December 17th, 2019: Ellsbury, Happ, Urshela, Warren, Luxury Tax, Free Agency, Schwarber, Coaches

At some point soon, maybe even tomorrow, the Yankees will introduce Gerrit Cole with a press conference in Yankee Stadium. Cole is currently in New York -- "Unfortunately," he jokingly told Zach Braziller when asked whether he's planning to cut his hair and shave before the press conference -- so it'll happen soon. The Yankees still need to make a 40-man roster move to accommodate Cole, then another one for Brett Gardner. Anyway, here are today's thoughts as I look at the Corey Kluber trade and assume there's a third Delino DeShields I have to read up on.

1. The Cespedes settlement. The Yoenis Cespedes settlement seems relevant to the Yankees and Jacoby Ellsbury. Last week the Mets announced they have agreed to an amended contract with Cespedes that retroactively reduces his 2019 salary and converts a big chunk of his 2020 salary into incentives tied to playing time. Ken Davidoff and Joel Sherman have the details. Long story short, Cespedes broke his ankle on his ranch in May while recovering from dual heel surgeries, and he said he stepped in a hole. The Mets didn't believe him, so they investigated the incident, and they determined he broke his ankle in an incident with an animal (apparently he fell off a horse). Whatever happened violated his contract, so they stopped paying him and the two sides were locked in a grievance. Rather than take the case in front of an independent arbitrator, they settled. Cespedes loses roughly half his $29M salary for 2019 and his $29.5M salary for 2020 is cut to less than $10M guaranteed, with the rest converted into bonuses tied to days on the active roster. Cespedes and the MLBPA agreed to the settlement because there was a chance he'd lose the grievance and get nothing. The Mets agreed to it because there was a chance they'd lose the grievance and he'd get everything. The Yankees and Ellsbury are currently locked in a grievance because the team claims he received medical treatment without their approval. The circumstances are very different but the end result is the same: Ellsbury and Cespedes violated their contracts (allegedly) and their teams stopped paying them. There's a significant difference here though: Cespedes is still with the Mets and could make money back through incentives, in theory. Ellsbury is no longer with the Yankees and wouldn't have a chance to earn anything back, so the Cespedes settlement framework doesn't really work. That said, there is now recent precedent for withholding payment and reducing a player's guaranteed salary after a contract violation, and the two sides could pursue a settlement rather than go in front of an independent arbitrator. Ellsbury gets some money instead of potentially nothing, the Yankees save some money instead of potentially paying it all. I don't know how eager the two sides are to settle. The Yankees may believe they have Ellsbury dead to rights because whatever evidence they have shows conclusively that he was in violation of his contract, and they can get out of the full $26M they owe him in 2021 (and potentially get back money already paid to him). On the other hand, Ellsbury and Scott Boras and the MLBPA may believe no such evidence exists (because they didn't actually violate his contract), and they're willing to go to a hearing because they'll still get it all. I dunno. The circumstances are different but the Cespedes and Ellsbury situations are the same. The player is said to have violated his contract and the team stopped paying him. Cespedes and the Mets settled. Will Ellsbury and the Yankees? No idea, but the Cespedes settlement shows it is possible.

2. Happ trade timing. Given the payroll situation -- the Yankees are at $256.8M for luxury tax purposes next year per Cot's Baseball Contracts, well above the $248M third luxury tax threshold -- it seems likely the Yankees will salary dump J.A. Happ. He's owed $17M next season with a $17M vesting option for 2021. The Yankees now have Gerrit Cole to front the starting rotation with Mike King, Jonathan Loaisiga, and Jordan Montgomery candidates to hold down the fifth spot until Domingo German returns from his suspension. I hesitate to call Happ expendable because hanging on to pitching depth is never a bad idea, but the Yankees have the internal candidates to fill the fifth starter's spot, and moving Happ is the easiest way to get under the $248M luxury tax threshold. Hal Steinbrenner has said staying under that threshold is his preference. Happ is on the trade block -- the Blue Jays, Brewers, and other National League teams have interest according to Andy Martino --  and my hunch is a trade will come later rather than sooner. Remember the A.J. Burnett and Sonny Gray trades? Everyone knew those guys would be moved before Spring Training and there were endless rumors throughout the offseason, but Burnett was not traded until Feb. 19th, and Gray not until Jan. 21st. Things dragged out so long that us bloggers with nothing better to do wrote "you know, keeping him isn't a bad idea" posts. Sometimes more than once. Spring Training is two months away and the Yankees have shown that, even when a guy has one foot out the door, they are very willing to be patient and get the best possible deal. They aren't rushing into anything. Now that Madison Bumgarner is off the board, the play could be waiting until Dallas Keuchel and Hyun-Jin Ryu sign, then shopping Happ around to the teams that miss out. That's risky because there will be fewer suitors once those guys sign, but enough clubs need pitching that I think the Yankees will have little trouble finding a trade partner for Happ. I don't expect much in return and the Yankees may have to add a sweetener to get a deal done -- I don't think the Corey Kluber salary dump ($17.5M next year with a 2021 vesting option) works well as a Happ trade benchmark given the difference in track records -- but I do expect a trade to happen at some point. Given the Burnett and Gray precedents, this might drag into January or even February. Don't expect the Yankees to rush into anything just to get a deal done and cross that item off the offseason to-do list.

