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The Yankees' dwindling advantage as a financial powerhouse

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Will the Yankees adjust to the present and the future, or will they fall further behind?


In the past, the Yankees were able to buy whatever player they wanted, whenever they wanted to do it. Times have changed and so have their available outlets in which to spend that money without repercussion. With changing times, you either move forward quickly or get left behind to play catch up. There have been multiple changes throughout the game that have impacted the Yankee’s competitive advantage.

Free Agency

For many years, the Yankees flexed their financial muscle at will when they wanted players. Whether it was Babe Ruth, Dave Winfield, or CC Sabathia, they would blow other teams out of the water. The team’s modus operandi was to wait for an opposing team’s best player to become too expensive and hit free agency, where they then could sign them to a contract worth the most money. However, the market has shifted and now teams like the Tampa Bay Rays are signing their younger players to long-term deals, buying out their arbitration and prime years of free agency. The other side of the coin is the Yankees' handling of their own players under the archaic policy of not extending them before their contracts are up. If only they would have negotiated with Robinson Cano or David Robertson, maybe neither would have reached free agency during their prime. Moving ahead, they must take chances like they did with Brett Gardner and not let core players get to free agency.

International Free Agency

The team has approached the international free agent market similar to how they have approached regular free agency. They find a player that they like and either wait for them to be posted (overseas) or become international free agents where they just outspend everyone else. In recent years, the Yankees have had competition in this arena from the Cubs, Rangers and Red Sox. This season the front office took a page out of the their playbook and spent $12 million on the first day of the international free agency period and signed Masahiro Tanaka to a seven-year, $155 million dollar deal in the offseason. However, the game is about to change as the Yankees now face spending restrictions for the next two seasons and rumors are swirling of an international free agency draft coming within the next couple of seasons as well.  Solid scouting and finding "diamonds in the rough," will be the key to future of the international market.

TV Contracts

In 2002, the Yankees launched their own regional sports network, known as the YES Network. In 2012, the team sold 49 percent of its stake in the network to News Corp, parent company of Fox Sports, for a whopping $1.5 billion dollars. Upon finishing the sale, the Yankees also signed a 30-year television contract with YES which will be worth $367 million per year by 2042. Unfortunately, this advantage has begun to disappear as well due to other networks including Fox Sports signing agreements with other MLB teams.

Revenue Sharing

Since its inception in 2003, the Yankees have paid the luxury tax every year. This season was no different as the team will be taxed at a rate of 50 percent for every dollar spent on contracts over the $189 million payroll threshold. With this money now being distributed to smaller market clubs, it has allowed other teams to not only resign their talent but to sign other players as well. Unfortunately, Bud Selig has allowed revenue sharing become a source of profit and subsidization for teams like the Rays, Astros and Marlins.

What’s Left

The last areas available for the team to exploit are in player development, coaching and scouting. Hal Steinbrenner and the front office should leave no stone unturned in identifying and signing the best people to grow the organization. Bringing in someone such as Omar Minaya would be a huge step in the right direction for the franchise. It shouldn’t stop there, however, as teams continue to make improvements at a rapid pace.

The Yankees will always be financial powerhouse as long as a Steinbrenner is at the helm, because it's part of the team's DNA. I remain hopeful that they will leverage their financial strengths in a much more efficient manner.  It appears that ownership recognizes their weaknesses and is finally starting to address them. We can all agree that they should’ve recognized it sooner, but change is still better late than never. Now we get to sit back and watch and see if these changes will lead to a return to playoff glory or further disappointment.