The New York Yankees have certainly acted with urgency. On Wednesday night, the Yankees traded for Texas Rangers outfielder Joey Gallo and left-handed reliever Joely Rodríguez. The 27-year old Gallo is under team control through 2022, and the Yankees will have a club option on Rodríguez next season. On Thursday evening, they brought Chicago Cubs first baseman Anthony Rizzo to the Bronx. Rizzo turns 32 next month and is a free agent at the end of the season. Without further ado, let’s evaluate the moves.
Competitive Balance Tax Implications
On Tuesday evening, FanGraphs estimated that the Yankees payroll for competitive balance tax (“CBT”) purposes was around $207 million. The Yankees traded Justin Wilson and Luis Cessa to the Cincinnati Reds on Tuesday night for a player to be named later, freeing up a little more than $1.3 million in CBT space. Given their well-known goal to reset their CBT status for 2022 by staying under the $210 million CBT threshold in 2021, the trade signaled that the Yankees would be buying at the deadline and that corresponding moves were imminent.
The trade for Gallo and Rodríguez would have added approximately $3.2 million to the then $205.8 million CBT payroll, but the Rangers committed to taking on “most” of Gallo’s and Rodriguez’s remaining 2021 salaries. The Yankees likely sweetened the prospect haul somewhat in return, but doing so gave them the flexibility to make another move and still stay under the CBT threshold.
The Yanks exercised that flexibility by bringing in Rizzo, who is owed about $5.8 million for the remainder of the 2021 season. Yet again, the Yankees sent enough in return for the Cubs to pick up the tab, allowing them to retain something in the vicinity of $4 million to work with under the $210 million threshold, according to FanGraphs.
Gallo and Rodríguez
The Bombers sent second baseman Ezequiel Duran, shortstop Josh Smith, second baseman/left fielder Trevor Hauver, and right-handed pitcher Glen Otto to the Texas Rangers in exchange for Gallo and Rodríguez. Here are the public prospect grades on the players involved in the return.
Driveline’s Dan Aucoin and FanGraphs’ Craig Edwards have both done research on prospect valuation. We can use that research to estimate the value of the prospect package. To assign values to players who have differing grades, we’ll grade Smith as a 45 and use the average value between Hauver’s grades for both his Driveline and FanGraphs valuations; we’ll do the same for Otto’s Driveline valuation, but since Edwards didn’t include 35 or 35+ prospects in his study, we’ll just use the 40 grade for his FanGraphs value, which shouldn’t throw things off too much.
|Player||Driveline Value||FanGraphs Value|
The two models give us a range of approximately $41 million to $47.5 million in prospect value that went back to the Rangers in the trade.
Taking a look at his projections on FanGraphs, it feels reasonable to expect about 1.4 WAR over the rest of the season from Gallo. If we use that same WAR per game rate for next season and project Gallo to play 151 games, he would be worth about 3.6 WAR in 2022. Using the respective $/WAR figures from the prospect valuation research (though, recent $/WAR research indicates that those figures were probably too high and also that $/WAR is not linear), that 5.0 WAR from Gallo equals a value of $45 million (FanGraphs) to $52 million (Driveline). Gallo is entering his final year of arbitration in 2022. Given the year he’s having, he might expect a salary in range of Michael Conforto’s $12.25 million next season. If we put him at a round $12 million, that puts his surplus value between $33 million and $40 million.
The Yankees inherited a $3 million club option on Rodríguez for 2022. Although WAR may not fully capture the value of a relief pitcher, using the same method we did for Gallo, Rodríguez is projected for 0.1 WAR for the rest of 2021 and 0.6 for 2022. That 0.7 WAR converts to a range of $6.3 million and $7.3 million of value. When factoring in what Rodríguez will cost, his surplus value sits between $3.3 million and $4.3 million.
Combined, the two ex-Rangers provide the Yankees with a surplus value of $36.3 million and $44.3 million, which looks like a fair deal but one that the Rangers might have won. When you consider the $3 million or so that the Rangers sent to the Yankees in the trade, things look just about even as the Rangers value range decreases to between $38 million and $44.5 million.
Rizzo was obtained in exchange for right-handed pitcher Alexander Vizcaino and outfielder Kevin Alcantara.
