Hal Steinbrenner

With a 35-17 record that leads AL clubs and trails only the Phillies in the NL, the Yankees have been among the very best teams in baseball to start the 2024 campaign. That being said, all that winning has come at a price: RosterResource pegs the club’s payroll at a whopping $302MM this season, trailing only the Mets and Dodgers for the third-highest in the league while surpassing the fourth-place Phillies by nearly $60MM. It appears that club chairman Hal Steinbrenner doesn’t plan to keep payroll at those top-of-the-line levels, however, as he told reporters (including Dan Martin of the New York Post) yesterday that payroll will be coming down in the future.

“I’m gonna be honest, payrolls at the levels we’re at right now are simply not sustainable for us financially,” Steinbrenner said, as relayed by Martin.

He went on to point to the luxury tax as a limiting factor on the club’s spending. New York’s payroll is just over $312MM for luxury tax purposes this season. As a club that has gone over the lowest threshold more than two seasons in a row, the Yankees are subject to a tax that escalates from 50% to 110% of the overage above the league’s base threshold of $237MM. That figures to put them on the hook for more than $58MM in luxury tax obligations this offseason, a figure that could increase further depending on midseason additions and contract incentives. That’s a hefty bill, particularly considering the fact that (as noted by Cot’s Baseball Contracts) the club’s 2024 payroll breaks the franchise record payroll of roughly $278MM that was set just last season. Prior to the last two seasons, the club’s payroll generally set in the $200MM and $250MM range.

Scaling back payroll could be feasible for the for the Yankees somewhat naturally, as the club has just under $182MM in guaranteed money on the books for next year per RosterResource. That figure does not factor in arbitration-level contracts for players such as Nestor Cortes, Jose Trevino, and Clarke Schmidt, nor does it include the possibility of the club picking up options on the services of veterans like Anthony Rizzo and Luke Weaver. Even considering that, however, it’s reasonable to expect the Yankees to have some room to cut down payroll and still add in free agency this winter.

Of course, the elephant in the room regarding the coming free agent class is superstar youngster Juan Soto, who is slated to hit free agency this fall ahead of his age-26 season. Acquired from the Padres in a blockbuster swap back in December, Soto has been everything the Yankees could have hoped for in his first 51 games with the club, slashing an incredible .313/.409/.569 with a 15.1% strikeout rate, a 14.2% walk rate, and 13 homers in 232 trips to the plate. Given how vital a one-two punch of Soto and Aaron Judge has been to the club’s success this winter, it’s hard to imagine the Yankees not aggressively pursuing a long-term deal with their newly-acquired star.

Steinbrenner himself indicated recently that he hopes to see Soto remain with the club “for the rest of his career,” suggesting that the Yankees at least plan to make an effort to retain him beyond this season. With Soto widely expected to land a contract that rivals the $460MM net present value of the Shohei Ohtani deal from this past offseason, it would seemingly be difficult to significantly lower the club’s payroll while retaining Soto via what could be a massive raise over his current $31MM salary.

That’s not to say it can’t be done, of course. Steinbrenner’s comments also made note of the club’s ability to retain Soto, as he noted that the club has a “considerable amount” of money coming off the books this winter in comparison to last year. Gleyber Torres and Alex Verdugo are both pending free agents who have combined to make more than $20MM this season, and it’s feasible to imagine the Yankees allowing the pair to walk in free agency before offering their roles to younger players such as Oswald Peraza and Jasson Dominguez.

Yankees chairman Hal Steinbrenner appeared on the Yankees News & Views podcast today and host Jack Curry of the YES Network asked him about the possibility of extending superstar outfielder Juan Soto. The YES Network shared a video clip on X.

“I think we’d like to see him here for the rest of his career,” Steinbrenner said. “I don’t think there’s any doubt of that.” He goes on to say that Scott Boras, Soto’s agent, doesn’t normally do extensions midseason. Steinbrenner says he generally prefers to avoid talks during the season as well so that they don’t become a distraction, but that Soto is a special case.

That’s due to Soto’s obvious talents but also since he’s only been a Yankee for a few months, having been acquired from the Padres in December with just one season left to go before he’s slated to reach free agency. Steinbrenner said he wanted to give Soto some time to get to know the organization before getting into talks about long-term plans. “I wouldn’t be shocked if there was a conversation or two had, possibly during the course of the season.”

In the latter half of the clip shared above, Curry relays that he contacted Boras about what Steinbrenner said. Boras said he is always willing to talk to Steinbrenner but that Soto is focused on winning.

