres, Gleyber 605,200 204,239,400
    Green, Chad 598,650 204,838,050
    Montgomery, Jordan 596,600 205,434,650
    Holder, Jonathan 580,300 206,014,950
    Cessa, Luis 578,975 206,593,925
    German, Domingo 577,500 207,171,425
    Voit, Luke 573,200 207,744,625
    Tarpley, Stephen 557,250 208,301,875
    Tauchman, Mike 557,000 208,858,875
    Tulowitzki, Troy 555,000 209,413,875
    Heller, Ben 555,000 209,968,875
    40-man players-minors 2,250,000 212,218,875
    Est. Player Benefits 14,500,000 226,718,875
    Championships since purchase by John Henry group: Red Sox 4 Yankees 1

  10. #10
    Now that we are past the trade deadline, the 2020 picture comes into clearer focus. The guaranteed contracts with AAV's are as follows for 2020

    Stanton- $22 mil
    Tanaka- $22.1 mil
    Ellsbury- $21.8 mil
    Chapman- $17.2 mil (if he doesn't opt out)
    Happ- $17 mil
    Britton- $13 mil
    Hicks- $10 mil
    Severino- $10 mil
    Ottavino- $9 mil
    Lemahieu- $12 mil

    Arb cases
    Something to keep in mind about arbitration. They take into account the past year's salary AND the last 2 years of production. This will help us in terms of Judge since his best year was his rookie campaign and he has missed a big chunk of time two years in a row. It will also help us with Sanchez who has had a good 2019 but had a miserable 2018
    Green- $2.5 mil
    Judge- $7 mil (better than most first timers, won't see the $10 mil Mookie saw due to the time lost)
    Sanchez- $5 mil (also better than most first timers, but big hit for 2018 performance)
    Kahnle- $3 mil (his 2018 was a disaster)
    Montgomery- $1 mil (missed all of 2018 and now 2019)
    Paxton- $10 mil (moderate jump on 2018 after a disappointing first year in pinstripes)
    Hale- $1 mil
    Bird- $1.5 mil
    Player benefits- $15 mil
    Last 7 roster spots- $4 mil

    Heading into 2020, the Yanks will have $204 mil on the books. As for the team under contract, it will look something like this

    C- Sanchez, Higashioka
    1B- Voit
    2B- Lemahieu
    SS- Torres
    3B- Andujar. Urshela
    LF- Tauchman, Frazier
    CF- Hicks
    RF- Judge
    DH- Stanton

    SP1- Severino
    SP2- Paxton
    SP3- Tanaka
    SP4- Montgomery
    SP5- Happ

    CL- Chapman
    SU- Britton
    SU- Ottavino
    MR- Hale
    MR- Green
    MR- Kahnle
    MR- Cessa

    We would have a full team. We would be saying goodbye to CC, Romine, Gardner, Gregorius, Encarnacion and Betances. This is all assuming we don't lose or extend Chapman, who has an opt out. My assumption is we are going to need to do something with Chap, but my guess is he would get an added year at a lower salary and might actually drop his AAV. The first lux tax line will be $208 mil. The final line will be $248 mil. If Chap stays on, the Yanks will have $44 mil to play with before hitting the final line. My guess is they would like to spend a big chunk of that on Cole

    The craziest thing is that our tax implications drop after 2020. Tanaka, Ellsbury, Happ and Lemahieu fall off the curve. Iím assuming the Yanks opt in on Britton. Iíd assume we would try to keep DJ. We would have some arb contracts to handle, but thatís $75 mil more to play with, with only one player really needing to be re-signed (Lemahieu)
    Last edited by jacksonianmarch; 08-02-2019 at 07:29 AM.

  11. #11
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    First let me say, Fuck Ellsbury. Second, I can see them bringing Romine back. Hell it would only cost them 2.5 million most likely at most.

    We better sign Cole. I wonder if they offer didi arb

  12. #12
    Quote Originally Posted by jacksonianmarch View Post
    All the talk about extensions for the sox got me thinking about the Yanks and their lux tax scenario. Here is how it projects into 2020 and 2021

    2019-
    The Yankees are at $217 mil right now

    2020-
    Things change a bit. Gardner and Sabathia definitely move on. I am assuming Chapman doesn't opt out as Kimbrel's situation is a cautionary tale for any effective closer. Betances becomes a FA, and with his shoulder barking, he might end up moving on too. Didi also hits the market. Right now, the lux tax implications locked in for 2020 are $168 mil. That doesn't take into account arb, which starts getting pricey in 2020 and more so the years after. In 2020, Green, Judge, Montgomery, Paxton and Sanchez all hit arbitration. Sanchez, Green and Judge are first timers. There are other players hitting too, but guys like Bird and Cessa aren't going to be breaking the bank barring a remarkable turnaround. I'm assuming Judge follows a Betts pattern and goes for $10 mil. Paxton will be in his final year and should make upwards of $15 mil assuming good health. Sanchez is really going to depend on this year. Arb looks at the last 2 seasons and with Sanchez having an injury marred and awful 2018, he will need a huge 2019 to tip the scales. My guess is $3 mil or so for him. Green, assuming continued success, should see somewhere in the $3 mil range as well. Add in medicals at $15 mil and the other arb guys adding up to about $5 mil, the Yanks number would jump to $219 mil. It gives us a $29 mil buffer to add one big piece or multiple small ones.

    2021-
    This is probably the most interesting season, barring any major additions in the offseason. Happ (presumably), Lemahieu, Tanaka, and Ellsbury go off the books. Britton can opt out or in. Judge goes into arb year 2, which jumps him up to $20 mil. The rest, who knows. We will have a ton of flexibility, but Andujar and Torres start the arb process. We will have a pen that is expected to contain Green, Holder, Britton, Ottavino and Chapman. We should have a rotation headed by Severino and Montgomery. I assume we would try to extend Paxton. I would also assume any pitching addition from the year prior would carry over. Maybe, we would try to keep Tanaka. Pretty fluid process to this point
    Chapman will not opt out . He would be a fool to opt out .

  13. #13
    Quote Originally Posted by dgalehouse View Post
    Chapman will not opt out . He would be a fool to opt out .
    He pitched like dog shit in July for sure, but there was an article about him opting out prior to his downturn. I think he will opt out because I am sure he will right the ship (he does this every year). He's got 2yrs $34.5 mil left on his deal. While he definitely won't see the same AAV, he can look at Kimbrel's deal and believe he can increase his guaranteed take home. These relievers are a single arm injury away from being done or in Chap's case, a drop in velo away from being done. Kimbrel got $43 mil guaranteed for 2.6 seasons and Chapman has been as good or better than Kimbrel the past few seasons and they're the same age (Chapman is 110 days older). My guess is Chapman opts out and the Yanks re-sign him for 3yrs and $45 mil.
    The rebuild is complete.

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