So far this off-season, the Yankees have spent $438 million and guaranteed 29 contract years to 4 players, and STILL managed to lose their best player to FA. Quite impressive, considering that 2014 was set up as the year they were going to try and stay under the lux tax cap, in order to save $50 - $70 mil over the next 5 years.
Truly moronic behavior, given all the decisions they made after the 2012 season to set themselves up for staying under the cap.
It’s almost as if an adult and a 5 year old are alternating turns at a game of chess.
Here’s hoping Tanaka turns out to be the second coming of Hideki Irabu or Kei Ogawa.
The Steinbrenner Jrs. are more interested in money and less in baseball than their father. So yes, they make a bunch of penny-pinching decisions to try to get under the luxury tax threshold but ultimately couldn’t pull the trigger because they realized it’d hurt attendance and the bottom line too much.
I understand that, but Uday and Qusay are morons, and all they do is react to what just happened. Spending a half-billion , every 5 years, to win a championship is not the most efficient way of maximizing profit or even growing the value of the franchise. If the Yankees are continued to run this way for another 10 years, the franchise will be in trouble… they’re highly leveraged and depend upon increasing valuation to keep them viable. Of course if the Yankees ever do get towards financial collapse, their importance too MLB will get them a bailout from the other 29 teams, so I guess the in-bred Steinbrenner brothers don’t really have to worry 'bout a thing.
Maybe bad for baseball, but as a Red Sox fan, I’m pretty delighted that they’ve been run by the moronic Steinbrenner family for over 40 years. The only time they’ve sustained any quality was when Felonious George was suspended for a couple of years, in the early 90s, and Gene Michael was able to run things long enough to get a amazing yield out of the farm system (Rivera, Jeter, Williams, Pettitte… etc.) If George had been around he probably would have traded the lot of them for Albert Belle.
Stripping out the ridiculousness there, and there’s a lot of it: no, the Yankees are not running their team the most efficient way. But then, they don’t have to. They’re not the A’s. They’re a team in a huge market, they have a new stadium, and they own their own network. They could build a strong farm system and ease away from giving ridiculous contracts, but if they do those, it’ll be at the same time because they can’t afford to have a string of blah seasons in a row. That’ll require some real long-term thinking. When they let Cano walk, I thought perhaps they were taking a hard turn in that direction, but I guess not. In the real world, the team’s finances are never going to collapse unless the economics of baseball change radically, and if they do, a bunch of teams will be worse off than the Yankees.
In the long run, an incompetent running of baseball’s most important franchise costs the league and it’s fans. Lehman Bros and AIG and many of the other financial institutions didn’t think they had to run their businesses in an efficient manner.
The Yankees are highly leveraged… they borrowed to buy out their old cable contract to establish YES, they borrowed to finance the stadium. They continue to survive, and theoretically, thrive, because the valuation of the team continues to rise, but that’s no different then what happened with the Real Estate boom. Because the Yankees operate with so little innovation or planning, they neglect player drafting and development, and they then are forced to rely upon the FA market to keep their House of Cards still standing. And it inflates the process for all the other teams in MLB.
The only thing that keeps the Yankees afloat is MLBs “territorial rights.” If a well-financed group could buy the Tampa Bay Rays and then move them to Brooklyn or NJ or SouthEast Conn., then the Yankees would be screwed if they continued to operate with such a complete disregard of competence.
It really wouldn’t, though. Not in terms of threatening the existence of the team. If a Red Sox fan wants to live in a fantasy that the Yankees are on the verge of shutting down I should probably just let him and save myself the time, but it’s a very silly idea.
Wow, who said the Yankees are on the verge of shutting down? Oh, yeah, you just did. Now, if, by verge, you mean 8-12 years, then, maybe. Although, even then, the league would bail them out.
But the Yankees’ cannot sustain this way of doing business for much longer. They should have taken the hit this year, with ARod suspended, and concentrated on long term planning.
Right now their payroll is around $220 mil, and they’re going to be stuck at a 50% lux tax for the duration of the current CBA, at least. And I’m not even sure their team is better than the 85 win team of last year that over-achieved their Runs Scored/Allowed ratio. (Which projected to a 79-85 W-L record)
They’ve lost Cano, Rivera, Pettitte and Granderson.
They’ve gained Ellsbury, McCann, Tanaka and Beltran.
They have the oldest team in the league, with few, if any, replacements at the minor league level, and, outside of 1b, they have an infield worthy of a top AAA farm club.
I rate them the third best team in the division, and a 25% chance of making the playoffs.