Here’s the prospect package valuation for Vizcaino and Alcantara.
|Player||Driveline Value||FanGraphs Value|
Rizzo’s remaining salary is around $5,800,000. Taking that into account, the Cubs are getting back value in the range of $34,700,000 to $38,300,000.
If we project Rizzo for about 1.2 WAR for the remainder of the season, that’s a value range of $10,800,000 to $12,500,000. From that perspective, this trade seems like a massive overpay from the Yankees, but this return might just be what it took to get the Cubs to eat the rest of Rizzo’s salary to keep the Yankees under the CBT threshold and keep him away from the Boston Red Sox (who later added Kyle Schwarber instead). When you compare it to the Oakland Athletics’ deal for Starling Marte, the Rizzo deal doesn’t look so bad for the Yanks. Oakland sent Jesús Luzardo, once a 60-grade prospect worth around $60 million according to the prospect valuation research, to the Miami Marlins for Marte, who is also a true rental with a projected rest-of-2021 WAR similar to Rizzo’s, and the cash to pay the rest of Marte’ s 2021 salary. Maybe this was just the market for players of this caliber this year, but it’s also possible that the prospect hauls required to get teams to eat salary are a testament to the league’s recent reluctance to spend money generally.
The Added Value of Staying Under the CBT Threshold
There’s an interesting wrinkle to valuing these trades for the Yankees given that they have been able to stay under the $210 million CBT threshold so far. By getting the Rangers and Cubs to retain most of Gallo’s, Rodríguez’s, and Rizzo’s salaries for the rest of this season, the Yankees have avoided incurring the 50% tax on any overage up to $20 million that applies to teams who have exceeded the threshold for three or more consecutive seasons. In addition, staying under would allow the Yankees to reset their CBT penalty status for future seasons, which would make them first-time CBT payors the next time they exceed the CBT threshold. The tax rates for first-time CBT payors are much lower than the maximum rates the Yankees would incur as a CBT payor for a fourth consecutive time in 2022. Finally, as non-CBT payors in 2021, they would also decrease the penalties associated with signing free agents with qualifying offers attached during the upcoming off-season.
Consequently, the Yanks can add any CBT penalty savings they otherwise would have incurred in 2021 and 2022 (and beyond) to their side of the ledger in these deals without any additional cost to the Rangers or Cubs. Had the Yankees not offered prospect packages that enticed the Rangers and Cubs to pick up those salaries, they would have taken on about $9 million in extra salary for CBT purposes for the remainder of 2021 alone. After moving Wilson and Cessa, that would have taken their CBT figure from around $206 million to $215 million. The $5 million overage would have been subject to a 50% tax, which would have cost the Yankees an extra $2.5 million.
The more significant effect (potentially) comes in 2022. If the Yankees were to exceed the CBT threshold in 2022 by $40 million (assuming the CBT structure remains unchanged in the new collective bargaining agreement), they will save $12 million in tax penalties by being first-time CBT payors rather than fourth-time CBT payors. Moreover, as 2021 CBT payors, if the Yankees sign any free agents with qualifying offers attached, they will forfeit an extra draft pick in the fifth-round of the amateur draft and an extra $500,000 of international signing bonus pool money. If they sign two or more free agents with qualifying offers attached, they’ll also forfeit a sixth-round pick. On average, according to research by Craig Edwards at FanGraphs, amateur draft picks in the fifth- through seventh-rounds are worth about $2.5 million each. $500,000 of international signing bonus pool money could be expected to yield a 40-grade prospect on average, which FanGraphs estimates to be worth about $2 million and Driveline estimates to be worth about $4.6 million.
Between 2021 and 2022, that’s a potential total savings of approximately $23 million accrued by sending extra prospect value to compensate the Rangers and Cubs for retaining the salaries of Gallo, Rodríguez, and Rizzo (while also saving the actual $9 million that would need to be paid to those players this season). When you consider those potential future savings and the fact that teams likely have to pay a premium to beat out other contending trade offers, the Rizzo deal pulls closer to even for the Yankees.
The Yankees are now 53-48, 8.5 games behind the division-leading Red Sox and 3.5 games behind the A’s. FanGraphs projects them to finish 89-73, dead even with Oakland for fifth place in the American League, and gives them a 44.8% chance to make the playoffs and a 4.8% chance to win the World Series.