Soto himself was asked about the comments after this afternoon’s game and echoed what Boras said, with the YES Network sharing a clip on X of those as well. “My door is always open,” Soto said. “Whenever he wants to start talking with Scott and all his people, they’re always open. They’re always open to hear whatever he has. And for me, I just focus on the game right now.”

The topic of Soto’s future free agency, or an extension to prevent that free agency from happening, has been a topic of conversation for quite a long time. That’s on account of how he debuted at such an unusually young age and also due to him finding immediate success that he has maintained or improved. Soto debuted with the Nationals in 2018 when he was only 19 years old. He hit 22 home runs in 116 games while drawing walks in 16% his plate appearances. His .292/.406/.517 batting line translated to a 146 wRC+.

He’s never provided much in terms of speed or defense, but his combination of power and plate discipline is exceptional and has remained quite consistent. He currently has 169 home runs in his career and an 18.7% walk rate, while striking out just 16.9% of the time. He has slashed .286/.420/.525 overall and has a 155 wRC+, which includes a .310/.408/.530 line and 170 wRC+ as a Yankee this year.

Those skills and his age put him on course for a massive contract. Most free agents reach free agency for the first time in the vicinity of their 30th birthday but Soto is still just 25. He’ll turn 26 on October 25, just before he’s slated to hit the open market.

The fact that Steinbrenner is interested in an extension is somewhat notable since the club doesn’t do them very often. MLBTR’s Contract Tracker shows that they have done just three in the past decade, which were for Luis Severino, Aaron Hicks and Aroldis Chapman. Those deals didn’t go especially well for the most part and the club may not be thrilled at doing more extensions in general, but Soto is clearly in a different stratosphere than those players. That Steinbrenner is willing to make an exception here is unsurprising, but actually getting it done won’t be cheap.

Back in 2022, the Nationals reportedly offered Soto $440MM over 15 years. When he rejected that overture, they decided to trade him instead, which is how he came to be a Padre. While that may be a massive sum to leave on the table, he’s already earned himself a decent chunk of that. Since turning down that deal, he made $23MM last year and is making $31MM this year, his final two arbitration seasons. That means any contract higher than $386MM will prove that he made a wise financial decision in turning it down.

Last month, Boras revealed that the late Peter Seidler tried to get a deal done to keep Soto in San Diego. However, Seidler’s deteriorating health got in the way of the talks and he passed away in November. The next month, Soto was traded to the Yankees as the Padres’ financial situation forced them to make budget cuts.

Keeping Soto away from the open market is obviously going to be a challenge. Yankees’ general manager Brian Cashman admitted as much in February. “The odds are this is a one-year situation,” he said. “I don’t see too many things stopping him from reaching free agency.”

There has been all kinds of speculation about what kind of number it would take to get Soto’s signature on a contract. The round number of $500MM is often thrown around as a speculative ballpark figure, but that’s really just a guess.

Since Soto is now just a few months away from the open market, there’s little incentive for him to accept anything except free agency prices. The largest contract in MLB history is Shohei Ohtani’s recent ten-year, $700MM pact with the Dodgers. The heavy deferrals on the deal make the net present value closer to the $435-465MM range, though that adjusted figure still makes it the largest ever, both in terms of total guarantee and average annual value.

Soto obviously doesn’t have the two-way abilities of Ohtani nor the same international marketing power, but Ohtani is now 29 and about to turn 30, meaning Soto will be marketing three to four extra prime years compared to Shohei. That youth is clearly valuable to teams, as was recently seen with the Yoshinobu Yamamoto free agency. Going into his age-25 season, he drew widespread interest despite having no major league experience. He eventually shattered expectations when he signed for $325MM over 12 years, plus a posting fee of over $50MM.

The Yankees have long been one of the biggest spenders in baseball, but they have a decent amount of money on the books already. Between Aaron Judge, Gerrit Cole, Giancarlo Stanton and Carlos Rodón, they have four players making $25MM or more through 2027 or longer. The Marlins are paying down a bit of Stanton’s deal but the Yankees already have almost $150MM committed to books three years down the line, per Roster Resource.

For a generational talent like Soto, they likely wouldn’t care much about adding another huge contract to the pile. Still, Boras might want to wait a few more months to see what teams like the Mets, Dodgers, Blue Jays, Red Sox, Phillies or others have to offer. Getting them to the table would increase the chances of a bidding war driving up prices and the Yanks might have to put down a huge number to stop that from happening.