New York Yankees and Derek Jeter Agree to One-Year Deal

(Photo by Lisa Blumenfeld/Getty Images)

Derek Jeter and the New York Yankees agreed to tear up his 2014 player option (worth $9 million) and have agreed to a one-year deal worth $12 million instead.

You may be asking yourself, “why did the Yankees give Jeter a raise?” Jeter only played in 17 games last season due to several injuries and it wasn’t a good year for him or the Yankees.

The answer is simple – it’s all about the $189 million luxury tax threshold they need to be under. In terms of luxury tax, it’s not the actual annual salary that counts. Instead, it’s the average annual salary for each contract that counts toward the luxury tax. In Jeter’s case, his number towards the luxury tax would have been $15 million dollars (due to the average annual salary of his previous contract). By doing a one-year deal, that’s what counts towards the luxury tax, so it in essence frees up $3 million dollars the Yankees can now use to pursue free agents.

Jeter was going to take his player option no matter what, so this actually works out best for both parties. Jeter gets an unheard of “raise” when it comes to a player option (even though he’ll make less in 2014 than he did in 2013) and the Yankees not only keep the Captain on the team (which was going to happen anyways) but they can do the following:

• offer more for Cano (still shouldn’t give more than seven years and $20 million per)
• get in the hunt for some of the Japanese and Korean pitchers that will be on the market
• try to entice Hiroki Kuroda to come back for another year (he was their best starting pitcher in 2013)
• maybe sign Brian McCann to be their catcher (even though he’s not the offensive threat he used to be, he would still be better than anything they currently have or is “next” up in the minors at this time)
• go after one of many free agents they need (outfielders, pitchers, shortstop/3B)

Now that they have him officially on-board, they need to make the decision to make him the permanent DH so they can go after a free agent shortstop. No free agent shortstop will sign with the Yankees with Jeter “being the starting shortstop” and Jeter has at best one more year left in the field. They need to take advantage of the situation and just make him the DH for 2014 (or possibly even move him to 3B with the pending suspension of Alex Rodriguez).

You may laugh at the Yankees for giving Jeter a “raise,” but when you look at the reasoning behind it, it all makes perfect sense, especially in regards to the Yankees spending plan that started last off-season.