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March 6, 2013

Contractual Matters

The Sinking and the Sunk

by Jeff Euston

For all of their accomplishments, the Yankees don’t generally fare well with spending efficiency. Using Marginal Dollars per Marginal Win—Doug Pappas’ yardstick to measure the bang for a buck a club gets out of its payroll—we find the Yanks spent $4.28 million per win in 2012, ranking 23^rd among the 30 clubs in spending efficiency. That actually was an improvement from their rank of 25^th in 2011 ($4.02 million per win) and 28^th in 2010 ($4.23).

This is not so much an indictment of the Yankees’ front office—they’ve won an average of 95 games per year since 2010—as it is an inevitable result of the highest payroll in the game, mixed with slight regressions in production or injuries to a key high-paid player or two.

In fact, if you thumb through your new copy of Baseball Prospectus 2013 and line up the Marginal Dollars per Marginal Win figures contained in each team Prospectus Box, you find that no team with a payroll of $100 million or more ranked in the top 10 in spending efficiently last season. The most efficient of the $100 million clubs, the White Sox, ranked 12^th, spending $2.31 million per win. Leading the field were two clubs light on high-priced free-agent talent: the Athletics, who paid a mere $890,000 per win, followed closely by the Rays, at $1.21 million.

The Yankees don’t figure to make a leap forward in the efficiency rankings this season, either, if PECOTA projections and payroll figures for 2013 are any guide. The explanation lies with one of the significant drags on salaries last year: Alex Rodriguez.

A-Rod posted a WARP mark of 1.2 in 2012 while earning $30 million, sparking a severe spike to the price the Yankees paid for each marginal win. At 37, he is recovering from a second hip surgery, and the Yankees still owe him $114 million through 2017—more than they did when they acquired him in 2004. PECOTA forecasts a 2013 WARP of 1.1 for Rodriguez, who will earn $29 million this season. If he is not a sunk cost already, he’s sinking fast.

The Yankees also are one of the few clubs with significant dead money on the books already for 2013. They’re on the hook for $8.5 million of A.J. Burnett’s salary this season, placing them among nine clubs—shown in the chart below—paying at least $1 million or more for players to work elsewhere this season.