3. New position(s) for Gio? During a clinic in his native Colombia, Gio Urshela told Christian Red he is willing to play all around the infield next season. "Whatever they need me (to do). I’ll be playing anywhere -- second, share first. I’m feeling good, working out, getting ready for the 2020 year and see what happens," he said. Urshela played five innings at first base and one inning in left field this past season, and he has experience at second base and shortstop too. Here's the career breakdown (majors and minors):

• 1B: 32 games and 211.2 innings
• 2B: 10 games and 59.2 innings
• SS: 50 games and 361 innings
• 3B: 1,154 games and 9,578 innings
• LF: 1 game and 1 inning

Urshela played second and short as recently as 2018 in the minors, though it was only a handful of games. He's willing to play anywhere, so that's cool. Buy-in is important. How comfortable is he truly at second and short? How comfortable are the Yankees with him at second and short? Those are the big questions. Urshela would seem to have all the tools necessary to play any infield position (hands, arm, reaction time, etc.), but it's not always as easy as DJ LeMahieu made it look this summer. With Didi Gregorius gone, Urshela being able to back up shortstop would be huge for roster flexibility. Gleyber Torres can back up LeMahieu at second, but there's no obvious candidate to back up Torres at short. Thairo Estrada or Tyler Wade would have to be on the roster for that reason. Urshela as the backup shortstop would free up the Estrada/Wade roster spot for, well, whatever. Clint Frazier, Mike Ford, a third catcher, a free agent signing, whatever. Urshela doesn't need to be able to play short full-time -- if Torres gets hurt, the Yankees can turn to Estrada or Wade, two natural shortstops, to fill in at the position -- just once a week or thereabouts. The Yankees have indicated they may try Miguel Andujar at other positions next year but they've said nothing about potentially moving Urshela around. Shortstop is really the only position in question. The Yankees have obvious backups at first (LeMahieu behind Luke Voit), second (Torres behind LeMahieu), and third (Andujar and LeMahieu behind Urshela) bases. Shortstop is a little up in the air at the moment. Urshela is willing to move around and I hope the Yankees give him a look at short in Spring Training. If he shows he can handle it on a part-time basis, that would free up a bench spot for other players. And, if Urshela looks out of place, then Estrada or (more likely) Wade is on the roster, and the Yankees are right back where they started. Spring Training is a good time to experiment and I hope Urshela gets some time at shortstop in camp. Could prove to be a nifty little position shift.

4. Warren comes home. Welcome back, Adam Warren. The Yankees have signed Warren to a minor league contract, report Ken Rosenthal and Mark Feinsand. It's a rare two-year minor league contract. Warren had Tommy John surgery in September and will spend next year rehabbing, presumably in Tampa, then the Yankees will see what he has to offer in 2021. The contract terms:

• $800,000 salary at the Major League level.
• $100,000 each for 30, 35, 40, 45, 50, 55, and 60 appearances.
• Can opt out on Aug. 28th if not on MLB active roster.

Longtime RAB readers know I am an irrational Warren fan, though maybe it's not so irrational seeing how the guy had a 3.18 ERA (3.61 FIP) in 407 innings with the Yankees, and pitched in all sorts of different roles (Warren has a 5.08 ERA and a 5.45 FIP in 56.2 innings with the Not Yankees). Warren was awfully valuable in that Swiss Army Reliever role. He turns 33 in August though, and guys without blow you away stuff have the most to lose with Tommy John surgery. Any loss of stuff or command may render Warren unrosterable. But, it's a zero risk minor league contract, and the Yankees presumably would not ask Warren to step in as a high-leverage guy. Zack Britton, Aroldis Chapman, Chad Green, Tommy Kahnle, and Adam Ottavino are all under contract or team control in 2021 (Britton's unusual club/player option kicks in that year). You never really know with relievers, but, in an ideal world, those guys handle the heavy lifting and Warren slots in as a support piece. Hopefully his rehab goes well and he comes able to contribute in some capacity. Would be cool. My expectations are low but damn if I'm not irrationally excited.

