The Yankees Get Budget Conscious

New York Yankees co-owner Hal Steinbrenner stopped to speak with reporters this morning and ended up delivering a sermon on fiscal responsibility and how it pertains to baseball. While it may seem strange for the owner of a team that’s spent more on payroll than any other franchise in the sport for the past fourteen seasons to talk about budget consciousness, Steinbrenner is very aware of the increased luxury tax repercussions of the new collective bargaining agreement.

According to Steinbrenner:

Plenty of teams win without the kind of payrolls we have. You can field every bit as good a team with young talent.

Indeed you can. Or, perhaps more accurately, you could.

As MLB attempts to bridge the supposed competitive parity gap that exists between small and big market teams by handing out extra draft picks to franchises that don’t earn as much revenue as others, the new collective bargaining agreement has severely limited the ability of teams to invest outrageous fortunes in young talent by implementing caps on draft spending and signing bonuses for International free agents.

So, when Steinbrenner speaks of teams that have been able to win without the type of payroll structure that the Yankees employ, he’s most likely thinking of the Tampa Bay Rays and their stocking of draft picks or anticipating the results of the Texas Rangers investment in Central American prospects. Unfortunately, the window for taking advantage of such opportunities is either closing or already shut.

The irony is that in the owners’ attempts to curb spending, they’ve limited the one area which likely offered the biggest bang for their buck. It surprises me that the Yankees wouldn’t have wanted to avoid massive luxury tax penalties earlier. With their revenues, they could have afforded to make a far more aggressive push at the draft, and in the International free agent market, without it raising their payroll or the tax that they pay.

Under the new collective bargaining agreement such a strategy seems impossible. However, there are 30 front offices in baseball filled with rather intelligent people. It will be interesting to see how franchises attempt to exploit the rules and the direction that the majority of teams take under the new guidelines.

In other words, perhaps Mr. Steinbrenner has something up his sleeve to maintain the Yankees level of success without breaking the bank.

Comments (6)

  1. The Pineda trade is a concrete example of how the Yankees are changing their player acquisition strategy. Ownership had plenty of money to throw at FA’s like Wilson, Darvish or Buerhle, but they chose to go young and cheap with Pineda. Kuroda for one year is also a reasonable contract.

    It will be interesting to watch how the Yankees approach the 2014 season as they have Cano to worry about. He’s a Boras client and typically, he advises the player to test the FA market. We will likely see more A-Rod and CC like shenanigans ensue once Cano’s contract is due. And then we will see the Yankees pay big dollars to keep him at 2B. This is why they need to pare down the payroll by 2014-2015, as they will still have massive deals for A-Rod, Tex and CC on the books.

    Ellsbury also is a Boras client. It will be fun times in Boston when he decides to test the FA market.

    • I know what you’re saying, but I’d be more convinced of that strategy working A) If the Yankees didn’t have to give up young and controllable talent to get the same in return. I don’t think we’ll see a team built like the Rays ever again; or B) Regional TV contracts paying for enormous contracts that the Yankees pass on to maintain raising costs of free agents.

      • Some are reporting that the Phillies, thanks to the Halladay, Howard, Lee, Utley, Rollins & Papelbon (giggle) money, may not be in a position to sign Cole Hamels. If he tests the market, how do you think the Yankees will react? Will they stay focused and stick to the script or will they do like Illitch and blow a huge amount on an ace pitcher?

        Sometimes, rational thought goes out the door when ownership decides to run things.

  2. Good. Seems the only true advantage any team could have any more IS in the FA market, and just accepting the luxury taxes as a cost of doing business. It seems like nobody is prepared to actually go that route, and so I expect some serious competitve rebalnace to occur.

    I see some serious vulnerabilities in the Yankees in the very short term, starting in 2013 and going to 2014. They’ve got so much money tied up already, they’re going to have field at least half replacement players in 2013 and 2014 if they hope to get under the cap.

  3. For example, in 2014, they’ve got $80 million tied up in JUST:


    Then they need to extend Cano and Grandy, I think a low estimate is $30 million for the two of them combined. So they need to have a 2-5 SP, a bullpen, 4 starting position players and a bench…..for, what, $80 million?

    They certainly won’t be signing any superstars for the next couple years. I see a big window for us to gain some ground in the short term.

    • $80 Million still buys you the entire Jays roster and that of a bunch of other teams as well. I agree that we will have to sign some big free agents to compete but the Yankees should still have a great team.

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