In my most recent post, I identified three urgent needs for the Yankees: outfield, first or second base, and left-handed bats (with a preference for more contact). The Yankees addressed all of them with these moves.
The Yankees found their lacking outfield production in Joey Gallo. You probably know Gallo from his hitting the ball hard: 97th percentile in barrel rate (rate of balls hit with the ideal combination of exit velocity and launch angle) this season, 95th percentile in maximum exit velocity, 84th percentile in average exit velocity. Since the start of the Statcast era in 2015, Gallo ranks ninth in average exit velocity all-time among all hitters with at least 100 batted balls, now giving the Yankees three hitters in the top 9 (Aaron Judge and Giancarlo Stanton are first and second, respectively). Gallo also walks a ton: he has the eighth-highest walk rate of any hitter with at least 900 plate appearances since the start of 2018 and first among all qualified hitters this season. Gallo’s power and patience have led to a 139 wRC+ in 2021, the 18th-best mark among qualified hitters. Gallo can also contribute with the glove: he won a Gold Glove in 2020, leads all outfielders in DRS this season, ranks tenth in UZR/150, and ranks in the 95th percentile in Outs Above Average (“OAA”) and in the 91st in Outfielder Jump. Overall, Gallo is a strong answer to the Yankees lack of production in left field this season. The one valid criticism of this move is that Gallo only adds more swing-and-miss to a lineup already plagued by strikeouts.
What Gallo lacks in contact ability Anthony Rizzo provides. Rizzo possesses the fourth-best strikeout rate among all first basemen with at least 900 plate appearances since the start of 2018. He’s done that while providing the ninth-best wRC+ (126) among first basemen in that span. Rizzo truly controls the zone, as he not only strikes out at well below-average rates but has also historically posted comfortably above-average walk rates. Rizzo fields his position, too, with the fifth-best DRS and sixth-best UZR/150 among first baseman since 2018 and a 97th percentile OAA this season. He gives the New York Yankees a more than solid option at first base if Luke Voit’s health remains a concern. He also makes Voit’s inclusion in a trade before today’s deadline more likely.
Gallo and Rizzo also give the Yankees lineup two strong left-handed bats, providing much-needed balance. According to Derek Carty’s THE BAT X projection system (which incorporates exit velocity and launch angle data into its model), Gallo and Rizzo both project to be among the fifty-best hitters over the rest of this season, ranking 25th and 49th overall and 11th and 17th among lefties.
By my calculation, prior to the Gallo and Rizzo trades, New York Yankees position players were projected for 11.3 WAR over the remainder of the 2021 season. Below is a comparison of the Yankees projected WAR from position players (i) before the Gallo and Rizzo trades, (ii) after the Gallo and Rizzo trades if Luke Voit is traded or lost for the season, and (iii) after the Gallo and Rizzo trades if Voit stays and sees the lion’s share of his time at DH, Stanton plays about 40 games in left field, and Gallo plays most games in center.
|Post-Trades (w/o Voit)||1.0||1.4||1.3||1.4||1.8||1.4||0.6||2.2||1.4||12.4|
|Post-Trades (w/ Voit)||1.0||1.4||1.3||1.4||1.7||1.2||1.5||2.3||1.4||13.1|
Going from Rizzo to Voit appears to be something of a lateral move with the only improvement in the non-Voit scenario coming from Gallo taking over left field. The really dramatic gain comes in the scenario where the Yankees keep Voit and move Stanton back to the outfield about two-thirds of the time. If all the Yankees do is add one win (as in the middle scenario), they will likely have only kept pace with Oakland, who also probably added around one win over the rest of the season with their acquisition of Marte. For the Yankees to really gain ground, they need to be closer to scenario three, where they’re expected to add almost two wins over their last sixty-one games. That advantage could come by using Voit, their remaining CBT space, and more prospects to make additional moves before 4 p.m. today. With somewhere between $4 million and $4.5 million left in CBT tax space for 2021, it feels like the Yankees aren’t done yet. No matter what happens over the rest of the season, the Yankees have certainly acted with enough urgency at the deadline to give themselves the best possible chance at another playoff run in 2021.