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Young money or big name rock star? Yankees face new era without Rodriguez

Bryce Harper of the Washington Nationals
Getty Images
Bryce Harper of the Washington Nationals

Welcome to the future, New York Yankees.

With the retirements of Alex Rodriquez and Mark Teixeira, the Bronx Bombers continue to drift further away from the original star-packed high-priced roster that hoisted the Commissioner's Trophy in 2009. For some, therein lies the rub.

The club is now looking toward a painstaking process of forming a new nucleus around fresh talent. A hint of that was seen on Saturday, when the Yankees promoted two top rookies, Aaron Judge and Tyler Austin, to the team, who made an instant impact in their debut.

Following years of mediocrity and missing the playoffs in two of the last three seasons, the Yankees are now embarked begin an unfamiliar chapter: Rebuilding.

Rarely have the Yankees settled on cultivating talent through the ranks of its farm system. Historically, when the club struggled, management turned to signing big names like Rodriguez, Jason Giambi and Jacoby Ellsbury.

However, before this season's trade deadline, the Yankees dumped MLB-ready players to invest in some of the game's most promising minor league prospects. Despite Judge and Austin's impressive debut on Saturday, this raw talent likely won't translate to wins for the club until at least 2018, when several key free agents are also expected to enter the market.

So will the club spend less, build from within and ultimately depart from an approach that George Steinbrenner championed for over three decades? Or will the Yankees be buyers once again?

If that's the case, one of the most desirable name on the market will undoubtedly be Bryce Harper. The 23-year-old Washington Nationals right fielder is a 4-time all-star, reigning National League MVP and currently has his club sitting in first place in the National League (NL) East standings.

For super-agent Leigh Steinberg, the decision to go after Harper is a no-brainer.

"The Yankees, in terms of playoffs and world series, have not been competitive for some time," explained Steinberg to CNBC in a phone interview.

With the Yankees' recent decline, and the departure of stars like Derek Jeter, Mariano Rivera, Teixeira and Rodriguez, one could argue that the Bronx is in dire need of a marketable star like Harper, who is set to become a free agent in 2018.

Here's the catch: Harper has already played for the Yankees.

Once upon a time, Harper was a 17-year old earning his GED in order to become eligible for the MLB First-Year Player Draft. Harper then enrolled in junior college in his hometown of Las Vegas to keep his skills sharp. He won a Golden Spikes Award, which is given to the nation's top amateur baseball player.

There's rampant speculation that the Bombers are among the front-runners to land Harper when he becomes eligible for free agency. If the stars align in the Bronx and the Yankees can sign Harper, a fresh dynasty could be taking shape.

"They're the team that initially mastered the art of re-loading through free agency and I expect them to spend again and be dramatically aggressive," Steinberg said.

"The expectations are so high I think it will very difficult for them to do a slow re-build. Adding stars to the mix is absolutely necessary because Yankees fans are not long-suffering fans."

Teen years in Pinstripes

Bryce Harper during a Yankees’ youth league game on July 14th, 2009
Brian Price | CNBC
Bryce Harper during a Yankees’ youth league game on July 14th, 2009

On a scalding hot day on July 14th, 2009, dozens of kids and their families saved up and made a family trip to the Bronx in order to have their kids evaluated by MLB coaches and scouts.

In addition to the pro-franchise and the accompanying farm system teams, the Yankees (as well as the Red Sox) have 18-and-under "youth urban initiative" teams to showcase amateur talent. Making one of these prospect teams can be the fast track to being noticed (and drafted) by a pro club.

The Yankees' youth team is known as "Hank's Yanks" sponsored by Yankees part-owner and co-chairman, Hank Steinbrenner.

For Harper, it was his first trip to New York, and he was there to play baseball in a near-empty Yankee Stadium in front of a handful of baseball gurus and the parents of his teammates. Harper had been dubbed "Baseball's Chosen One" by Sports Illustrated and every team, Yankees included, were angling to get him

"Baseball, from a revenue standpoint, is in the midst of a gold rush." -Leigh Steinberg, Sports agent

At the time, Harper didn't smear eye black all over his face like tribal war paint. He pretty much kept to himself. He didn't have to be gregarious; everybody knew who he was and what he was capable of because a few months earlier, during a high school home run derby in Tampa Bay, he hit the longest ball in the history of Tropicana Field at a distance 502 feet.

With that kind of reputation it was no wonder that Yankees' General Manager Brian Cashman made his way down to the field just in time to see Harper take batting practice. Cashman was there to address the players, but it was clear his top priority was to see Harper in action. The Yanks exec was not disappointed.