You may not think the Yankees have to be competent, but for all the money they pissed away since 2000, how much success has it brought them on the field?
So anyone else think this has been a epically stupid off-season for the Yanks? Well I guess many do looking at the thread.
Tanaka is such a bad risk in my opinion. I hope he works out and I know he is only 25 but damn, too many years and too much money. I don’t like any of the signings but McCann’s is the only one that seems within the realm of reasonable.
All that said, I think Bellhorn, you’re wrong about the Yanks finances. Can you back up what you’re saying with some actual cites? To the best of my knowledge the Yanks have been making money and the YESnetwork has more than paid for itself.
I wouldn’t say epically stupid, but it’s been confused. They should have decided what they were going to do in advance and stuck to it. So I still think it would have been smarter to spend some more money on Cano - not $240 million over 10 years, but say $200 million over seven - instead of bringing in Ellsbury to as a quasi-Cano replacement since he isn’t as good as costs almost as much as Cano would have.
The Yankees now own 27% of the YES network. They keep on selling off more and more to Fox for big bucks so the the inbred Steinbrenners can live well.
In spite of their mammoth revenues, the Yankees had operating losses averaging $20-$50 mil per year, before the new stadium was completed in 2009. Since then, they’ve had miniscule operating profits ($1.4 mil, last year) and that was before the attendance drop in 2013, and the spending spree this offseason. So, new stadium, big TV deal, and next to nothing in operating profits.
But, just like real estate in good times, the valuation of the Yankees keeps on rising. Forbes, in it’s 2013 estimate, valued the Yankees at $2.3 billion, with exactly half of that valuation attributed to the value of the NY market, which is currently protected by MLB.
Owning the Yankees is like owning a high-rise building in Manhattan bordering Central Park, but where you’re essentially breaking even on rents, although the valuation keeps on rising double digits every year. And to keep that rise in valuation, you keep on adding capital improvements (luxury balconies, parking garage, gymnasium in basement…) and then raising the rents to cover the costs of the improvements. When you need cash, you sell of large percentages of the parking garage, and the gym. And you hope that the real estate boom keeps on going, because you aren’t making money off the rents.
Here’s Forbes’ 2013 estimate, and since the Yankees are privately held, it is just that, an estimate.
Tanaka is a gamble… that being said, he’s only 25, so he IS the Yankee’s youth movement. But he’s projected to be a #3 pitcher, with a high-side of being a #2, so at his best, he might be something close to prime-time Andy Pettitte, who, for a while was the best #2 in the AL. Pettitte only made $140 mil in his entire career. Tanaka will make $155 mill over 7 years, PLUS the $20 mil posting fee, PLUS he’ll cost the Yankees $50-$70 mil luxury taxes, now that the Yankees are stuck in salary cap hell. That’s close to a quarter billion dollars that the Yankees are spending in order to forgo an attendance drop in 2014. Forbes lists their gate receipts for 2012 at $295 mil, so I have no idea how the Tanaka signing makes any kind of financial sense. And since their YES equity is down to 27%, most of their tv rights are fixed and not as volatile as they were 10 years ago.
It’s funny that a Red Sox fan knows more about the Yankees finances than I do, a lifelong fan. It’s not my money, so what do I care? I’d find it greatly entertaining if they went through a period of austerity and had to play a bunch of rookies. But I really doubt that’s going to happen.
The Tanaka signing is looney tunes, but along with Ellsbury, Beltran and McCann, they will a lot more entertaining than last year’s team. Age is definitely an issue among the position players. On the other hand, with Tanaka, Nova, Pineda, Robertson, Nuno, Kelley, Campos, Claiborne, Phelps, Betances and Banuelos, they have a good number of young and inexpensive (minus Tanaka) pitching.
It’s an important part of being a Red Sox fan. I like the fact that the Sox have been run well most of the time under the ownership of J Henry & Co., and that when they have screwed up, they’re quick to correct the way they operate the club. But, if the Yankees weren’t run so poorly, there’s still no way the Sox could have won 3 World Championships in 10 years.
I can’t believe how little resources the Yankees have devoted to scouting, drafting, signing and player development over the last 15 years. They reaped such great benefits from the Jeter/Rivera/Pettitte/Posada/Williams core, and yet, since the mid-90s that part of running a team seems to be an afterthought. The Yankees have the resources to both sign free agents AND have a strong farm system, particularly with the rising costs of FA, and the diminishing return.
I guess the Yankees are just too lazy, too stupid or too reactive to even bother. And as a Sox fan, I’m thankful for that.
If that’s how high the bar is set, be careful not to stub your toe getting over it.