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Are the Yankees reinvesting enough revenue into team payroll?

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While payroll has stagnated, the Yankees revenue has exploded.

New York Yankees Introduce Masahiro Tanaka

The New York Yankees are one of the highest spending teams in Major League Baseball. There are multiple players on the roster who earn in excess of $20 million per season. The highest paid player is Gerrit Cole, making $36 million per season. Following him is Giancarlo Stanton. Thanks to money sent by the Marlins in the trade to acquire Stanton, they technically only pay him $22 million per season. No other players make north of $20 million, including the great Aaron Judge.

Despite their spending relative to the rest of the league in terms of total dollars, they haven’t been able to win a World Series in recent years. In a vacuum, it looks like the team has done all it can! They have two of the longest contracts in the game on their payroll and gave out the largest pitcher contract ever. However, I, along with surely many other fans, am not so convinced that the team is doing everything they can. By that I mean, they should be investing even more into their payroll.

This offseason is a perfect example of a situation when there is a blatant need at shortstop that could have been (and could still be) filled by one the game’s best. Yes, that may take their payroll around $250 million with Aaron Judge set to be a free agent after the 2022 season, but the thing is, they have done it before when they have made less money!

What exactly do I mean by that? Take a look at the table below. It shows you how much revenue the team has made each season from 2001-2019, how much the team has spent on payroll from 2001-2019, and each season’s payroll as a percentage of the team’s revenue. Go through each season in chronological order. Do you see a trend?

Yankees Payroll and Revenue

Year Revenue Payroll Reinvestment
Year Revenue Payroll Reinvestment
2001 215 114.5 53.26
2002 223 133.4 59.82
2003 238 180.3 75.76
2004 264 187.9 71.17
2005 277 207.2 74.80
2006 302 207.5 68.71
2007 327 218.3 66.76
2008 375 222.5 59.33
2009 441 220 49.89
2010 427 215.1 50.37
2011 439 216 49.20
2012 471 223.3 47.41
2013 461 237 51.41
2014 508 218.5 43.01
2015 516 223.6 43.33
2016 526 224.5 42.68
2017 526 208.4 39.62
2018 619 182.7 29.52
2019 683 225.9 33.07

Throughout the last two decades, the decision makers for the Yankees have made a conscious effort to keep payroll relatively constant even as they have tripled their revenue from 2001 to 2019. Let’s take 2004, the first season the Yankees took on a mega contract (Alex Rodriguez). They made $277 million and the payroll was $187.9 million. Over 70 percent of the team’s revenue was “reinvested” back into the club.

If we fast forward to 2019, another decently successful season for the Yankees, you can see $683 million in revenue and $225.9 million in payroll. Oooffff. That percentage reinvestment slashes all the way down to 33 percent. It was even worse in 2018 at 29.5 percent. That makes you think: what if they even jumped that number to 50 percent? Well, then they would have had a payroll of over $340 million. With that flexibility, there is significant room for roster improvement.

That’s the issue! I know there are several other factors that have to be considered, but this quick snapshot is a great representation of why the players union is so angry and why Yankee fans, including myself, are frustrated with Hal Steinbrenner’s leadership of this franchise. He doesn’t even need to go back to his father’s spending habits from the mid-2000s. Even reaching the halfway point between today and then would give them space to improve their roster with little-to-no limitations.

I looked into the same numbers for the league on the whole and discovered the Yankees are doing worse than the league on average. These self-imposed limitations have made them miss out on significantly improving the roster in Baby Bomber era. In 2009, when the Yankees most recently won the World Series, the percentage was at just about 50 percent.

That’s fair isn’t it? They’re the New York Yankees! This is their biggest competitive advantage. I know, they’d have to spend some extra millions because of the luxury tax, but they would still be better off than they were in the mid-2000s. The club has reinvested such a smaller proportion of their revenues that it’s clear there’s room for Steinbrenner to up payroll. It’s hard to see a good reason why the wallets shouldn’t be open for Brian Cashman to spend to improve the club.