So the Yankees have signed Mark Teixeira. Along with CC Sabathia and A.J. Burnett, they’ve committed a load of money to three of the top free agents available this year, making everyone cry “checkbook” at Cashman and Company.
Thing is, the Yankees payroll has gone down at this point. I’m not the math guy or business guy around here, but using the available contract figures and terms, the Yankees are just south of $200 million before arbitration. With players like Melky Cabrera and Xavier Nady eligible, that figure (around $186m) will go up, but not significantly.
Yes, the Yankees spent a lot of money, but they didn’t suddenly spend money they didn’t have. They used money coming off the books and backloaded to work with money that’s coming off the books next year as well. I’m not defending them against charges that they’re “buying championships” but I would like to see some acknowledgement that the Yankees aren’t in some new era of spending. They’re just still spending, like they always have.
Add in some interesting ways of looking at the Marginal Revenue per Win calculations might make this make even more financial sense as the economy continues to turn down. With all the comparisons of 1931 and 2008, it’d be interesting to know what the payroll was on this 107-win monster.
True as to the 08-09 Yankees. But salaries from 1929-1933 decreased, in real terms, by nearly 40% on average. (Data taken from linked data on the late Doug Pappas's site.)
1929 167,792
1933 100,928
(1950's $, using Robert Schiller's CPI data, average per team.)
(I used 1933 b/c that is when I have the data.)
Ruth and Gehrig took big pay cuts, and league-wide teams fired front office and coaching staff in order to stay afloat. Team profits went from (again 1950's $, average per team) from $59,520 to a loss nearly as big (average loss in 1933: $55,446).
The 2009 Yankees don't seem to making such negative salary moves. We'll see if the rest of baseball can keep up. In fact, we'll see if the Yankees can keep up.
Lost:
$23 million free from Giambi (after buyout)
$16 million free from Abreu
$16 million free from Pettitte
$11 million free from Mussina
$10 million free from Pavano
$1 million free from Molina's contract structure (earns $1 million less this coming year)
That's $77 million freed up.
Added:
CC at $14 million (first year)
Tex at $20 million
Burnett at $16 million
ARod adds $5 million from contract structure
Cano adds $3 million from contract structure
Wang wins $5 million in arbitration
Marte signed for $4 million
[estimate] Say Nady wins $10 million in arbitration (a likely overestimate)
That's $77 million spend so they've broken even. And that's giving Nady a HUGE overestimate for what he'll get in arbitration.
if you include the $5 mil the yanks are giving to wang in the added, you have to include what he made last year in the lost (since they aren't paying him last years salary + 5 million). I think it was 4.1 mil, but i'm not positive.
Yes, the Yankees' current payroll is around $200 million which is where it was last year. That is beside the point. The economic downturn could very well take attendance out of the equation and make competitiveness simply a function of available revenue from local media.
All of the data has yet to be determined but the tenative state of the American economy will lead many other teams to wait and see just how many baseball games that fans can afford to attend. At this point, we don't know. But any precipitous decline in attendance around the MLB will simply make the Yankees' competitive advantage more pronounced because the revenue from local media (in which the Yankees have a marked advantage over small market teams like K.C.) will become more important.
People may not be able to afford to go to games but they can still watch television. Some commentators have suggested that a deep recession or depression in our era will lead people to stay home more frequently and, if it possible, watch even more television than we do now.
So, the Yankees' "budget" stays at (or likely over) $200 million. But take the Yankees out of the equation. Every other team not located in a New York borough will likely have a decline in payroll.
In the 1950's, the New York football Giants and the Chicago Bears controlled their local media markets and could have continued to do so if their only goal was to put a stranglehold on the other franchises. But Wellington Mara and George Halas had larger fish to fry. They wanted to build the NFL and for the good of the league, they agreed to Pete Rozelle's plan for total sharing of media revenue. Anyone think that the NFL did not benefit from the leadership of Mara and Halas?
Could anyone seriously suggest that the Yankees' blatantly unfair advantage in local media revenue and the Steinbrenners' selfish, petulant "leadership" is good for the future of baseball?
