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Word still was circulating about the Blue Jays’ acquisition of Miami’s moneyed class — Jose Reyes, Josh Johnson, Mark Buehrle, John Buck and Emilio Bonifacio — when an executive with an AL East background posed an oft-asked question these days when the Yankees appear at a problematic juncture:
“What would George do?”
The implication was that George Steinbrenner never would allow an AL East team such as Toronto to make this kind of score without answering in kind — or larger.
But these aren’t George’s Yankees. The Boss never would have had the discipline to stick with long-range plans to stay under a $189 million payroll in some future date as his son, Hal, has mandated for 2014.
However, what if the Yankees fail to make the playoffs in 2013 and the fan apathy that manifested in empty seats and quiet crowds in the postseason persists next year? Then we will ask this question:
What will Hal do?
Hal has insisted the team can stay a championship contender with a huge payroll, but one south of $189 million. Maybe. But does he double down on that theory and chance two straight playoff-less years if the club is playoff-less in 2013? Does he gamble that a fan base used to the constant importation of stars will tolerate every Tom, Dick and Hamilton going elsewhere?
Is Hal risking a brand worth billions to recoup the millions that would come from being under $189 million in 2014?
Last offseason, I was first to report the Yankees’ vow to drop beneath $189 million by 2014 because of the substantial inducements for doing so that existed within what was then a newly signed collective bargaining agreement. The Yankees still are proceeding on that path in an offseason when they plan not to offer even Hiroki Kuroda multiple years because they are obsessed with not putting salaries onto their 2014 books.
But more and more outside officials have raised their level of doubt about the Yankees actually following through on this vow.
Here is the surer element: Even if the Yankees dive under $189 million for 2014, they almost certainly will not stay there in 2015 despite the continuing financial benefits for doing so. Because the tax resets at a substantially lower level, the Yankees will be well-timed to capitalize on a free-agent class after the 2014 season that currently includes a potential replacement for Derek Jeter in Elvis Andrus and arguably the three best starters in the game: Felix Hernandez, Clayton Kershaw and Justin Verlander.
The fixation to drop under $189 million is financially motivated by two potential streams of money.
The first involves the luxury tax. In the 10-year history of this program, the Yankees basically have been the lone payer, annually contributing between $11 million and $33 million, with an expectation that their final bill for 2012 will be around $13 million.
They currently pay 40 cents on every dollar over the $178 million threshold. The threshold rises to $189 million in 2014 and — as a repeat offender — so do the penalties, to a 50 percent tax. Thus, a $10 million-a-year player would cost the Yankees $15 million.
By going under $189 million, the Yankees would save the difference between that payroll and their familiar $200 million-plus outlay. They also would pay zero tax. Also, vitally, by going under, the tax resets to the lowest penalty level (17.5 percent) the first year a team returns over the threshold. Thus, if the Yankees go back over in 2015 because, say, they sign Andrus and Verlander, the tax is far less prohibitive.
The second inducement for going below $189 million is in the CBA’s revenue sharing refund program. It is a complicated concept and formula, but what is important to know is the Yankees would be rebated a percentage of what is the highest revenue-sharing payment in the sport, but — and this is key — only in years they are under the luxury tax threshold. If not, they forfeit the rebate.
There is debate about how much the rebate is worth since it is tied heavily to the revenue that, in particular, Atlanta, Houston, Toronto and Washington generate. Some initial projections had the Yankees getting between $5 million-$8 million after 2014 with a steady climb afterward. So between lower payroll, no tax and the steadily climbing rebate, the Yankees could save real money, $30 million-plus annually perhaps.
Since they are not receiving the rebate in the first year of the program (2013) because they are over the threshold, the Yankees can watch the program and gain a truer idea of what the rebate will be worth if they go under in 2014. If it is a fraction of the projections, the Yankees can just decide if they want to continue to do what they always have done — pay a luxury tax in exchange for loading their roster with stars.
Look, if the Yankees win a championship while staying on the $189 million course, then that will embolden them to keep going. General manager Brian Cashman has stated multiple times that the front office should be ashamed if it cannot forge a title contender at $189 million.
But, in 2013, the Dodgers likely are to move ahead of the Yankees in payroll and multiple other teams are edging closer. The Yankees, at $189 million, would not enjoy the huge financial advantage that they did even two or three years ago. In addition, rules capping how much can be spent on the draft and international signings keep the Yankees from stocking up in those forums. Thus, the only real way to use their large revenue advantages is if Hal Steinbrenner takes off financial handcuffs on major league payroll.
The aging/diminishing Alex Rodriguez, CC Sabathia and Mark Teixeira plus the roughly $11 million each team is charged for a benefits plan costs about $84 million toward the luxury tax each season. That would give the Yankees roughly $105 million to complete a contender in 2014. But say Robinson Cano gets $22 million a year. Now it is $83 million for everything else. That is doable, but less so after a year in which the Yankees’ farm system regressed horribly, potentially derailing the expected pipeline of lower-cost talent.
Now, exorbitant payrolls have not assured titles for the Yankees or any other teams. But, unlike other clubs who have spent big, the Yankees have consistently translated huge payrolls into at least playoff appearances and regular importation of stars to energize their fan base. That combination has enabled the Yankees to build the largest brand in the sport. Maybe they can keep doing this south of $189 million. But what if they can’t?
What will Hal do?
joel.sherman@nypost.com