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Hal Steinbrenner and the Yankees strain credulity

The Yankees owner’s statements defending the team’s supposed financial restraint were of little substance.

Cleveland Indians v New York Yankees

Last week, Yankees owner and managing general partner Hal Steinbrenner spoke at the MLB owners meetings about the team’s spending and its offseason. You’ve probably heard the quotes by now, but in case you missed them, here’s a sampling of the most important ground Steinbrenner tread on Thursday:

“If there’s a narrative that we’re not spending money and being cheap, it’s just false. I mean, we’re well above $200 million [in payroll] -- we’re at $220 [million] right now -- and we’re well above where we were last year.”

“With no discussion of our costs, that’s always the problem. I hear everything about our revenues, I hear nothing about our cost. I hear nothing about the gargantuan debt service payment that we have to pay every year [on bonds that financed new Yankee Stadium] ... not to mention revenue sharing.

Most of what Steinbrenner says here is not blatantly false. He’s right there exist pervasive narratives that the team has been overly stingy, even cheap this winter. He’s also correct that, as of right now, the team’s payroll is above where it was last year. Even more, the team surely pays a large chunk into MLB’s revenue-sharing system, and while Steinbrenner failed to prove exactly what amount of debt the Yankees must service every year, it’s likely the team is paying quite a bit for its new stadium.

Steinbrenner is asking you to take everything he said on its face. He’s asking you not to put his comments into context, or to even wonder whether they stand up to any sort of scrutiny. Just because his statements aren’t overtly false doesn’t mean they represent reality. That Steinbrenner and the Yankees want us to pretend as though they do strains credulity.

The biggest black box we have here is the Yankees’ debt. The Yankees financed $1.2 billion (to go along with over $1 billion in public subsidies) to build Yankee Stadium. Steinbrenner stated that the team’s annual debt payments amount to about $90 million, though he doesn’t offer any evidence as to what the payment actually is, and the New York Post reported back in 2016 that the team’s annual debt payment in 2018 would amount to $76 million.

Let’s simply accept the figure Steinbrenner proposes here and assume the Yankees are paying down their debt at $90 million a year. Steinbrenner asserts that this debt figure, plus the team’s significant revenue-sharing contributions, as well as its $200+ million payroll, provide sufficient confirmation that the team has not behaved in a miserly fashion.

It’s also difficult to pin down just how much the team pays in revenue sharing. Back in 2016 the Yankees reportedly made a net payment of $90 million into the system. However, we know that the last CBA, which went into effect before the 2017 season, should have decreased the amount the team must pay, as the new agreement changed the way MLB calculated the extent to which big market teams are hurt by revenue sharing. FanGraphs’ Craig Edwards wrote a detailed explanation of how the new CBA benefits big market teams that pay revenue sharing here.

Again, let’s make the more generous assumption here, and say that the Yankees are paying just as much in revenue sharing now as they were three years ago, in spite of a more favorable CBA. Even in making the most generous assumptions regarding both the Yankees’ debt and revenue-sharing payments, Steinbrenner’s assertions come across as misleading at best and flatly wrong at worst.

Consider that in 2004, the Yankees generated a total of $264 million in revenue. According to the New York Times, the team made a $63-million revenue-sharing payment that year. The newest Yankee Stadium had not been built, so there was no debt to finance. The team also ran a $188 million in player payroll and made $25 million in luxury-tax payments, for a total of $213 million spent on players.

Per Forbes, the Yankees posted revenues of $619 million in 2018. By Cot’s Contracts currently listed CBT payroll of $213 million for the Yankees, the team projects to pay $215 million in player salary this year. Essentially, the team’s revenues have increased by some $350 million since 2004, while the amount spent on revenue sharing and debt financing combined, under our most liberal assumptions, has increased by about $120 million. Money spent on players has remained level over the past 15 years.

The Yankees’ ownership, by the looks of it, believes we should view that increase in debt and revenue-sharing payments as more than enough to offset that increase in revenue. Unless the amount the Yankees have spent on stadium and front office staff, along with other miscellaneous costs, has increased by hundreds of millions of dollars in that span, Steinbrenner’s comments come up empty.

All of this could become moot if, instead of making mostly empty statements to the media, the Yankees actually showed us their books and displayed exactly what the team makes and pays. They will not do so, as the status quo over the past several decades has remained constant; we get to know every minute detail about what the players get paid, and nothing about what ownership takes in.

The Yankees have a great baseball team, and I want to focus as much as anyone on the tremendous players they will trot out out in a matter of weeks. But when Steinbrenner and the Yankees make public statements that assume the gullibility of their own fans, it distracts from the enticing product they’ve put on the field. It puts into question how much better that product could be with proper investment.