I live in central Illinois and have no rooting interest in The Yankees, but I don't think that the Yankees' revenue advantage matters much. They've outspent the world for the last eight years and have zero championships for their effort and are coming off a season in which they spent 200 freakin' million dollars and didn't even make the playoffs. If their financial advantage eventually does start to materialize on the field and we have a 50's style Yankee dynasty, baseball will benefit from having a team that everyone can agree on disliking. Beating such a team would be an accomplishment!! Some Dodger fans still talk about the 1955 series fifty years later.
I'm no NFL fan, but that league seems lesser by virtue of not having any dominant teams to root against. It used to mean something to beat the Cowboys.
I wouldn't say the advantage is "unfair", but it's definately an advantage. The Yankees haven't won a series but, as this site often points out, that is not the true measure of long term greatness. The regular season is the best measure and the Yanks have dominated for the last 5 years, 10 years, 15 years... Money is the primary reason for the dominance and I think it makes baseball less interesting. Rooting for the Yankees (and to a lesser extent Boston, the Mets or Cubs) is not nearly as interesting as rooting for a team that wins on a level playing field.
the only advantage big market teams have is the ability to stay competitive every year. but, in any given _single_ year, it's likely that multiple small market teams can be just as competitive.
The Yankees have 1 pick in the first 3 rounds of next years draft (28a, compensation for not signing their pick last year). By my calculations, the Brewers for example will have: their first round pick, whoever takes sheets' first round pick, 2 first round sandwich picks for sheets/sabathia, their second round pick, and the yankees' second round pick. 6 picks in the first 2 rounds for young players way below market price. just because they won't make as much money as sabathia, burnett, and teixiera, doesn't mean that in 4 years they'll be less valuable.
And that's a huge advantage, not only the constant revenue from always being in the hunt for a title (in a "bad" year the Yankees still won 89 games, which would have won two divisions), but to be able to retain your own home grown talent while buying other high-quality talent the moment it becomes available.
And it's true that random small market teams, if they're dead on drafting can develop a team that can compete for a couple years, but if they don't continue to be near perfect (with worse draft slots) they can't compete in more serious and reliable manner. The Yankees are in their own league of salaries, and a near-guaranteed playoff spot for any team isn't a good idea in any league. If the Yankees (A) played the Yankees (B), each would have had the 10th highest payroll in baseball. That's just painful.
Not to mention the gall of having a city pay for the ballpark. Instead of 200 mil, how about just outspending the league by 20-25 mil and giving the rest back to the city, they probably could use it. The whole situation is a sick joke.
The Yankees competitive advantage encourages innovation among the other teams. Just like the A's with their low payroll spent the early 2000s exploiting market inefficiencies in ways other teams weren't and were really good as a result. That philosophy has now trickled out to almost all the other teams, and is providing us with better baseball.
Competition leads to improvement. Show me one major advancement in the NFL in the last 20 years.
Hear hear Evan. Just look at the newfound emphasis on thoughful drafting, minor league development and international scouting throughout MLB in the last few years. Even the Pittsburghs and Kansas Citys of the world can compete on that level.Innovation driven by economic circumstance (to me, its just good business). And if Tampa's run to the pennant proved anything (utilizing the components I mentioned plus aided by a couple wonderful trades netting Garza and Kazmir) even low payroll teams can compete...and not in a fluky, one-off miracle season way either.
How far can you take this argument? What if the Yankees played in a league had essentially Double-A talent? In that scenario, how far do you think innovation would get the non-Yankee teams? The competitive balance would be totally out of whack and the games would be boring. The bottom line is this -- if the distribution of top tier talent is concentrated in one team based upon the accident of geography, the whole sport suffers because the games are not compelling. The Yankees have taken the sport to this very precipice. Thanks, Steinbrenners.
