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Back In Black: Accounting for the 2009 Yankees

Here’s an update of the chart I posted two weeks ago comparing the Yankees’ 2008 payroll to their 2009 commitments:

Player 2008 cost 2009 cost Net
Jason Giambi 21 5 (buyout) 16
Bobby Abreu 16 16
Andy Pettitte 16 16
Mike Mussina 11 11
Carl Pavano 11 1.95 (buyout) 9.05
Ivan Rodriguez 4.3* 4.3
Kyle Farnsworth 3.7* 3.7
Total Credits 76.05
Mark Teixeira 25 (25)
CC Sabathia 23 (23)
A.J. Burnett 16.5 (16.5)
Wilson Betemit/Nick Swisher 1.165 5.3 (4.135)
Alex Rodriguez 29 33 (4)
Robinson Cano 3 6 (3)
Damaso Marte 0.667* 3.75 (3.083)
Chien-Ming Wang 4 5 (1)
Total Debits (79.718)
Total Net (3.668)

all costs in millions of dollars; *estimated prorated portion of 2008 salary

As you can see, even after signing CC Sabathia, Mark Teixiera, and A.J. Burnett, the Yankees’ commitments for 2009 are still within $4 million of their 2008 payroll. That number will increase. Coming off a career year, Xavier Nady will earn a few million more via arbitration (Brian Bruney and Melky Cabrera are also arb-eligible, but unlikely to get significant raises), and there’s still a chance that the Yankees will add payroll via a one-year deal for Andy Pettitte or an alternate fifth-starter or a veteran center fielder. There are also automatic incremental raises due to the team’s pre-arbitration players based on major league playing time. Even still, the net change in team payroll will be negligible relative to the massive dollar figures connected to those three new contracts.

It’s also worth noting that Burnett and Sabathia will earn the exact same amount in each year of their contracts (for Sabathia his 2009 earnings combine a $9 million signing bonus and a $14 million salary, but his salary in every other year of the contract is an even $23 million), while Mark Teixeira will actually earn less in the subsequent years of his contract as his 2009 earnings combine a $5 million signing bonus and a $20 million salary, but he’ll earn “just” $20 million in 2010 and $22.5 million in each subsequent year of his deal.

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1 Joel   ~  Dec 26, 2008 12:53 am

Also, $26 million will be coming off after 2009 with the probable exits of Matsui and Damon. And, not to get too far ahead of ourselves, but after 2010, both Jeter and Mo come off. Sure they could come back, but probably for cheaper than they cost now.

2 Bum Rush   ~  Dec 26, 2008 6:53 am

Are signing bonuses not factored into the calculated payroll for luxury tax and revenue sharing? Why would the Yankees hand out $14 mil in bonuses when that outlay could just as easily be included as salary? Seems like there's some team benefit...could it be as simple as the "official" team payroll for 2009? If anything, it seems there has to be. There's a cost to the team (making money available immediately). Is the benefit really as vain as the PR associated with the payroll vs 2008?

3 seamus   ~  Dec 26, 2008 8:32 am

[2] or money for Sabbathia to use up front for moving and other expenses (buying home, etc...). Not that he isn't rich already.

4 Bum Rush   ~  Dec 26, 2008 9:33 am

@ 3

Yeah, in this credit market I bet he can't get a loan...

5 Chyll Will   ~  Dec 26, 2008 11:49 am

I think it has a lot to do with taxes. He would still be paying the income tax on the salary + bonus, but the bonus could be placed in interest-bearing accounts like IRAs (non-taxable), so he'd ended up making back the money he pays in taxes in the long run. It's a smart move, even in a recession, provided the money is diversely invested.

6 williamnyy23   ~  Dec 26, 2008 12:35 pm

[2] Bonuses are just an extra inducement. When you factor in the time value of money, the sooner you receive the cash, the more value it has. Also, with Sabathia, paying out part of the bonus before the new year might have been designed to avoid any new taxes that might be imposed next year.

7 Joseph   ~  Dec 26, 2008 1:25 pm

I'd be willing to bet that probably over half of the "casual, not really paying attention, disinterested" baseball fans out there are not even aware of what was coming off the Yank's payroll this offseason. They're probably thinking that 400+ mil. outlay is being heaped on top of that already humongous 2008 payroll. Chances are that Cliff's excellent graph above will set at least a few of them straight who happen by Bronx Banter.

8 Chyll Will   ~  Dec 26, 2008 1:37 pm

[6] That's why it's better to take the lump sum over the twenty-year payout if you hit the Lotto >;)

[7] What are the chances of a few of them happening by?

My buddy in Atlanta texted me with the same tired complaint about the money shelled out to Tex during a recession. So, it's okay for other teams to bid the same or higher for Tex, but since the Yanks already spent a lot of money, they should abstain from competing for a good player who actually suits a need? The way I see it, we did not sign guys who didn't fill a hole in the lineup or the rotation, so... what? If Tex had accepted DC's bid, they would be excused from spending more than the Yankees would have on him because they always suck and Tex makes them suck only a little less? Ah.

9 OldYanksFan   ~  Dec 26, 2008 3:56 pm

[8] Really... other fans just don't understand us. We need a group cry. But we got Tex! HA!

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