As New York Yankees fans learned in a harsh manner this offseason, Major League Baseball’s rules that restrict the league’s top spenders are officially getting out of hand. For example, the Yankees lost Juan Soto after trying to re-sign him, but still also lost their compensation draft pick they received when he departed because they signed Max Fried. They didn’t have a first-round pick due to payroll penalties.
There’s definitely some level of understanding that teams without the financial advantage of the Yankees, Dodgers, Mets and Phillies should gain a bit of an edge elsewhere, but how does swapping out one free agent for another result in a future disadvantage? That’s excessive.
The Yankees were reminded of MLB’s partially broken system last week, too, when the division-rival Baltimore Orioles signed top prospect Samuel Basallo to an eight-year, $67 million contract extension after just a handful of games in The Show.
Why does this matter? Because the Yankees had a deal in place to sign Basallo back in 2021 when he was an amateur free agent coming out of the Dominican Republic. What happened? That deal went up in flames because the Yankees were penalized for signing Gerrit Cole to a nine-year, $324 million contract.
New York had $1 million in international bonus pool money taken from them as retribution for the Cole deal in free agency, and they could no longer afford Basallo, who then inked a contract with the Orioles. Awesome!
The Yankees had a deal with Basallo as an amateur before he was eligible to sign in January 2021.
Then, the Yankees signed Gerrit Cole as a free agent. That cost them $1M in international pool money for the 2021 class.
Basallo was cut loose and signed with Baltimore for $1.3M. https://t.co/z6fjWal4LV
— Kiley McDaniel (@kileymcd) August 22, 2025Yankees reminded of painful (and unfair) MLB reality with Orioles top prospect news
He landed with the O’s for $300K more. That’s how much of a difference this stuff makes. Not only that, but the Yankees had to award the Astros with a compensation pick when Cole departed. Free agent plus payroll penalties all in one.
And what’s that gotten the Yankees? Cole captured a Cy Young award in the lost 2023 season that saw the Yankees finish with their worst record in 30 years. They didn’t win a single ALCS game from 2020-2023. In fact, they had a losing record in the playoffs over that span (5-10). Their crowning achievement in the Cole era was getting to the 2024 World Series and losing in such agonizing fashion that it’s still a talking point nearly a year later. Oh yeah, and Cole got paid out $36 million while he didn’t pitch in a single game this year due to Tommy John surgery, and that money counted against the Yankees’ payroll.
Have the Yankees misallocated funds? For sure. Very few big-spending teams use all their money perfectly, in fact. It’s extremely hard to hit on all of your impact acquisitions. But one singular free agent acquisition shouldn’t be the source of multiple penalties when a team is simply trying to win baseball games. Gerrit Cole is a great player, but adding him shouldn’t completely cut the Yankees off at the knees when they’re trying to further their player development pipeline.
Good job on the O’s for eternally remaining cheap and turning a 101-win roster into a sub-.500 non-contender within two years, though. That deserves the real reward.