Cole’s Contract Opens Door for Happ Trade
Just as an earthquake can send shockwaves across a region for days, a high-magnitude free agent signing can create ripple effects for other teams around baseball.
On Tuesday, the Yankees agreed to sign Gerrit Cole to the richest pitching contract in history, getting their man for $324 million over nine years. While the top free agent is now officially off the board, the decision-makers in front offices across the league aren’t resting quite yet. In fact, the Yankees began preparing for the reality of signing Cole before the deal was even completed, with Joel Sherman reporting on Monday that the team is “actively” trying to trade J.A. Happ.
Happ is entering the second year of a two-year, $34 million contract, meaning that he will count for $17 million for luxury tax purposes. We currently project the Yankees’ 2020 payroll to be approximately $250 million, already putting them above the $208 million tax threshold. Even if the Yankees clear Happ’s salary in a trade, Cole still puts them well above the threshold, but at that point, it’s more than worth it. For New York, the key isn’t as much getting below the tax as it is getting below $248 million. For every dollar spent up to $248 million, the tax is solely monetary. Beyond that point, however, a team’s highest draft selection is moved down 10 slots. That’s why the Yankees (or any team) can blow pretty far past the tax without having to worry about impacting anything other than their owner’s checkbook. Read the rest of this entry »