Major League Baseball

Yankees owner signals payroll cut with Juan Soto's free agency looming

Updated May. 23, 2024 10:52 a.m. ET

The New York Yankees hold one of the richest payrolls in MLB, but a cut in spending could occur after the 2024 season.

Yankees owner Hal Steinbrenner signaled that the team might not be able to afford a $300-million-plus payroll for each season in the long run when he spoke with reporters at the owners meetings on Wednesday.

"I’m gonna be honest, payrolls at the levels we’re at right now are simply not sustainable for us financially," Steinbrenner said. "It wouldn’t be sustainable for the vast majority of ownership [groups], given the luxury tax we have to pay."

Steinbrenner's comment comes at an interesting time. Juan Soto is set to hit free agency after the 2024 season, but the Yankees owner said just last week that he's open to getting an extension done for the star slugger during the season, noting that it's a change from his usual practice as he doesn't usually negotiate extensions during the year.

Soto, who hit two more homers on Wednesday to give him 13 on the year — to go with a .313/.409/.569 slashline in his first season with the Yankees — appears primed to earn one of the largest contracts in MLB history. The 25-year-old reportedly rejected a $440 million extension from the Washington Nationals in 2022 as some have speculated that his next contract could rival the $700 million deal Shohei Ohtani received this past offseason.

Steinbrenner isn't concerned though about the Yankees' ability to keep Soto even if he wants to cut payroll, saying they're in a good payroll spot entering the upcoming offseason.

"We’ve got a considerable amount of money coming off [next offseason]," Steinbrenner said. "We didn’t have a considerable amount of money coming off last offseason, which is why we’re at where we’re at."

The Yankees currently have a $305.8 million payroll for the 2024 season, second only to their in-city rival, the New York Mets, according to Spotrac. That places them over the highest Competitive Balance Tax (CBT) threshold by nearly $10 million. They finished above the highest CBT threshold in 2023, meaning they had to pay $32.4 million in taxes last season, according to Spotrac. Due to being a repeat offender, the Yankees would owe $59.7 million in tax money if their payroll remains unchanged this season, per Spotrac.

But as Steinbrenner mentioned, the Yankees have a chance to at least do some payroll reworking this offseason. In addition to Soto, Gerrit Cole, Gleyber Torres, Anthony Rizzo, Alex Verdugo, Clay Holmes and Tommy Kahnle are among the handful of players who are either set to become free agents or have an option for the 2025 season. New York currently has $202.4 million committed in salary for next year.

Some might see the money coming off the books as a strong opportunity for the Yankees to reload their roster as they're 34-17. While Steinbrenner sees the 2024 Yankees as "championship caliber," though, he doesn't believe he has to spend an equal amount of incoming money to outgoing money this offseason in order for New York to compete in the future.

"I’ve been a broken record [on this topic]: I don’t believe I should have a $300 million payroll to win a championship," Steinbrenner said. "I believe I need a good mix of veterans, who are gonna make a lot more money, but also we’ve put a lot of money into our player development system in the last five-to-10 years. And in my opinion, we have one of the better ones in baseball now."