Your contention that the NFL has had no innovations in the last 20 years is puzzling. Nearly 50 years ago, Pete Rozelle envisioned a 32 team league with national t.v. contracts and revenue sharing that bolstered the strength of all the franchises. Rozelle believed that the NFL was as strong as its weakest franchise. That vision has been realized within the past decade and the NFL is thriving. The competition is great, the financial structure of the league gives all of the teams a reasonable chance to build up a franchise quickly, the playoffs present exciting and competitive games and the sport has never been more popular. That does not exactly sound stagnant to me.
The Lions are bad because their management has been unbelievably awful. The size of the Michigan media market has nothing to do with the Lions' terrible play.
If the NFL had baseball's structure for distributing media revenue, do you think the league would have a team in Green Bay? Would Indianpolis have been able to keep Peyton Manning and Marvin Harrison and other Colt stars on their team during this last decade?
How far can you take this argument? What if the Yankees played in a league had essentially Double-A talent? In that scenario, how far do you think innovation would get the non-Yankee teams? The competitive balance would be totally out of whack and the games would be boring. The bottom line is this -- if the distribution of top tier talent is concentrated in one team based upon the accident of geography, the whole sport suffers because the games are not compelling. The Yankees have taken the sport to this very precipice. Thanks, Steinbrenners.
Your contention that the NFL has had no innovations in the last 20 years is puzzling. Nearly 50 years ago, Pete Rozelle envisioned a 32 team league with national t.v. contracts and revenue sharing that bolstered the strength of all the franchises. Rozelle believed that the NFL was as strong as its weakest franchise. That vision has been realized within the past decade and the NFL is thriving. The competition is great, the financial structure of the league gives all of the teams a reasonable chance to build up a franchise quickly, the playoffs present exciting and competitive games and the sport has never been more popular. That does not exactly sound stagnant to me.
This is missing the point. Television revenue can't be analyzed in a vacuum. These cable networks make money from advertising. If people are doing as much discretionary spending, advertising isn't as beneficial, won't be as expensive, and advertising revenues will go down.
Doug Melvin et al. need to take a deep breath and relax. The Rays and the Phillies did just fine last season. If the Brewers could play defense and throw strikes they might have done a heck of a lot better too.
I always root against the Yankees. Rooting for the Yankees is like rooting for Tom Cruise to get the girl...
Another detached Central Illinoisan here; I don't mind that the Yankees overspend, but to say that their revenue advantage doesn't matter much is fallacious. They had made the playoffs (I believe) in every year since their last championship in 2000 until 2008, and played in the World Series in 2001 and 2003. As Cub fans have re-learned the last two years, the playoffs - especially the best-of-five first round - are a crapshoot. The Yankees for once actually used their revenue advantage to their greatest benefit - they spent their big money in an off-season where blue-chip proven commodities were available. This should at least guarantee that they make the playoffs most every year going forward, and once you're in anything can happen. Simply put, if the Yankees continue to spend their money on the Sabathias and Teixeras of the world, their advantage will be difficult for their non-Bostonian competition to overcome.
Will, would you entertain a Pizza Feed somewhere in Central Illinois? It's a straight shot down I-74 from Indy, and you'd get an eclectic mix of Cubs, Sox, and Cardinal fans (ratio of about 50-25-25). It's not Chicago, so there's no Giordano's, but we are getting an Independent League team (Normal, IL - as yet nameless) in 2010 and this is definitely a baseball town.
It’s a 100% guarantee that one if not a couple of these signings will be a bust. They signed 2 overworked arms that will never hold up through the length of these contracts. And when they do get hurt, they’re stuck with them due to the contract terms. I’m a Twins fan and I believe that we still have a better pitching staff 1-5 than the Yankees even with CC and AJ. Baseball is still about grooming your farm system and holding on to your young players as long as you can. Thus when the Yanks don’t win this year, we can all look back at today and wonder why we were so upset.
Right now, I would pick at least 3 other teams to advance to the WS in the AL before NY. Look for the Indians, Twins or RedSox to get there before NY.
I'm a pretty non-detached Red Sox fan, and I have to say this offseason has been incredibly frustrating. Granted, this is still a fantastic era to be a Sox fan, but at least the longest-suffering franchises don't have to deal with year after year of outrageous Yankee excesses. It's just insulting to see the most intelligent franchise in the game outmaneuvered by three quick pen strokes. Ta da! Instant pennant!
