A Look at the Yankees Organizational Philosophy Over the Years… and How They Got to Where They Are in 2021
By Chris O’Connor
April 22, 2021
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Before the 2012 season, New York Yankees owner Hal Steinbrenner held a press conference with the media where he talked about taking over as owner in the aftermath of his father’s death in 2010. In the conference, he discussed his goal of getting under the luxury tax threshold by 2014, saying that teams “don’t need a $220 million payroll” to win a championship. Hal, a self-described “finance geek”, has mostly stuck to that principle in stark contrast to his famous father.
Hal Steinbrenner finally reached his goal of ducking under the luxury tax threshold in 2018, a season where the Yankees ranked sixth(!) in Opening Day payroll. Even without accounting for inflation and the rise in revenue across the sport, the Yankees payroll in 2005 was higher than it was in 2018 despite the average team increasing their payrolls by 150% during that time. While the Yankees had the highest payroll in 2020 after signing Gerrit Cole, they ducked under the luxury tax again in 2021 despite not having been to a World Series since 2009. In a noticeable contrast, the Dodgers won the World Series in 2020, signed Trevor Bauer to a contract that will pay him $40 million this year, and will have an Opening Day payroll nearly $50 million higher than the second-place Yankees. Forbes estimates the Yankees to be worth $5.25 billion, 47% higher than the second-place Dodgers.
There are a few exceptions to this relatively frugal philosophy. In December 2013, the Yankees were coming off a playoff-less 84-win season that saw them post the run differential of a 79-win team. The organization was at a crossroads. Their lineup was aging quickly, their best player (Robinson Cano) was a pending free agent and their two best starting pitchers that year were 38-year-old Hiroki Kuroda and 41 year-old Andy Pettite (that baseball reference page is not a pretty sight). They also had a middle-of-the-pack farm system, all of which suggested the start of a multi-year rebuild. The New York Yankees, however, do not rebuild (and charging $20 for a beer at a game means they should never).
That offseason, they spent a combined $441 million on free agents Masahiro Tanaka, Carlos Beltran, Jacoby Ellsbury, and Brian McCann. This had many recalling the $423.5 million spending spree on CC Sabathia, Mark Teixeira, and AJ Burnett that led to the Yankees last World Series win in 2009. There were, however, a few key differences between the two. For one, the Yankees were far better in 2008 than they were in 2013. Despite not making the playoffs, they won 89 games with the run differential of a 87-win team while employing in-their-prime superstars in Derek Jeter, Alex Rodriguez, and other talented youngsters in Robinson Cano and Melky Cabrera. Starting pitching was a huge need (sound familiar?), but they were just a few holes away from becoming a championship-level team. That 2013 team was just plain bad, and it is a testament to Joe Girardi and his managerial skills that the team extended their winning record streak. The other key difference between the two is that the Yankees got durable superstars in their prime in 2009 while the 2013-2014 class was… not that. CC was entering his age-28 season in 2009, Tex was 29, and though Burnett was 32, all had long track records of durability and success over the years. While Tanaka was a 25-year-old ace, the Yankees chose to let go of their 30 year-old prime superstar with a long track record of durability and terrific performances in Robby Cano. While he signed a huge contract with the Mariners that has not aged well in recent years, he averaged 141 games played with a 129 OPS+ and 4.7 WAR for the first 5 years of it. That is a solid return on investment. McCann and Ellsbury were entering their age-30 seasons in 2014, still theoretically in their primes, but catcher is a position that historically ages poorly and Ellsbury already had a lengthy injury history to that point. The lessons here: be honest and recognize where your team is in the competitive cycle. If a team is going to invest heavily in free agents, only do it for in their-prime superstars with few durability concerns.
