Red Sox benefit when Gerrit Cole contract backfires on Yankees

Now that the Boston Red Sox will be facing Gerrit Cole for the next nine seasons, it could very well be the Yankees who face the consequences.

Boston Red Sox fans woke up to bad news on Wednesday morning by learning that the New York Yankees 11 year pursuit of Gerrit Cole is over. The 29-year-old Cy Young runner up has agreed to head to the Bronx on a nine-year deal worth $324 million and will have the opportunity to opt-out following the fifth year of the deal.

In the 2008 amateur draft, the Yankees drafted Cole 28th overall in the first round straight out of high school. However, he elected to pass on the Yankees and pitch for UCLA on a college scholarship.

In the 2011 amateur draft, the Pittsburgh Pirates signed Cole first overall and awarded him with what was until then, the highest signing bonus ever awarded to an amateur player at $8 million.

Before the start of the 2018 season, the Yankees also attempted to trade for Cole with the Pirates, but negotiations of a potential swap came to a halt when GM Brian Cashman refused to include both Clint Frazier and Miguel Andujar in the trade.

It was a move New York likely regrets since neither prospect was able to contribute in either of the previous two seasons towards winning a championship.

The fact that Cole got a record-breaking contract did not surprise many insiders. He’s coming off a season in which he led the American League with the lowest ERA at 2.50. Even more impressively he led the league in strikeouts with 326 and had a staggering 13.8 average strikeouts per nine innings.

Further increasing his value, the former Pirate has pitched north of 200 innings in four of his last five seasons and has a remarkable record of durability. Unlike Luis Severino, and James Paxton.

On the Red Sox side of the spectrum, everyone among the Fenway faithful has spent this winter frustrated for a multitude of reasons. Brock Holt likely won’t be back. There isn’t enough money to sign Mookie Betts, which could lead to him being traded. The lack of funds is also preventing any possible pitching upgrades, which in turn could lead to some starters being dealt.

The Yankees signing Cole is not all bad news for the Red Sox.  Will New York be frontrunners for the 2020 World Series? Probably. But will this $324 million contract have serious financial consequences? Almost certainly.

The luxury tax threshold is currently set at $208 million. The Yankees exceeded that limit with a $223 million payroll for 2019 and had to pay a 20% tax equaling $3 million. Coming into the 2020 season with Cole now under contract, their payroll currently sits at $249 million. Barring any changes, they will pay $12.3M in penalties with a 30% tax for exceeding the threshold for the second year in a row. Should they be over the threshold for a third straight year in 2021, the tax will increase to 50%, which also will apply to any new signings.  For instance, if Aaron Judge were to get a huge extension averaging $30 million per year, that contract becomes $45 million a year.

Their penalties could be reset if they manage to fall under $208 million for a full season, but doing so is highly unlikely due to the fact some of their large contracts are not tradeable.

Yankees fans would be quick to point out that Jacoby Ellsbury, Masahiro Tanaka, and Zach Britton will be coming off their books after 2020, but the majority of those players will need to be replaced.

Both corner infield positions for New York are largely unsettled as of now. Luke Voit or Mike Ford are potential options at first base. Gio Urshela and Miguel Andujar could slot into third base. None of these scenarios is a slam dunk.

Their outfield is largely unresolved as well. Giancarlo Stanton will likely be relegated to DH to preserve his health. Aaron Judge has had lengthy stays on the injured list in each of the past two seasons despite still being productive.

Aaron Hicks will miss close to half of 2020 as he recovers from Tommy John surgery. He has often injury prone and only played more than 100 games in a season twice in his career. Which makes his seven-year, $70 million contract last season look like a major overpay.

Clint Frazier is a defensive nightmare, and often draws the ire of Yankees media.  The lone bright spot in terms of stability is that Brett Gardner is set to return on a one year deal for the 2020 season.

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It’s fair to say that Cashman has made some poor decisions in signing players who have not quite lived up to their value. As Red Sox fans let out their own frustrations over their current roster mess, the Yankees will likely be facing the same obstacles after the next couple of seasons. This will make it much tougher for them to sign marquee names and will force them to weaken their farm system by trading for high end, inexpensive talent to fill their needs. It’s a recipe for the same purgatory they experienced from 2013-2016.

What led to their surge in payroll? For the last several years, Cashman has opted not to invest heavily in his starting rotation. But Instead investing in top-flight relief pitching combined with an explosive lineup to offset the shortcomings of the rotation. It worked for Kansas City in 2015 but was never successfully replicated in New York.

The Red Sox won two championships this past decade with a conventional roster that was above average in every area. The Yankees’ best bet to win another title was to keep that same conventional strategy, and successfully complete a trade for Cole or two or three years sooner. Or to have signed an elite starter.

It’s all about timing. The Yankees already had too much money invested into their roster by the time they committed $324 million to Cole. Players like Gary Sanchez and Judge are no longer on cheap salaries and are getting closer and closer to free agency.

Yankees fans are too busy basking in their celebration to see the writing on the wall, and it will likely take some time before they realize this. But it’s important that Red Sox fans do. The future is brighter than many may believe.