The trade was so insignificant it probably passed most baseball fans without notice, just a blip on their trade-deadline radar. The deal went down just as the trade deadline hit. Casey McGehee was traded to the Yankees for Chad Qualls. If anything, it irked some Pirates fans who saw Qualls as some kind of bullpen pariah, a bad-luck charm for the team. On the surface, it was just a trade involving two guys who were soon to be designated for assignment, instead going to clubs who demonstrated a need at their primary position. The Yanks need help at third base with A-Rod on the shelf and the Bucs needed to fill a spot in the bullpen with Brad Lincoln being shipped to Toronto in the Travis Snider deal. But looks can be deceiving. There was something rather significant about the deal that many folks were not aware of: along with infielder Casey McGehee, the Pirates also sent cash to the Yankees.
It was not the amount of cash that would be of great significance to a team, nor was it an amount that needed to be approved by the Commissioner's office; yet, a reported $225,000 did exchange hands. What's remarkable about it is that the money went from the small-market, low-revenue Pirates to the big-budget juggernaut known as the New York Yankees. Think about that for a minute, the Pirates were sending salary relief to the Yankees.
Now, on its own, it is of no great significance, but it is a symbol of change in baseball, albeit tiny. The Yankees and other teams are anxious to get under the luxury tax, so they're becoming more cost-conscious. Owner Hal Steinbrenner is reportedly determined to get the team under the luxury threshold by 2014. Part of the reason for this is that the luxury tax rates are going up under the new Collective Bargaining Agreement (CBA). This year, the tax is 42% of anything spent over $178 million. In 2013, that number jumps to 50%. There's another motivation for getting under the threshold, though. Starting in 2014, the luxury tax threshold becomes $189 million. With some clever cutting, the Yankees might well be able to sneak under the limit. And that could be very profitable for them. You see, the new CBA also has a tiered system for paying luxury tax. First-time offenders pay only 17.5% in tax. Second-time offenders pay 30%. The third time is 40% and the fourth time or higher is that dreaded 50%. But again, there's a catch. The rate you pay is based on how many consecutive years you've exceeded the threshold; drop under the line even once and your rate re-sets. That could amount to millions of dollars in savings for teams like the Yankees. So, for the time being at least, there's a real incentive for the Yankees to work to get under that limit.
And it's not just the Yankees, either. The Phillies had the second-highest Opening Day Payroll and with the team now out of playoff contention, they are actively trying to shed salary. Nobody was surprised that Shane Victorino was traded at the deadline since his contract expires at the end of the season. Many folks raised their eyebrows, though, when the Phillies also shipped out Hunter Pence who had another year of team control. Pence, however, is expected to make around $14 million in his last year of arbitration next year, so with the luxury tax in mind, the Phillies decided they didn't have that money to spend. The recent extension signed by Cole Hamels is also causing some ripples in Philly. Again, it was no shocker when Joe Blanton was moved in a waiver-trade with the Dodgers, but what is surprising is that the Phillies even contemplated trading Cliff Lee. Lee is a huge part of that Philly rotation, but he has over $90 million left on his contract and the Phillies are butting right up against the luxury tax threshold.
So what exactly does this all mean for a team like the Pirates? Well, not much at present, but it could mean that teams start to readjust how they approach free agency. You may see a lot fewer mega deals or spending sprees like you saw with Miami this year. Did you notice what the Marlins did at the deadline? They were in full fire-sale mode, trading away the likes of Anibal Sanchez, Omar Infante, Edward Mujica and, most notably, Hanley Ramirez. They even traded struggling first basemen Gaby Sanchez to your Buccos, if you recall. They were banking on a contending team and expanded revenues from their new stadium to cover their above-market-value contracts; but as the team struggled and the seats weren't filled, they needed to free up cash.
The Pirates, meanwhile, took on some salary at the deadline, especially in the Wandy Rodriguez deal. They also traded away their Competitive Balance Lottery Pick, meaning they shrunk their pool of money that they will have to sign picks in next year's draft. Part of what allowed them to feel comfortable doing so was the extra first-round pick they have due to their inability to sign Mark Appel, but they also are looking at increased revenue at the ballpark. Attendance is up around 7,000 per game this year at PNC Park and they've set a series of weekday/daytime attendance records this summer. General Manager Neal Huntington said that he had approval from owner Bob Nutting to add payroll at the deadline, if necessary. Pirates fans are coming out of the woodwork to support a winner and that contributes to a slightly deeper pocketbook.
For a team like the Pirates, though, who have been mired in a record-setting streak of losing seasons, these things take time. Similarly, teams like the Yankees and Phillies will continue to use their revenues to attract big-money free agents, even if they feel a little constrained by the luxury tax. You also can't overlook a team like the Dodgers who, with new ownership, are pumping money into the club like crazy. So, no, the competitive balance really hasn't changed, but it's still nice to see the Pirates' willingness to spend a little more and it still raises a jolly laugh out of me to see the Pirates providing salary relief to the Yankees.
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