The bottom line is that the Yankees are the big, dumb bully in high school. Think Moe from Calvin and Hobbes. They think it's perfectly reasonable to use their brute force to pound everyone else into submission. It's lame and pathetic. Why do they even need a front office? Just have someone that signs the checks, and you'll save on all that "analysis." Like it's really that difficult to figure out Sabathia, Teixeira, and Burnett are good ballplayers? Do we really need to give them credit for using a half a brain cell in this year's free agent signings?
Get over yourself. Theo and Co. tried to play hardball with Boras and lost: a case of being too smart for their own good. Meanwhile, the Red Sox spend plenty, can spend more, and will remain competitive. Leave the pathos to someone with rightful claim to it.
I am a Sox fan and I can imagine that posts like Baseball God's are tough for small market fans to stomach. The Sox spend more than the majority of the league and we have little to compain about. The system is definitely tilted in our favor.
It does bother me though, when I hear people say the Sox are the same as the Yankees. The Sox may be on a very different playing field than the Rays, Royals, etc., but the Yanks are clearly operating at a entirely different level. Last year the Yank's payroll was something like $70M greater than Boston's payroll.
Did you read anything will wrote? The advantage the Yankees have this off season isn't that the economy doesn't affect them. They are lucky enough for this league wide wallet tightening to coincide with an off season where they have $85 million dollars to spend on next years club, along with damon/matsui coming off the books next year. If the yanks were to spend $400 million every off season for the next 5 years, it would be a problem. but they won't so it's not.
These improvements only serve to make the Yankees as good as their competition for 08. I would imagine Tex and C.C. allow them to draw even, while A.J. maybe puts them over the top, making the generous assumption he makes his starts. The Rays and Sox have still yet to make moves though, and there remain numerous players on the market that, if signed, would help them regain their edge. As the days roll on toward March and the numbers come down, I would imagine both of these teams is in line for quality players at drastically reduced prices.
Odd assumptions are being made here about attendace figures for the upcoming season, especially considering gas prices have dropped like a rock since the summer of 2008.
What do gas prices have to do with it? Look at holiday spending, people are scared and hoarding discretionary income. I know I am personally managing money carefully given the tenuous nature of my employment, and am much less likely to go to as many games this year as I did last year.
To the Red Sox and Yankees, that probably just means the scalpers get less money for the tickets, but for some teams it could very well mean a drop in attendence.
I'm going to kind of agree here in that I think a lot of teams are affected by gas prices. I know people here in Indy that would drive to Cincy or Chicago, but didn't with $4 gas. I also think that helped the Triple-A team here some. I'm not sure how it will play out, but lower gas prices are something that is one of few positives in the 09 economy.
meh. given the cost of going to the park (tickets, parking, etc.) in most markets, I don't think whether I pay $10 or $20 in gas is that big of a factor.
The Yankees sign a big guy. people overreact. Teams like the Rays, A's, Rockies continue to actually win games beside the fact that people claim it is "impossible" for anyone to ever compete again.
I laugh at all the financial advice given to the Yankees at this site. We should all be so lucky to take a $ 10 mil investment and turn it into a $ 1 billion asset. They did that more by creating a revenue stream based on star power than any marginal win calculations.
I am sure there are hundreds of thousandss of people (including me) that could turn a $10 mill investment into a billion $ asset if they were given exclusive rights to the largest market in America. Especially if the tax payers in that market chip in. I'd hate to be a laid off New Yorker paying taxes right now.
What the Yankees do with the players they buy is irrelevant to the question of whether they have an unfair advantage. Take two identical teams, give Team A Sabathia and Teixeira, and let Team B take any two other available players. Which team would you rather have? If the Yankees can't make it work, that's their own failure, not a sign that the playing field is even. People talk like it's a choice between smart management (e.g. Beane) or money (e.g. NYY). But when you consider smart management WITH money (e.g. Boston), it's easier to see the imbalance.