5. Luxury tax bill. The 2019 luxury tax bills are in. According to Joel Sherman, the Yankees finished this past season with a $234M payroll for luxury tax purposes, and owe $7M in tax. The math as a first-time offender:

• Between $206M and $226M: $20M x 20% = $4M
• Everything over $226M: ($234M - $226M) x 32% = $2.6M
• $4M + $2.6M = $6.6M (Sherman used whole numbers, so round up and you get $7M)

Sherman says the Cubs and Red Sox were the only other teams to owe luxury tax in 2019. The Cubs will pay $8M in tax on a $237M payroll (first-time offender) and the Red Sox owe $13M on a $244M payroll (second-time offender). Tax payments are due to the Commissioner's Office by January 21st. Remember when Brian Cashman said the Yankees prefer to stay under the luxury tax threshold "to not line the pockets of opponents to use that (revenue) against us" last year? A portion of the luxury tax collected each year is distributed to the non-luxury tax paying teams, so let's do the math. Here's what happens to the luxury tax money per Article XXIII(H)(2) of the Collective Bargaining Agreement:

• First $13M is used to defray player benefit costs.
• 50% of the remainder is used to fund the player pension program.
• The rest is evenly distributed to the non-luxury tax paying teams.

The Cubs, Red Sox, and Yankees combined to pay $28M in luxury tax in 2018. The first $13M goes to benefits and half the remaining $15M goes to pensions. That leaves $7.5M to go to the 27 clubs that didn't pay luxury tax, or a mere $278,000 apiece. A little less than half the $563,500 league minimum. That's a lot of money in the real world but not much to a Major League Baseball franchise. The Yankees contributed $7M to the $28M in luxury tax, or 25%, so they're essentially responsible for a quarter of that $278,000 going to the non-luxury tax paying teams, or $70,000 or so. An insignificant amount, really. As was the case last year, Cashman's point about not wanting to line the pockets of opponents is disingenuous. It's true, technically, but it's a relatively inconsequential amount of money. Whatever. The Yankees will pay luxury tax again next season and their tax rates increase as a two-time offender. Their new tax rates:

• Between $208M and $228M: 30%
• Between $228M and $248M: 42%
• Everything over $248M: 75% (and top 2021 draft pick moves back 10 spots)

Assuming the Yankees spend right up to the $248M threshold but do not exceed it -- I think that's the plan and most likely outcome, but what do I know -- next year's luxury tax bill will be $14.4M or so. As a third-time offender in 2021, their tax tiers will jump to 50%, 62%, and 95%. Spend up to the third threshold again and the luxury tax bill will be $22.4M. I reckon we will begin hearing rumblings the Yankees want to get under the threshold and reset their luxury tax rate in 2022, right as the next CBA kicks in. That's a ways off though. For now, the Yankees owe about $7M in luxury tax this year and figure to owe around $14M next year.

6. Free agent spending. For at least a few weeks, free agency is alive and well. The Winter Meetings brought us three of the 11 richest contracts in baseball history, and, overall, the free agent market is moving at a much quicker pace than the last two offseasons. I knew that wasn't recency bias, but I looked it up anyway. Here's the free agent contract data (Major League contracts only) for Nov. 1st through the final day of the Winter Meetings each of the last five offseasons:

• 2019-20: 34 signings (71 contract years and $1.372 billion)
• 2018-19: 25 signings (40 contract years and $313M)
• 2017-18: 34 signings (53 contract years and $349M)
• 2016-17: 42 signings (88 contract years and $767M)
• 2015-16: 59 signings (113 contract years and $1.087 billion)

