So much for the theory that the Major League Baseball luxury tax will discourage the New York Yankees from spending money.

According to a report in Wednesday's New York Daily News, the Yankees' payroll now stands at $140 million, well above the $117 million tax threshold.

The Yankees recently signed pitcher Jose Contreras and slugger Hideki Matsui to lucrative deals. The Bronx Bombers are also nearing a deal with future Hall of Fame pitcher Roger Clemens.

"The Yankees payroll is going through the roof," a high-ranking MLB official told the Daily News. "For them to get under the luxury tax, they're going to have to move a whole lot of contracts. Good luck. It's been rather apparent that no one is taking on big-money contracts this winter."

"George is just unbelievable," an agent told the newspaper, referring to Yankees' owner George Steinbrenner. "He just doesn't give a ---. God bless him. He's obviously gonna spend whatever he feels like to win. He's unbelievable."

Landing Contreras was a huge achievement for the Yankees. Contreras is viewed as a possible No. 1 starter by many observers, and the Yankees beat out the rival Red Sox for the Cuban pitcher's services.

"We couldn't, the right word is we wouldn't, sacrifice the opportunity to sign these talents on the basis of reducing payroll first,'' Yankees general manager Brian Cashman said after nabbing Contreras on Tuesday.

The Yankees have shed the contracts of relievers Mike Stanton and Ramiro Mendoza this offseason. Stanton signed with the New York Mets as a free agent, and Mendoza appears heading for the Red Sox. However, the Yankees are having trouble finding new homes for Raul Mondesi, Rondell White and Sterling Hitchcock.

"The mindset is still for me to reduce payroll,'' Cashman said. "Obviously, when the opportunities to sign Hideki Matsui or Jose Contreras presented themselves, it was time for us to make decisions, to move now and continue to work on cutting the payroll down the line.''

Information from The Associated Press was used in this report.