$500 million man?

Steinberg, who is credited with negotiating over $2 billion worth of sports contracts during a 40-year career, says that the Yankees' Organization, more than ever, faces an uphill battle. Much like the Yankees, other clubs are now more willing to put big money on the table for key players.

"Baseball, from a revenue standpoint, is in the midst of a gold rush," said Steinberg. "This was a sport that was in trouble following the strike of 1994, but has since rebounded and gross revenue has grown exponentially. The years of hearing owners complain are gone."

Indeed MLB's yearly revenue in 2015 increased by $500 million from the previous year and is fast approaching $9.5 billion. According to Forbes, these gains marks the 13th consecutive year that the league has enjoyed record growth. Following Disney's recent purchase of a $1 billion stake in MLB's streaming business, that upward trajectory will likely continue.

Despite the playoff drought, Forbes estimates the Yankees franchise is worth $3.4 billion, making it the most valuable club in the league. That all bodes well for Harper, whom Steinberg believes is now in a prime position to land a deal in excess of $500 million.

Bryce Harper during a Yankees’ youth league game on July 14th, 2009
Brian Price | CNBC
Bryce Harper during a Yankees’ youth league game on July 14th, 2009

"For years, the Yankees have been the premier franchise in all of baseball," Steinberg added.

"Furthermore, fans are enamored with a dynasty, and they haven't been one as of late. Now, they're in a position to offer an unprecedented level of compensation to a player that can turn them around and help them build a dynasty. As long as revenue keeps increasing, there's really no limit to what they can offer," he said.

From here, Steinberg also noted that the Yankees' ability to operate under the luxury tax could offer them an opportunity to be even more aggressive than in past off-seasons.

Since 2003, the club has paid nearly $300 million in penalties for exceeding a league-designated threshold for spending on player contracts. If the threshold is passed, a club is forced to pay at least a 17.5 percent tax of what was spent above the limit.

For instance, in 2015, the Yankees' spending far exceeded the $189 league-mandated threshold, and they were therefore forced to pay $26.1 million in penalties. With Rodriguez off the books, it gives the club more wiggle room in salary terms, Steinberg said.

Looking ahead to the 2018 season, the Yankees are currently committed to less than $100 million worth of player contracts. Given their propensity to spend well above $200 million on payroll each year, they will be well positioned to cobble together a historic long-term offer to Harper.


Will the 'Evil Empire' pass on Harper?

Despite the promise that Harper could deliver in pinstripes, there is the possibility that the Yankees are in the midst of a philosophical shift that favors home-grown talent versus super-star signings.

Unlike Steinberg, super-agent Scott Boras, who previously represented Rodriguez and now represents Harper, feels the winds of change may be sweeping over the Bronx when it comes to putting up cash to land big-name players.

"The historical covenant between the Yankees and their fans has always been through superstars. The new Yankee regime, much like players, have to prove themselves on the field annually in the marketplace," Boras explained to CNBC in an e-mail.

"They need to be aggressive and show that they're willing to compete for star players. However, with a focus on rebuilding, rather than the normal Yankee 'win annually' philosophy, that recruitment process will be far more difficult," the agent said. "

The player community looks at the Yankees positively, but certainly differently than in past years," Boras added.

If this is in fact the new New York mindset, it could open the door for other major market teams to step up their recruitment of all-star players while the Yankees opt to focus on cheap home-grown talent.

Despite strong revenue growth for the Yankees, payroll has remained fairly stagnant. Meanwhile, the Los Angeles Dodgers—another likely suitor for Harper—continue to ramp up spending. Last season, the Dodgers' opening day payroll was a league record $272 million. This season, the team remained the highest-spending club, while the Yankees decreased their payroll by about 5 percent.

Time will tell if the Yankees are saving for the future or simply just not spending. Still, Boras cast doubt over the notion that Yankees have what they need to get back to the top with recently acquired farm-system players like Clint Frazier and Gleyber Torres.

"The perception in New York is that 'Wow, these guys will be stars'. However, there are fewer stars in the league today than there were five years ago," he told CNBC. "If these new Yankees were stars, they'd be in the league already. They are certainly serviceable, but are they superstars? No."

But, maybe a team of "serviceable" and reasonably priced talent is what the Yankees are now looking to build around. However, if the Yankees do land Harper, it's intriguing to consider that A-Rod could conceivably be his hitting coach.