There is a clear advantage to being a team in a major market. Yes, signing players like the Yankees have done does not guarantee success...and no, just because you are a small market team doesn't mean you can't be competitive. But a small market team has little margin for error...most of their moves have to be right on...whereas the Red Sox, Yankees, etc. can eat a few contracts and move on....team like the Rays of 2008 are "the Perfect Storm."
The revenue rules that let home teams keep 80 or 90 percent of the ticket revenue and all the local TV revenue (and block franchises from moving to higher revenue areas) are entirely league-created. You can't blame the Yankees for responding appropriately to the incentives that are placed before them.
Blame the other owners for agreeing to this setup.
It's near impossible to find a writer from the Prospectus team do anything other than minimize the Yankees' massive revenue advantage and consequent competitive advantage. When sabermetric principles saturate the industry's front offices, as is pretty much the case now, payroll acts to separate the teams not player evaluation. Yet none of them want to admit it. It's time for a major restructuring of revenue distribution in mlb.
The argument about salary cap in baseball always seems to ignore the fact that baseball has another form of salary control-- the fact that you get to keep a guy in the minors until he's ready, pay him nothing while he's there, then pay him the league minimum for three years, and then pay arbitration salaries below market value-- and then the player is almost always past his prime. Sports with salary caps don't give you the ability to pay a player below market value in his prime.
If the issue is that teams have larger payrolls than each other, then you need to do something to add to the value of winning. Let money be distributed to teams who gain in the standings. Add to the incentive for teams like the Royals and Marlins to spend money. Don't enforce a salary cap that will only hamper a few teams and still leave a few teams in small markets way behind, don't enforce a minimum payroll so that the Marlins and Royals can't stay in business, don't hamper player salaries so that the owners keep all the money either. None of that makes sense. Even the incentives to win, don't redistribute.
I don't blame the Yanks for spending. They have the money. Most teams spend what they earn--or at least plan to earn via hitting the sweet spot for the playoffs or a new revenue stream.
As a fan, though, I don't know how it is fun to watch a team underachieves its potential every time it loses and if it wins, it merely meets expectations. I take satisfaction in watching a team well-built, but when it is a team well-bought, that seems empty.
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True as to the 08-09 Yankees. But salaries from 1929-1933 decreased, in real terms, by nearly 40% on average. (Data taken from linked data on the late Doug Pappas's site.)
1929 167,792
1933 100,928
(1950's $, using Robert Schiller's CPI data, average per team.)
(I used 1933 b/c that is when I have the data.)
Ruth and Gehrig took big pay cuts, and league-wide teams fired front office and coaching staff in order to stay afloat. Team profits went from (again 1950's $, average per team) from $59,520 to a loss nearly as big (average loss in 1933: $55,446).
The 2009 Yankees don't seem to making such negative salary moves. We'll see if the rest of baseball can keep up. In fact, we'll see if the Yankees can keep up.
Lost:
$23 million free from Giambi (after buyout)
$16 million free from Abreu
$16 million free from Pettitte
$11 million free from Mussina
$10 million free from Pavano
$1 million free from Molina's contract structure (earns $1 million less this coming year)
That's $77 million freed up.
Added:
CC at $14 million (first year)
Tex at $20 million
Burnett at $16 million
ARod adds $5 million from contract structure
Cano adds $3 million from contract structure
Wang wins $5 million in arbitration
Marte signed for $4 million
[estimate] Say Nady wins $10 million in arbitration (a likely overestimate)
That's $77 million spend so they've broken even. And that's giving Nady a HUGE overestimate for what he'll get in arbitration.
if you include the $5 mil the yanks are giving to wang in the added, you have to include what he made last year in the lost (since they aren't paying him last years salary + 5 million). I think it was 4.1 mil, but i'm not positive.
Aha! Even better, especially since I forgot about Nick Swisher who's earning a bit over $3 million this year.
$5.3 million, my bad. Up from $3.5 last year (not on the Yanks, though, so all 5.3 is fresh spending).