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OUCH – Yankees Bringing In Top Dollars And Spending Less and Less on Players

PINSTRIPE ALLEY has a report that shines the light on the Yankees’ austerity approach and raises a host of questions about the direction of this franchise:

Putting the Yankees’ financial austerity in context

I encourage all readers to read the entire article linked above, but here are some important facts as reported therein:

“In 2004, the club spent a whopping 84.3% of its estimated $264 million revenue on player salaries, which totaled $222.6 million.”

“Yankees revenue has increased by an average of five percent per year since the new stadium opened, so using that number we could estimate that the Yankees took in $650 million in 2018. The $193 million spent on payroll represents only $29.7% of that figure. This means that the Yankees quite possibly spent the lowest percentage of revenue on payroll among the 30 teams.”

“A small part of the fan base has bought into this austerity program, but it’s yet to be seen whether the club can sway the remainder or is willing to risk alienating them. Hal Steinbrenner would do well to remember a truism his father knew and honored: Yankees fans don’t come out to see the team play, we come to see them win.” (emphasis mine)

“The Yankees used to be the gold standard in professional sports, but are now perennial runners-up in a five-team division.”

Many of the ideas above have been written on these pages as well. In short, as reported here, the Yankees, baseball’s most valuable franchise, with a net worth of four billion dollars (which is more than a billion dollars more than baseball’s number two team, the Los Angeles Dodgers) have the financial wherewithal to sign Bryce Harper and Manny Machado. They also have the financial might to have also brought in Patrick Corbin. In short, they have the resources to acquire any player they need or desire.

In 2004, the Yankees spent 84.3% of its revenue on the players. If they spend just half of that percentage amount in 2019 (42%), they would have $273,000,000.00 to spend (assuming their revenue is $650,000,000 – which is a conservative estimate) on players. Again, from the article, it seems that the expectation is for teams to spend closer to 50% of their revenue on player salaries. That $273 million number is below the 50% guidepost. (50% of Yankees revenue would bring their payroll to $325,000,000.)

The Yankees are not financially strapped. They can afford big salaries today and into the future.

For the last many years, Yankees fans have seen the team pass on one great free agent after the next and also most of the big name free agent international stars.

Rather than hearing about winning World Series’, Yankees fans hear more about the luxury tax that the owners wish to stay below. When the Yankees stay below that number, the benefit does impact the fans. Yankee Stadium, even during these “austerity years” remains one of the most expensive venues to watch a ballgame. When the Yankees save money, the owners, not the fans, benefit. Costs at Yankee Stadium continue to rise.

Because of all of this, I pose same question that Pinstripe Alley is asking – “How much longer will Yankees fans accept this approach?”

As I have also shared previously, the Yankees sell their fans on the franchise’s history – a history marked by the team’s desire to win, and spend whatever is necessary to attain that goal. That is the Yankees’ brand. Or, at least it was. The Yankees never used to let big contracts, either at the front or the back-end negatively impact on their decisions to win that year. The Yankees want, and expect, their fans to continue to invest in the team and it’s history. These numbers seem to indicate that the team has not been willing to do the same.

What happens over the next few weeks specifically in regards to Bryce Harper and Manny Machado and also in regard to the way the rest of the 2019 team is built will determine a great deal about the direction that this franchise truly wishes to take.

Are the Yankees more concerned about saving money or winning?

It’s time they let us know their true intentions.

#Finances #LuxuryTax #Payroll

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