New York intends to stay below the luxury-tax threshold of $197 million for 2018, and the squad is reportedly already sitting at $178 million, per the Associated Press (via ESPN).
Frazier is currently seeking a multi-year deal and has been in contact with several organizations about a new contract.
The 31-year-old came to the Yankees in July as part of a seven-player deal with the Chicago White Sox that also brought in David Robertson. He hit 11 home runs in 66 games and had a .365 on-base percentage that would have been a career high over a full season.
He also started all 13 games of the postseason for the Yankees, most notably hitting a three-run home run in Game 3 of the ALCS.
While New York is known for having a nearly limitless payroll, the team plans to stay under the luxury tax next season.
"You can have a world championship-caliber team and not have a $200-plus million payroll," owner Hal Steinbrenner said in November, per David Lennon of Newsday. "And I think we’re finally getting to a point where that’s coming true for us because we’ve got a lot of good young players on our team."
According to George A. King III of the New York Post, the Yankees have been taxed each of the 15 years since the plan was introduced in 2002, totaling $341 million.
With players like Aaron Judge and Gary Sanchez still yet to reach arbitration, the organization can maintain a reasonable payroll. Unfortunately, this could lead to a missed opportunity for Frazier, who earned $12 million last season.