The Yankees did something similar in 2017-2018. Coming off a season that saw them come one game shy of reaching the World Series with a young core of cheap players, the Yankees recognized that their window of contention was wide open. They were, like every other team, interested in the two-way phenom Shoehi Ohtani. After he spurned them for the Angels, the Yankees shifted their attention to Giancarlo Stanton. Stanton was coming off a monster age-27 season that saw him play in 159 games and hit 59 home runs. There were, however, a few concerns with him for potential acquiring teams. The first was his contract. With 10 years and $295 million left on it at that point, only a few teams could realistically afford Stanton. The second was injuries. While he had stayed healthy in 2017, he played a combined 193 games in 2015-2016 and missed time with injury in almost every year he had played in the big leagues. As has played out, investing that heavily in someone with a somewhat lengthy injury history is risky. The third is opportunity cost. Stanton obviously had a great 2017, but was he really the player the Yankees needed to put them over the top? They not only had outfield depth with Aaron Judge, Aaron Hicks, Clint Frazier, and Brett Gardner at the time, but with Judge and Gary Sanchez locked into their core, investing heavily in another strikeout-prone player, a corner outfielder to boot, seemed redundant. Similarly, those funds could have been earmarked for a pitcher like Yu Darvish or for the following year’s free agent class: a less injury-prone stud like Manny Machado and Bryce Harper or a starting pitcher like Patrick Corbin. While Stanton’s surface-level stats (38 homers, 100 RBI’s) looked solid in 2018, it can be argued that Daniel Descalso outhit him when accounting for the context of his at bats. Stanton is now a full-time DH and has 7 years and $208 million left on his contract. That contract is among the worst in the entire sport as it handicaps not only the Yankees’ financial flexibility but also their positional versatility with Stanton needing the full-time DH duties.
To be fair to the Yankees, it was hard to see this coming. While Stanton had an injury history, it was nothing like it has been the past few seasons. Also, other teams like the Giants, Cardinals, and Dodgers were interested in him. The Dodgers make for an interesting comparison, and get to the ideal of how a franchise with the financial reserves of the Yankees should operate. When the Dodgers new owners purchased the team in 2012, they recognized they had a lot to do to build a sustainable winner. They did not want to wait long, however, as like the Yankees, the Dodgers do not rebuild. They identified drafting and player development as the key to sustainable championship contention, but they recognized that it would take time to build up the farm system. To bide time, they spent heavily. From 2014-2017, they led the league in payroll each year as they built up one of the top farm systems and player development machines in the sport. When they recognized that their prospects like Corey Seager, Cody Bellinger, Walker Buehler, and others were ready for the big leagues, their payrolls began to decline because all of these young players were on very cheap contracts. Starting in 2018, with their payroll in much better shape, they began to look to acquiring a true superstar to put them over the top. Because they had such a great team in the present, with the 2017 and 2018 teams winning the NL pennant, they could afford to be disciplined and patient in their pursuit. Their biggest free agency signing from an outside organization was the 5 year, $60 million contract given to AJ Pollack in the 2018-2019 offseason. Many fans were angry when they either passed on or refused to meet the asking price for big names like Stanton, Nolan Arenado, Francisco Lindor, or Bryce Harper, but the team knew what it was doing. Only a select few players are deserving of the $300+ million dollar contracts. To meet this criteria, a player has to be young, durable and have a long history of great performance. The Yankees were similar to the Dodgers in 2017 and 2018, seeing their payrolls fall and their wins rise on the back of young talent. They were doing everything right, putting themselves in a position to be flexible enough to add a true top-5 star in the game if one were to become available. Unlike the Dodgers, however, the Yankees could not remain disciplined and traded for the first available big name in Stanton after losing out on Ohtani.
Like the Dodgers with their pitching, the Yankees have shown a terrific ability to develop hitters. This has been the primary reason that they have had this sustained run of success since 2017. In recent years, the likes of DJ LeMahieu, Luke Voit, and Gio Urshela (among many others) have had career years as soon as they joined the Yankees. Developing Aaron Judge, Gary Sanchez, Aaron Hicks, and others have been integral to their four consecutive playoff berths. Because of this, it makes less sense for the Yankees to spend heavily on middle class, or even upper-middle class, hitters. If fiscal responsibility is the goal, why spend big money on a decent player when you can replace that player very easily with your ability to draft and develop talent? Saving money in this way can frustrate fans in the moment, but they would be pleased when it opens the funds for when the next Mookie Betts becomes available. I am sure Dodgers fans were angry when they let Kenta Maeda and Hyun-Jin Ryu leave as free agents after 2019, but the team recognized that they could replace those guys with younger, cheaper pitchers that opened up the financial flexibility to trade for Mookie Betts. As an example, look no further than the vaunted free agent shortstop class. Carlos Correa, Javier Baez, Trevor Story and Corey Seager are all young and talented enough to be looking for a contract in the range of $200-$300 million. Are any of them worth that investment? Correa is injury-prone, Baez is streaky and inconsistent, and Story has a career OPS+ of just 113. While Seager missed most of 2018 with Tommy John surgery, he has been very durable otherwise and has a long track record of great performance (not to mention a proven postseason record). He is the only one deserving of a $300+ million contract, with Story close behind. Splurging for the wrong player(s) at the wrong time can have disastrous consequences, as the Yankees have learned with Stanton and Jacoby Ellsbury.
