What Gerrit Cole Means for the New York Yankees Luxury Tax

New York Yankees, Gerrit Cole

Remember when I asked whether the luxury tax or championships were more important for the New York Yankees front office? Well, they just showed that they have no problem going all-in on the RIGHT piece missing from the puzzle. 

So what does Cole mean for the Yankees and the luxury tax?

The luxury tax for 2020 is $208 million. But going $40 million past the $208 million results in being taxed at 42.5%. The Yankees will also have their highest pick in the Rule 4 Draft drop 10 spots getting there.

Going into signing Cole, the Yankees were sitting at $199,228,571 in total payroll. Tack on Cole’s salary, which puts the Yankees at $235,228,571. Gardner is going to get resigned, and so will Betances (in all likelihood). That will result in the Yankees crossing the $240 million thresholds right there. And they will be adding more payroll through trades because… well, they always do. It’s not a matter of if, it’s a matter of when they cross that $248 million thresholds.

Why They Can Afford It

In 2018, the Yankees were a 100 win Wild Card team that was eliminated in the ALDS. The team made $668 MILLION in gross revenue but spent a paltry 29.8% of that on the payroll. The Yankees were division winners for the first time since 2012, winning over 100 games, and made it to game 6 of the ALCS. It’s not unrealistic to assume that they will make $800 million in total revenue.

Then there’s the money the Yankees generate whenever Yankee Stadium plays host to NYCFC home games. And the concerts that they’re hosting as well. And the licensing revenue from MLB certified jersey and hat sales. And the money the Yankees get in licensing for the trademarked Yankees logo being featured in ad campaigns. And the ad revenue generated from YES broadcasts. And…

I still feel more than justified giving the front office grief for arguing “the luxury tax” for keeping this team one rung down from the next level. They’ve ALWAYS been able to afford this. It’s the price of being the New York Yankees

Notify of
Inline Feedbacks
View all comments