Hal Steinbrenner says Yankees may spend past highest luxury tax level after all

Ben WeinribYahoo Sports Contributor

The Yankees just traded for the AL home run leader in Edwin Encarnación, but they may not be done spending money.

At Wednesday’s major league owners meetings, Yankees owner Hal Steinbrenner indicated that the team would be willing to spend beyond the third and final level of the luxury tax in order to improve his team’s World Series chances.

“If we feel we need another starting pitcher or even more help in the bullpen, we’re going to look at it,” Steinbrenner said. “If I really felt we needed that deal that takes us over the top then, yes, I would, but we still have a decent amount of cushion.”

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While this may not sound too shocking, knowing the long history of the Yankees, the team has been far more miserly lately. Last season was the first time they finished below the luxury tax since it was implemented in 2003, and general manager Brian Cashman vowed to stay below it again this season.

Where do the Yankees sit now compared to the luxury tax?

The Yankees’ pledge to stay below the tax line did not last long, since they started the year with $226.7 million in tax payroll. After the Encarnación trade — in which the Seattle Mariners are paying a significant chunk of change — that figure went up about another $3 million.

The competitive balance tax is a bit complicated, but here’s the skinny. Teams that spend more than $206 million are taxed on their overages at a level that depends on how many years in a row they've passed the tax. If they reach $226 million, they pay an additional tax, and passing $246 causes an even higher surtax and lowers their first draft pick 10 spots.

Since the Yankees have already passed the first two markers, all that’s left for them is the final frontier. Spending an additional $16 million might seem hard since they missed out on Dallas Keuchel, but if any team is up for spending money, it’s probably the Yankees.

Yankees owner Hal Steinbrenner signaled that his team is willing to spend again. (Photo by Alex Trautwig/MLB Photos)
Yankees owner Hal Steinbrenner signaled that his team is willing to spend again. (Photo by Alex Trautwig/MLB Photos)

How would the Yankees spend more money?

The Yankees have had an incredible season, even before considering all the injuries they’ve had to endure. At 46-27, they lead the AL East by 3.5 games and are 7 games up on the first team out of the playoffs.

Still, they’re a few games behind the Houston Astros and Minnesota Twins and have some holes to fill. Injuries have left their rotation decimated at times, and that remains a strong suit for other AL contenders.

Fortunately for them, the trade market seems flush with starting pitchers. The Yankees have already expressed interested in Marcus Stroman and Madison Bumgarner, and several other top-of-the-rotation arms like Trevor Bauer, Corey Kluber and Zack Wheeler could become available if their teams continue to fall out of contention.

“I’m absolutely willing to look at [trades] if I feel it’s going to get us over that threshold, up to the level we absolutely want to and need to be at to win a championship,” Steinbrenner said. “We get asked by enough teams about a number of younger people, so I know we have people that other teams would be very much interested in.”

One of the Yankees’ top trade chips is likely the player it just sent down: Clint Frazier. With Encarnación taking over at DH and a full outfield, there’s no room at the inn for the former top prospect who is slashing .285/.333/.522 on the year. New York has the pieces to get a big trade done, and now it seems they’ve found the budget.

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