Giancarlo Stanton’s contract would be less of an issue if Yankees fans were confident that it would not stop the team from spending money to improve. IN addition, it is far from the only problem that the Yankees have had in recent years. The dearth of reliable starting pitching has been a bug on the Yankees record for some time. They have not shown the ability to get the most out of young-ish pitchers in the same way that they have for position players. The 2016 Cubs are an interesting model to follow. Like these Yankees, those Cubs had a terrific core of young hitters and had shown that they could draft and develop young position players (though this did not prove to be sustainable once they stopped drafting in the top 10 every year). The same could not be said for their pitching development, so they invested heavily in free agency to find the right starting pitching to supplement their lineup. They signed/traded for veterans Jon Lester, John Lackey, and Jason Hammel to complement Jake Arrieta and Kyle Hendricks and they were rewarded with a World Series victory and three consecutive NLCS appearances. In the case of the Yankees, they have their ace in Gerrit Cole, and he was certainly a player worth the massive contract they gave him. He could still be their Mookie Betts, the guy that takes them over the top. However, the key difference between the Yankees pursuit of Cole and the Dodgers with Betts is that the Yankees needed Gerrit Cole. In the three years preceding the Betts trade, the Dodgers won two consecutive pennants and had arguably one of the best teams of all time in the year that they did not win it. While the Yankees won 103 games without Cole in 2019, their lackluster 2020 demonstrated that he was a necessity. The fact that he was needed so badly speaks to the needs of the rotation. They need durable, experienced starting pitchers. In an ideal world, the Yankees would use their unmatched financial resources to not have to be picky in investing in hitters and pitchers. If, in reality, they are trying to avoid the luxury tax, relying on their ability to develop position players on the cheap and spending significantly on pitching would be the superior move.
What would this mean moving forward? This upcoming free agent class includes Max Scherzer, Justin Verlander, Clayton Kershaw, Zack Greinke, and Lance Lynn. They would all represent significant improvements to the Yankees rotation. While they are all over the age of 35, they may not command a long-term deals and might look for a shorter deal with a higher average salary. In regards to the trade deadline this year, it is difficult to ascertain what the Yankees plans are. They presumably passed on trading for Francisco Lindor and Carlos Carrasco, Yu Darvish, and Lance Lynn due to their desire to stay under the luxury tax threshold. Would they be willing to exceed the tax to make the necessary improvements to the roster during the season? They are currently close to $4 million shy of the threshold, so they may have to get rid of some salary if they want to add a big name. Some pitching targets that may be available include Kyle Hendricks of the Cubs, German Marquez of the Rockies, Luis Castillo of the Reds, and Kevin Gausman and Johnny Cueto of the Giants. Some real dark-horses would be pending free agents in Max Scherzer and Trevor Story. It would be a real shame if the Yankees let another year go by without doing all they can to compete for a World Series title.
The Yankees need to take a look no further than the last five World Series winners for proof that despite bullpens throwing more innings than ever before, starting pitching can still have an outsized impact in the playoffs. Dating back to 2016, all 10 World Series participants ranked in the top 8 in starting pitcher fWAR the year they won the pennant. While bullpens are more important than ever before, look no further than the 2019 Nationals for a model in how to maximize the value of starting pitchers in the playoffs. Instead of throwing simulated bullpens between starts, they routinely used their three horses (Max Scherzer, Stephen Strasburg, and Patrick Corbin) in important moments out of the pen and rode them all the way to the title. It would be nice if the Yankees used their financial clout to not worry about the luxury tax and spent whatever it takes to improve the team, but if they are going down this route, the way to do it is continue to develop position players on the cheap and invest heavily in starting pitching. This could be at the trade deadline, an offseason trade, or a free agent signing, but the Yankees have to do their best to maximize this window of contention.
The Yankees have certainly had a great run since 2017, but all the history books will remember is the postseason disappointment if the team can not get over the top. Those 2013-2019 Dodgers seasons look a lot better now in the wake of the 2020 title. With their unrivaled financial resources and position-player development machine, there is certainly a way to do what is necessary in the present to build a World Series team while ensuring that the window of contention stays open indefinitely.
The chase for 28 continues.
