The Yankees began the off season trumpeting their intention to fall below the luxury tax threshold for the first time. With a superstar free agent class looming in 2018, avoiding the tax and resetting the penalty from 50% to 20% was deemed an economic imperative. So, what did Brian Cashman do? He traded for the most expensive contract in baseball history.

By acquiring Giancarlo Stanton, the Yankees hit the jackpot, but didn’t break the bank. Because of how the deal has reportedly been structured, Cashman was able to turn a contract with a $295 million balance into a relative bargain. The chart below contains a breakdown of Stanton’s contract based on its impact to the Yankees’ luxury tax position. Included is an explanation of how the average annual value is calculated, both for the contract alone and how it’s applied to the Yankees’ payroll. In addition, there is an analysis of how a potential opt out by Stanton would effect the Yankees’ payroll after the 2020 season.

Breakdown of Giancarlo Stanton’s Contract Based on Luxury Tax Implications

Source: 2017–2021 MLB Basic Agreement and Captain’s Blog

What makes Stanton’s high price tag affordable is the length of the deal, which reduces a record setting total value to a more pedestrian $25 million average annual value (AAV). Further mitigating the impact to the Yankees is the pro rated $30 million being sent by the Marlins, which, though contingent upon Stanton remaining in pinstripes beyond 2020, is applied to the team’s payroll calculation immediately. The result is a $22 million hit against the luxury tax threshold.

The Yankees began the winter with about $35 million to spend, so even at an AAV of $22 million, Stanton’s contract is still substantial. That’s one reason Starlin Castro was included in the deal. By shedding Castro’s contract, which had an AAV of about $8.5 million (including pro rated bonuses), the Yankees were able to increase their cushion to about $20 million, which should be enough to fill the two remaining roster holes (most notably a starting pitcher) and leave room for a mid-season acquisition or two (click here for a look at the Yankees’ estimated preliminary 2018 payroll).

Without shedding more payroll, the Yankees seem to be in a good position to trim their payroll below the $197 million tax threshold. But, that doesn’t mean Brian Cashman won’t attempt to create more wiggle room. The most obvious way to do that would be by dumping Jacoby Ellsbury’s contract. Even if the Yankees paid 70% of what’s owed on his deal, they’d still save over $6 million. That sum could come in handy at the trade deadline. There are other candidates for savings,  such as Dellin Betances, Chase Headley, and Brett Gardner, but Ellsbury would clearly be the preferred option because of his seemingly limited role on the team.

The Yankees may have rocked the baseball world by acquiring Stanton, but their attempt to dip below the luxury tax threshold remains on solid ground. To the extent that Stanton’s on-field value lessens the need for the Yankees to acquire more (expensive) players, his contract is more than just affordable, it’s a facilitator of the team’s financial aspirations. When you further consider the minimal prospect cost, the Yankees’ acquisition of Stanton is more than just a home run…it’s a walk off grand slam in the middle of December.



Masahiro Tanaka has decided to remain with the Yankees, and, in the process, confined the Bronx Bombers’ off season plans to a tight budget.

Tanaka’s decision was a linchpin because of the important role he fills in the Yankees’ rotation and the $22 million he gets paid to do it. Because of Hal Steinbrenner’s stated intention to keep player expenditures below the $197 million salary cap threshold, Tanaka’s salary, which is over 10% of that total, is likely to have a constraining effect on the team’s approach this winter. However, that’s not to imply the Yankees are worse off because of the righty’s fondness for the Bronx. With the Yankees already needing to fill at least one, and perhaps even two slots in the rotation, adding a third would have made for a very complicated off season, especially considering the thin pitching market. Now that Tanaka is back in the fold, Brian Cashman can focus his efforts on a much more modest winter plan.

Yankees’ Projected 2018 Active Roster

C Gary Sanchez SP1 Luis Severino
C Austine Romine SP2 Masahiro Tanaka
1B Greg Bird SP3 Sonny Gray
2B Starlin Castro SP4 TBD
SS Didi Greogorius SP5 Jordan Montgomery
3B Chase Headley RP Aroldis Chapman
UT Ronald Torreyes RP2 David Robertson
LF Brett Gardner RP3 Chad Green
CF Aaron Hicks RP4 Tommy Kahnle
RF Aaron Judge RP5 Dellin Betances
OF Jacoby Ellsbury RP6 Adam Warren
OF Clint Frazier RP7 Chasen Shreve

The Yankees have two glaring needs and, based on estimates, about $30 million to fill them. The team’s first priority will likely be finding another starter. Retaining CC Sabathia seems like the most obvious course of action, but that depends on the big lefty’s contract demands and the Yankees’ confidence in his ability to remain healthy. Although Sabathia will make considerably less than the $25 million-plus of his previous deal, he may still receive an offer or two in the $15-million range. That would be difficult for the Yankees to match, as it would cut their luxury tax buffer in half. An alternative might be for the Yankees to structure a two-year deal worth $20-22 million, but with a player opt out. This structure would give the Bronx Bombers’ an attractive AAV of $10-11 million, and provide Sabathia with an insurance policy against injury.

