Things didn’t go very well for the New York Yankees in the first weekend of the season, as the Bronx Bombers dropped three straight to the Tampa Bay Rays. When you think about the Yankees and the Rays, you can’t help but think about the massive discrepancy in payrolls between the two teams. The Yankees, unsurprisingly, lead the league with a payroll of $197,962,289; the Rays, on the other hand, have the sixth-lowest payroll at $64,173,500. Most shocking of all, the Rays are the better team, both now and for the foreseeable future.
So, what are the Yankees spending their money on?
Clearly, the Yankees aren’t the most fiscally responsible team. They owe $150 million to Alex Rodriguez, largely so he can break the all-time home run record and go into the Hall of Fame as a Yankee. They gave Rafael Soriano $35 million to be the heir apparent to Mariano Rivera, even though Rivera is still pitching at a high level. They’re paying AJ Burnett $11.5 million this year, and he’s not even on the team anymore. They already have $70 million on the books for 2016. The Yankees have made their bed, and they’ll continue to lie in it.
But the Yankees’ high payroll isn’t entirely their fault. Today’s contracts don’t just consist of a dollar amount and a number of years; players receive plenty of perks that come out of the team’s pocket and add to the payroll. For instance, Rodriguez’s deal includes a $30 million marketing deal that kicks in as he approaches Barry Bonds’ home run record. CC Sabathia gets a suite for road games. Then, there are the typical performance bonuses that come with successful seasons and long-term durability.
That durability is important because teams often pay millions of dollars in salary to players who aren’t even fit to compete. In 2011, the Yankees paid Pedro Feliciano $4 million to rehabilitate a rotator cuff injury, but he isn’t likely to pitch this year either—and that will cost the Yankees another $4 million. Insurance for baseball players isn’t the same as insurance for individuals; the club is responsible for on-field injuries as a worker’s compensation insurer. With the high cost of physical therapy and surgeries, not to mention conventional insurance for front office staff, medical care costs the Yankees millions of dollars each year.
Finally, the Yankees have expenses that don’t show up on the payroll sheet. The Yankees have an academy in the Dominican Republic dedicated to finding, signing and grooming undiscovered talent. The new CBA allows the Yankees to spend up to $2.9 million on international players, a limit the Yankees will likely meet in 2012. The Yankees must also sign their draft picks; while the Yankees have been accused of “cheaping” out on draft day, they’ve consistently spent above market value in order to bring in prospects. Lastly, there’s the dreaded luxury tax, to which the Yankees have paid an average of $20 million per year over the last decade.
So, what have the Yankees spent their money on? An organization that aims to balance the needs of top talent, the injury risks inherent in baseball, and the desire to acquire future stars. Not as easy as it looks, even with the highest payroll in the game.