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Cost and Value: Salaries and Future Value (Part 2 of 3)

Part 1

One of the things that has impressed me about the Yankees' recent contracts is their refusal to backload.

'10 '11 '12 '13 '14 '15 '16 '17
Posada 13.1 13.1
Tex 20 22.5 22.5 22.5 22.5 22.5 22.5
Cano 9 10 14+ 15+
Jeter 21
Arod 32 31 29 28 25 21 20 20
6.75 9
Sabathia 23 23* 23 23 23 23
Burnett 16.5 16.5 16.5 16.5
Rivera 15
Marte 4 4 4+
Igawa 4 4

*Opt out
+Club option

Over the last five years the Yanks' Opening Day payroll has averaged nearly exactly 200M.  Let's assume that number will hold constant over the next 5 years as Hank and Hal pocket a larger percentage of the revenue than George ever did, but the expansion of YES and the additional revenue of New Yankee Stadium's offseason events (football, boxing, hockey) balance that spreadsheet.

The Yanks have $160M (80%) of their 2010 payroll already locked in.  And a similar amount is settled in 2011 (Assuming Jeter returns for $16M/5Y, more than Posada or Rivera got for their twilight contract, and Mo begins to go year to year).

After the 2011 season, the Yankees will have a chance to retool their payroll, but like they had last offseason when the contracts of Giambi, Mussina and Pavano all came off the books.  Baring injury, CC is a lock to opt out because at least one of Halladay, Beckett, or Lee will sign a free agent deal eclipsing CC's.

When you hear Cash talk this offseason about getting young, it not just because younger players tend to perform better than old ones.  Younger means cheaper.

Here's a look at the Yanks by position, measured in dollars per win (WARP3):

$3.3 $3.8 $1.0 $5.2 $3.3 $2.7 $0.2 $1.4 $4.8 $2.2 $4.1 $3.4 $0.3 $2.0

A couple thoughts:

  1. Cervelli produced a .7 WARP3 in his limited playing time, but because he made league minimum, that significantly brought up the expensive non-production of Jose Molina.
  2. No real surprise that the most cost efficient position was centerfield.
  3. Since CC only made $14M this season, his value dwarfs AJ and Andy, but if he repeats the same performance next year his value falls to $3.5M.
  4. Despite Joba's struggles, he was still the most cost effective starter.  I hope this underscores the value of cheap young starters.  It's the reason that Cash hesitated to send Joba and Phil to the Twins for Santana in 2007, and it's the reason he should think long and hard about a similar deal this offseason.
  5. You want to know how incredible Mariano Rivera is?  He makes his $15M deal look like a bargin.  The actual number was $1.9736M/win.

Another way for the Yanks to approach their offseason plans is simply to ask, how can we get more efficient production from our open positions?  I love Matsui, but I'm sure we can find a DH capable of producing on the scale of $2.5M/win.  Damon looks like a valuable player after his last season, but it's also his first as a Yank when he was largely injury free.

The real thesis of Moneyball was find ways to exploit inefficiencies in the market.  An expensive DH in antithetical to that- especially if the other players around the diamond need to use that 'half day' to maintain the level of their productivity.

We might complain mightily about a LF/CF combo of Cabrera/Gardner, but if those resources are reallocated to a position of greater need (starting pitching), it might be a worthwhile offensive downgrade.

Tomorrow: Assessing the productivity of the 40-man roster.