Hal Steinbrenner says Yankees’ payroll is ‘not sustainable.’ What it means for Juan Soto pursuit

NEW YORK — The New York Yankees’ $302 million payroll this year is the highest in franchise history. It’s the first time the Yankees have eclipsed the $300 million mark, according to Cot’s Contracts. On Wednesday at MLB’s owners’ meetings, Yankees owner Hal Steinbrenner repeated an oft-used statement when discussing next season’s payroll.

“What I always say to you guys like a broken record: I don’t believe I should have to have a $300 million payroll to win a championship,” Steinbrenner said.

It’s an important quote to begin with when analyzing what the Yankees’ payroll could look like next season because they would like to re-sign superstar right fielder Juan Soto to a contract that ideally covers the rest of his MLB career. Soto has heard MVP chants in the Bronx over the past month. If those chants become reality and he wins his first MVP, the 25-year-old will cash in handsomely this offseason.

With the Yankees and San Diego Padres kicking off a three-game series beginning Friday, it’s a reminder that New York’s front office signed off on the blockbuster deal between the two clubs this past December with the knowledge that signing Soto to a contract extension before he hits free agency this offseason was a pipe dream at best. He is a Scott Boras client, and Boras clients almost always elect free agency to seek the biggest payday possible. There are very few examples of notable Boras clients not choosing free agency and instead securing an extension: Xander Bogaerts and the Boston Red Sox, Stephen Strasburg and the Washington Nationals, Jose Altuve and the Houston Astros and Carlos Gonzalez and the Colorado Rockies. Each player had a multi-year relationship with their club; Soto has just a months-long relationship with the Yankees.

Soto previously rejected a 15-year, $440 million contract offer by the Nationals, which would have amounted to a $29.33 million per year salary. Boras will push for Soto to make the highest average annual salary by a position player. Soto may very well receive that given he’ll be just 26 years old in the first year of his new contract and would have several years left in his prime.

For argument’s sake, let’s say Soto gets a deal worth $41 million a year, which would pay him $1 million more per season than Aaron Judge. A 13-year, $553 million contract would take Soto through his age-39 season. Cot’s Contracts currently projects a $185.12 million payroll for the Yankees in 2025. Adding $41 million would put the Yankees at $226.12 million for only nine guaranteed player commitments. Here’s a look at those salaries:

The Yankees have a $17 million club option on Anthony Rizzo in 2025. If declined, he’ll be owed a $6 million buyout. If they choose to pick it up, that would put the Yankees’ hypothetical payroll at $237.12 million. Because the Yankees seem committed to saving money in spots they can, Rizzo may become a casualty of the team’s Soto pursuit. Steinbrenner mentioned how the team has “a good amount of money coming off the payroll in the offseason.”

“Look, I’m gonna be honest, payrolls at levels we’re at right now are simply not sustainable for us financially,” Steinbrenner said. “They wouldn’t be sustainable for the vast majority of owners, given the luxury tax we have to pay. We have a considerable amount of money coming off. We didn’t have a whole lot of money coming off last offseason, which is why we’re at where we’re at.”

Outside of Soto, here’s a look at the Yankees who will become free agents at the end of the season:

The one player on that list who doesn’t have a clear replacement on the 26-man roster or in the minor leagues is Clay Holmes. Since the Yankees traded for him in 2021, Holmes has the eighth-best ERA of all qualified relievers. He’s trending toward possibly becoming an American League All-Star this season, and he’s established himself as one of the best closers in the sport. New York Mets closer Edwin Díaz is the highest-paid closer at $19.4 million per season. A $15 million per year salary would make Holmes the fifth-highest-paid reliever. If that would be enough and they re-sign Soto for the hypothetical $41 million salary, that would put the Yankees’ payroll at $241 million.

Gleyber Torres and Alex Verdugo would seem unlikely to return to the Yankees next season because of their expected salaries and the cheaper options available in the minor leagues. Caleb Durbin, a 5-foot-6 utility player currently hitting .301/.414/.457 with 20 stolen bases for Triple-A Scranton/Wilkes-Barre, has several high-ranking supporters inside the organization. Do not be surprised if he’s the hot prospect getting mentioned next spring training for a possible spot on the 2025 Opening Day roster. Verdugo’s likely replacement would be Jasson Domínguez, who’s currently rehabbing from Tommy John surgery.

Having more young players on the roster to supplement veterans will become even more important if Steinbrenner doesn’t want to be a repeat offender of going over the “Steve Cohen” fourth luxury tax threshold.

“I believe I need a good mix of veterans who are going to have a lot more money, but also we put a lot of money into our player development system in the last five to 10 years,” Steinbrenner said. “In my opinion, we have one of the better ones in baseball now. You can see the young players we’re producing. As they’re ready, they’re going to get their chances, just like (Anthony) Volpe did, Austin Wells, (Luis) Gil and others. I do believe being younger makes you faster. I also believe, whether I’m right or not, it makes you less injury-prone. We finally have a really good player development system with a lot of guys still coming. They’re gonna get opportunities.”

So let’s say the Yankees only re-sign Soto and Holmes in free agency. The Yankees still have to fill out the rest of their roster. They’ll have several players who are arbitration-eligible next season. Here’s that list:

It’s still early, but Trent Grisham would be an obvious non-tender or trade candidate. That would help shed some salary, but the Yankees are still looking at roughly $20 million in arbitration for players they’d likely keep. The Yankees also have club options on relievers Lou Trivino and Luke Weaver for next season. Trivino has a $5 million option, which the Yankees will almost certainly decline. Weaver has a $2.5 million option for 2025; if he continues pitching the way he has, they should exercise it. Volpe, Wells, Gil, Domínguez, Oswaldo Cabrera and Ian Hamilton are all pre-arbitration players.

With Soto, Holmes and the arbitration and pre-arbitration players signed, the Yankees are looking at roughly $261 million.

If they didn’t re-sign Rizzo, the Yankees could move DJ LeMahieu to first base. It might be the best move for him, considering his multiple foot injuries in the past few seasons. That would leave an opening at third base.

Cabrera is not the best long-term third base option, so they will need to fill that spot if this is the plan they follow. It could make sense for the Yankees to inquire about the availability of two players: Rockies third baseman Ryan McMahon and Pittsburgh Pirates third baseman Ke’Bryan Hayes. McMahon, who has an .891 OPS, is under contract through 2027 and has an average annual value of $11.67 million. Hayes, the son of former Yankees third baseman Charlie Hayes, is having a down year for the Pirates with a sub-.700 OPS. But he is one of the best fielders. Hayes’ AAV through 2029 is $8.75 million and there’s a club option on his contract for 2030. He could be a potential buy-low candidate.

Complicating Steinbrenner’s wishes of staying below the fourth luxury tax threshold would be Soto smashing the AAV record, but the Yankees’ No. 1 priority this offseason will be re-signing him. What happens after that may make for difficult decisions for the front office.

Here’s what the Yankees could look like in the field if they try mitigating costs to re-sign Soto:

The Yankees can still field a championship-caliber club by hovering below the fourth luxury tax level. But if Steinbrenner wants to drop below the third level, it would likely make the team worse.

(Photo of Soto celebrating with Aaron Judge: Matt Krohn / USA Today)