The Yankees correctly view their acquisition of outfielder Vernon Wells as one with little financial downside. But the move still raises the question of why the team wasn’t more aggressive on other players during the offseason, notably free-agent catcher Russell Martin.
Insurance from the World Baseball Classic on first baseman Mark Teixeira — money that wasn’t available to the Yankees in November — will help defray most or perhaps even all of the cost of Wells in 2013.
Martin, though, told the Yankees he was willing to accept a one-year contract in the $9 million to $10 million range, according to two major-league sources. When the Yankees balked, he agreed to a two-year, $17 million deal with the Pirates.
A one-year deal for Martin would not have affected the Yankees’ desire to get under the $189 luxury-tax threshold in ’14. Instead, the Yankees will enter the season with two less proven catchers, Francisco Cervelli and Chris Stewart.
Perhaps, one source suggested, the Yankees did not expect the market for Martin to develop as quickly as it did. At the time Martin signed, the Yankees had just committed $37 million over a 10-day period to one-year deals for pitchers Hiroki Kuroda, Andy Pettitte and Mariano Rivera, in that order.
Club officials were proceeding at a deliberate pace, checking off one need at a time. Martin might have been ahead of the Yankees’ timetable. His deal became official on Nov. 30, the same day as Rivera.
In any case, the addition of Wells is a reaction to the Yankees’ near-desperate state in the wake of injuries to Teixeira, outfielder Curtis Granderson, shortstop Derek Jeter and third baseman Alex Rodriguez, all of whom are expected to start the season on the disabled list.
Under the terms of the trade, the Yankees will be obligated to pay $13.9 million of Wells’ remaining $42 million obligation over the next two seasons, with the Angels covering the rest, according to reports.
Of that $13.9 million, the Yankees will pay Wells $11.5 million in ’13 and $2.4 million in ‘14, an accounting maneuver enabling them to face a zero tax charge in ’14, sources say.
Here's how the whole thing unfolds:
Wells’ salary in 2014 will be $21 million, just as it this season. But his luxury-tax charge, calculated from the average annual value of his long-term contract, is about $16.4 million. Most media outlets reported the Jays’ original extension with Wells as seven years, $126 million. But the team, according to a source, actually reported the deal to baseball as eight years, $131.6 million, lowering Wells’ luxury-tax number.
So for 2013, the actual cost of Wells to the Yankees will be about $10.35 million – the $6.9 million that is the difference between Wells’ luxury-tax number ($16.4 million) and the amount the Angels are sending to the Yankees ($9.5 million), plus another $3.45 million in luxury tax; the Yankees will again be over the threshold, taxed at a rate of 50 percent.
The WBC’s insurance on Teixeira will help reduce or potentially erase that burden. If Teixeira misses at least two months with a torn tendon sheath in his right wrist, as now appears likely, the Yankees will get back about $7.5 million in insurance. For each additional month – and a longer absence by Texeira is possible – the team would receive about $3.75 million.
As for that additional $2.4 million that the Yankees will owe Wells in ’14, it indeed will not count against their luxury-tax payroll. The Angels will cover $18.6 million of Wells’ salary, which is more than his luxury-tax charge. The Yankees cannot receive a “credit” for Wells, according to the labor agreement. His tax number will effectively be $0.
Wells, then, will not impact the Yankees’ ’14 payroll for luxury-tax purposes. How much he impacts their team over the next two seasons remains to be seen.
— Ken Rosenthal