2017-18 and 2018-19 really stick out like sore thumbs, huh? Even if you subtract out the Gerrit Cole, Anthony Rendon, and Stephen Strasburg contracts, teams spent almost as much in 2019-20 ($558M) as during the same period in 2017-18 and 2018-19 combined ($663M). Add the Bryce Harper ($330M) and Manny Machado ($300M) contracts to the 2018-19 number above and you're still Mike Trout's monster extension ($430M) away from 2019-20. A few thoughts on this. One, this does not mean the labor market is fine and the MLBPA has nothing to worry about. Player salaries are still coming down on the whole and that should frighten the union. Heck, the MLB average salary has decreased the last two years -- that's the first time that's ever happened -- and several would-be contenders are crying poor (Astros, Brewers, Cardinals, Cubs, Red Sox). There are still over 100 free agents on the market and the middle class is feeling the squeeze. Rather than pay a +1-ish WAR veteran $5M, many teams would rather call someone up and pay him the minimum. Adam Jones went to Japan rather than put up with it again. Lots of quality players are going to get left out in the cold this winter. The uptick in spending is encouraging, but not necessarily a sign all is well. Two, there were special free agents on the market this offseason. Cole is the best pitcher to hit free agency since at least Max Scherzer five years ago, and it just so happens the team with the game's deepest pockets has considered him their "white whale" (Brian Cashman's words) for over a decade. Rendon and Strasburg are on the short list of the game's best players and they heightened their value in the postseason (and, in Strasburg's case, his previous team didn't want to lose him at any cost). Those three were a unique set of free agents with essentially zero baggage. Even last offseason Harper's defense and contact rates had declined, and Machado had a history of dirty play (plus he's not a high on-base guy). You could nitpick them. Could you nitpick Cole, Rendon, or Strasburg? Not really. There's Strasburg's injury history, but that's about it. Special free agents -- all three represented by Scott Boras -- led to special contracts. I wouldn't use them as evidence the market is fine. They're outliers. And three, there are several desperate teams out there. The White Sox have baseball's fourth longest postseason drought and they believe they're on the cusp of going from rebuilder to contender, so they signed Yasmani Grandal and they tried to sign Zack Wheeler. The Angels and Phillies are clearly desperate after spinning their wheels the last few years, and they've spent accordingly. The Rangers have a new ballpark opening next year and they're making moves. Eight of this offseason's 11 largest free agent contracts have been handed out by teams that missed the postseason in 2019. Many bad teams are trying to get better and that wasn't always the case the last two offseasons. That's good news. If nothing else, this more active offseason is certainly more fun than the last two. I think we're still a long ways from saying the things between MLB and the MLBPA are a-okay.

7. Rapid fire thoughts. The Yankees have spoken to the Cubs about Kyle Schwarber, according to Ken Rosenthal (subs. req'd). I figured that was coming. Rosenthal says there is no momentum toward a trade at the moment. The Yankees have been enamored with Schwarber for years and they could use another lefty bat, though I don't think it's imperative. Given the current payroll situation, fitting Schwarber and his projected $8M salary under the $248M third luxury tax tier won't be easy, even with a J.A. Happ salary dump. Watch Schwarber be the guy the Yankees are willing to go into the top luxury tax tier to acquire ... I was thinking about potential Didi Gregorius replacements, and what about Matt Duffy? He hasn't been healthy or good in several years now, but he'll turn only 29 next month, and he's been a pesky bat-to-ball hitter when healthy. He's also played shortstop in the past, which is kinda important. I dunno. Duffy's not really worth a full blurb -- he hit .252/.343/.327 (88 wRC+) with the rocket back in 2019 -- but I figured I'd mention him. Maybe the Yankees could get him on a minor league deal ... the 2020 coaching staff is set, Aaron Boone told Brendan Kuty at the Winter Meetings. Matt Blake replaces Larry Rothschild as pitching coach, Carlos Mendoza moves from quality control coach to bench coach, and Tanner Swanson replaces Jason Brown as catching coach. Hitting coach Marcus Thames, assistant hitting coach P.J.Pilittere, first base coach Reggie Willits, third base coach Phil Nevin, and bullpen coach Mike Harkey all remain. Assistant pitching coaches are becoming a thing around baseball and I thought maybe the Yankees would hire one (even before hiring Blake), but I guess not. The only remaining piece of business is finding a second bullpen catcher to pair with incumbent Radley Haddad. Bet on it being someone you've never heard of before. Anyway, here are some neat videos to check out on Blake (one, two) ... Rachel Balkovec, who is believed to be the first woman hired as a full-time hitting coach, has been assigned to the Rookie Gulf Coast league, according to George King. She'll also spend time at the team's academy in the Dominican Republic and will be in uniform during games. “I have a special interest in biomechanics and understanding how the body moves and applying certain things, like for example, if there is a restriction in movement can they spot those types of things. How is that going to affect their swing mechanics and the ability to get something done in a game situation? Also, the visual side of things, what are the best strategies of things picking up the ball for recognizing a pitch? There are two sides of it, and I am not sure which one is more important at this point, but I am leaning more to the visual aspect not very many people are diving into I think at this point," she told King. It is in no way uncommon for a rookie coach to begin in, well, rookie ball. If the Yankees are happy with her work, expect Balkovec to move up to the full season leagues in the coming years.

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