The New York Yankees appear to have taken a significant lesson from their experience with DJ LeMahieu’s problematic contract, which has been a major obstacle in their offseason plans due to the $15 million luxury tax impact they will face while paying him not to play in 2026.
It’s hard to ignore the similarities between the negotiation processes for Cody Bellinger and the aftermath of LeMahieu’s contract following the 2020 season. Both players, LeMahieu while in his prime and Bellinger, share a set of skills that include excellent defensive capabilities, some flexibility in playing positions, and low strikeout rates. However, both also came with their own sets of questions regarding the quality of their contact statistics.
The Yankees prioritized both players during their respective free-agent negotiations. In a recent analysis of the Bellinger situation, Joel Sherman from the New York Post suggested that the Yankees may have gained insights from their previous miscalculation with LeMahieu.
Since Sherman’s observations, it has become clear that he was onto something. The Yankees stood firm and did not compromise on the length of Bellinger’s potential contract, opting for a five-year agreement rather than extending it to seven years or more, which would have been more financially beneficial in the long run.
Despite the lessons learned, the Yankees are still feeling the repercussions of their initial decision regarding LeMahieu. Sherman points out that the organization attempted to reduce LeMahieu’s average annual value (AAV) by extending his contract to six years instead of choosing the more sensible four-year option for the then-31-year-old second baseman. At first glance, the six-year, $90 million deal, averaging $15 million annually, seemed favorable compared to a slightly higher payment over a shorter duration. However, what actually transpired was that the Yankees effectively robbed their future selves of financial flexibility in order to save a few dollars at that moment, leading to larger costs now.
As a result of this misjudgment, instead of incurring a $32.5 million tax hit for Bellinger in 2026, the team faces a substantial $47.5 million charge, a direct consequence of their earlier frugality with LeMahieu’s deal.
While the Yankees’ firm stance on Bellinger is commendable, the damage has already been inflicted. There was a period when such lengthy contracts were standard for the Yankees, as seen with players like Aaron Hicks, and they repeated this trend last offseason with pitcher Max Fried.
During that time, other top free-agent starters, including Blake Snell and Corbin Burnes, opted for five and six-year contracts, respectively. The Dodgers managed to lower Snell's AAV through deferred payments, reducing it from $36.4 million to $31.3 million. Similarly, the Diamondbacks achieved a similar outcome for Burnes, lowering his hit from $35 million to $32.9 million. Conversely, the Yankees extended Fried’s contract by two additional years beyond what Burnes received, despite Fried being a year older, simply to bring down his AAV to $27.3 million, without any deferrals involved.
Predicting the outcome of the final years of Fried's contract isn't rocket science; it's likely they will end poorly, perpetuating a cycle of financial strain due to "dead money" against future payrolls—all in an effort to save some current tax dollars.
While it is encouraging to see the Yankees resist the temptation to compromise with Bellinger and stray from their previous patterns that led to such costly mistakes, the burden of longer-than-necessary deals from the past still looms large. Until these contracts expire, the Yankees will find themselves trapped between paying increased AAVs for new signings and managing the dead money from prior errors.