If the Yankees are unable to come to terms with Sabathia, chances are they’ll end up fishing in the shallow end of the pitching pool. Free agents like Yu Darvish and Jake Arrieta will likely command salaries well in excess of the Yankees’ budget. Also, neither pitcher is the bona fide ace who would merit breaking the bank. A better approach would be finding a free agent with good value potential, and two stand out from the others: Lance Lynn and Alex Cobb. Because AAV would be the Yankees’ biggest concern at this point, the team might have to tack on an extra year to make up for a lower annual salary, but both Lynn and Cobb are young enough, despite recent injury concerns, to warrant a three- or four-year deal. Of course, if several other teams feel the same way, the bidding could escalate quickly, putting even the best of the second tier outside the Yankees’ price range. Continue Reading »

All data is final as of November 2, 2017.

One of baseball’s most often repeated axioms states that, although home runs work just fine in the regular season, once the calendar turns to October, small ball becomes a more effective method for scoring runs. This mantra is proclaimed with such certainty that all who hear it seem to unquestionably accept its infallibility. However, since the dawn of the wild card era, history has suggested otherwise (though home runs have declined in the post season since 1995, runs scored by other means have dropped more significantly). So, as a service to those home run fanatics who refuse to accept the short comings of the long ball in the post season, the Captain’s Blog Presents the 2017 Long/Small Ball Meter (see here for 2016), which will not only keep a running breakdown of how runs are scored this postseason, but also present that data in a historical context. In addition, a historical comparison (since 1995) of the share of post season innings by role is also presented.

Current Season Data

Long/Small Ball Meter: Regular Season vs. Postseason, 2017
Note: Long/Small Ball Meter compares the rate of runs scored via the home run to all other means. Regular season data is for playoff teams only.  Averages are per team per game.
Source: Baseball-reference.com

Long Ball vs. Small Ball Tactics: Regular Season vs. Postseason, 2017

Note: Averages are per team per game.
Source: Baseball-reference.com

Continue Reading »

Since the tragic death of Indians’ shortstop Ray Chapman, who was beaned in the head by Yankees pitcher Carl Mays, the Yankees have used their uniform as a means of offering tribute to the passing of legendary figures or commemorating tragic events. Below is a list of such honors:


Forget about WAR, FIP,  wOBA and other saber creations. EBITDA (earnings before Interest, Taxes, Depreciation and Amortization) is the metric baseball fans should get to know.

The Chicago Cubs won the World Series in 2016, but, using EBITDA as a barometer, the Philadelphia Phillies had the last laugh, presumably on their way to the bank. According to Forbes’ annual report on MLB finances, the fourth place Phillies led all teams with a whopping operating profit (defined by Forbes as EBITDA) of nearly $90 million. And, not only were the Phillies the most profitable team in 2016, but it also scored the highest EBITDA figure reported by Forbes since at least 2003 (Forbes has conducted the study for 20 years). In fact, four other teams would have qualified for that distinction had the Phillies not claimed the honor. In total, all but five clubs ended up in the black, with the industry as a whole topping $1 billion in profit, a 50% increase over 2015.

Top-5 and Bottom-5 Teams by Valuation, Net Revenue, EBITDA – 2016
Note: Revenue for each team is net of stadium debt and revenue sharing.
Source: Forbes.com

MLB’s profit picture was boosted by continued steady revenue growth and stable cost management. Industry income of $9 billion-plus, which differs from gross figures reported by the league, represented a 7% increase from 2015, while player expenses remained relatively flat (Forbes estimates player costs are 57% of operating expenses; I have calculated player cost at just over 50% of net revenue). The rising tide of revenue also lifted nearly every boat. Only the Reds (-3%) and Royals (-10%) collected less money than last year, while eight teams enjoyed double-digit increases.

Total Player Compensation as a Percentage of Net Revenue, 2003-2016
Note: Revenue is net of stadium debt service. Total compensation is actual payroll + player benefit costs + players’ share of the postseason revenue pool. Benefit costs are determined by working backward from the known 2015 amount and assuming a 4% growth rate (CBA calls for increases up to 10%).
Source: MLB releases published by AP (actual payroll), baseball-almanac (postseason revenue) and Forbes (net revenue)

With such healthy income statements, it’s easy to see why team valuations continued to soar across the league. In 2013, only five teams had an enterprise value above $1 billion, but now the average is $1.54 billion, a 19% jump over last year. Every team in the survey enjoyed at least a nominal bump, while all but four advanced double-digits. As a result, the relative debt levels of the league have fallen, giving each team a much more stable operating structure. Continue Reading »

A note of caution to optimistic Yankee fans: Having lots of top prospects is nice, but most rebuilds don’t work, and even those that do, often have setbacks.

The Yankees’ young talent is undeniable, but even players with All Star potential often struggle early in their careers. That, of course, does not bode well for the 2017 Yankees, who have leveraged their season to the immediate success of the team’s up and comers. However, if the Bronx Bombers struggle, don’t blame it on their youth. After all, that’s what gives this year’s team a glimmer of hope. The real limitation on expectations comes from a lackluster core of veterans borne from several years of roster neglect and financial entrenchment.

Starting with the positive, the Yankees’ bullpen could be one of the best in baseball. The dominant duo of Dellin Betances and Aroldis Chapman gets all of the attention, but the bullpen runs deep. A veteran like Tyler Clippard could close on some teams, but he’ll anchor the seventh inning, at least until Brian Mitchell dislodges him. Adam Warren as a swing man, and Tommy Layne as a situational lefty who can also handle righties, speak further to the bullpen’s depth, and that’s before considering young power arms like Jonathan Holder and Ben Heller. If the Yankees get leads, they should be able to hold them.

Although the Bronx Bombers could boast one of the most dominant relief corps in the majors, the big question is how many innings will they be forced to pitch? Without a single starter who is a lock to throw 200 innings, Joe Girardi may be calling on his bullpen earlier and more often than he’d liked, which, by the end of the year, could seriously mitigate the team’s strength. Perhaps, if the rotation made up for its lack of quantity with quality, the epidemic of short outings wouldn’t be as much of a concern, but, aside from Masahiro Tanaka, the Yankees cannot reasonably expect much better than league average performances from the rest of their starters, and even that’s being optimistic.

A blockbuster offense and a dominant bullpen are the best way to overcome a weak rotation, but the Yankees’ lineup, though improved, not only lacks depth, but also the kind of middle of the order experience that defines consistency. When Gary Sanchez and Greg Bird hit, the Yankees will score runs. If Aaron Judge breaks out, they’ll score even more. But, it’s a little unfair to expect three hitters with less than a year’s experience between them to be the engine of an offense.

Young players have growing pains, so, when Sanchez, Bird and Judge suffer the inevitable pangs, who will pick up the slack? Matt Holliday comes to mind, but can he stay healthy for a full season? Otherwise, the Yankees lineup is filled with disappointing veterans (and Didi Gregorius) whose recent track records suggest mediocrity as a baseline. Players like Jacoby Ellsbury, Starlin Castro and Chase Headley should be the ones providing leadership, but instead, they are actually the supporting cast, and that’s why the offense is unlikely to carry the team as much as it will need.

The Yankees have upside. Young prospects can breakout, and talented veterans can rediscover old glory, but when you’re depending on both, mediocrity is often the result. However, don’t expect the Yankees to hover around the .500 mark. Because of the team’s reliance on youth and veterans with mercurial talent, peaks and valleys are likely to define the season. The timing of those ups and downs could further impact how the team approaches the trade deadline. If the Yankees catch a hot streak during the summer, the organization will need to determine if the team really can make a run, or if another downturn is just around the corner.

Following are 10 key questions outlined and answered in the context of reasonable best, base, and worst case scenarios. Also, scroll below to see how well the Captain’s Blog has predicted the Yankees’ annual win total in the past, as well as a forecast for the rest of the league. Continue Reading »

Do spring training records matter? The answer often depends on whom you ask, and how well their team is currently doing during the exhibition season. But, what does the data say?

Top-10 Spring Training Records, 1984-2016

Note: Excludes the 1990 and 1995 exhibition seasons, which were shortened by work stoppages. Tie games excluded from winning percentage calculations.
Source: espn.com, mlb.com and springtrainingmagazine.com

Yankees’ Historical Spring Training Performance, 1962 – Present

Note: 1995 data excludes record compiled by replacement players.
Source: Yankees media notes (h/t @LouDiPietroYES ‏)

With the Yankees in the midst of a strong spring campaign, Joe Girardi is likely to find some virtue in March success. However, a more dismissive attitude from John Gibbons should be expected. Not only have the Blue Jays struggled during this exhibition season, but it wasn’t too long ago when Toronto parlayed a historic spring performance into a fourth place finish during the regular season. There’s enough anecdotal evidence to support both sides of the debate, so let’s look at the aggregate data.

Distribution of Playoff Teams by Spring Training Winning Percentage, 1996-2016
Note: Tie games excluded from winning percentage calculations. Chart compares playoff and non-playoff teams within defined winning percentage range.
Source: espn.com, mlb.com and springtrainingmagazine.com

Continue Reading »

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