Earlier this week, I summarized the Yankees recent history of reinvesting payroll into revenue. If you haven’t read that yet, you should check it out before continuing this piece. The gist is that over time, especially in the most recent five seasons prior to the pandemic, they have very consciously kept payroll stagnant while revenues have exploded.
You could spin that as the team not doing the most possible to put a dominant roster on the field. The New York Yankees main competitive advantage is their ability to spend above and beyond any other franchise because of revenue they bring in. I started by comparing the team to its previous self because it’s important to understand the gravity of that competitive advantage.
When moving towards comparing the Yankees to the rest of the league, you’ll most likely become even more frustrated. Why? Well the most recent iterations of Hal Steinbrenner’s Yankees are not flexing the might that is their pocket. Let’s start with their immediate competitors in the American League East. As you know, they share a division with extremely low spending teams in the Rays and Orioles, so the expectation is that they are at least reinvesting more than those teams specifically.
It’s abundantly clear that Hal has become more conscious of his team’s payroll since the CBT threshold has entered the fold. In 2018, the Yankees ranked dead last in the division when it comes to reinvesting revenue into payroll. In their mini-rebuild years when the roster was mainly constructed of the Baby Bombers, the team didn’t necessarily have prime aged players who were imported via free agency to support the extremely talented young core.
This could be explained by the Yankees not expecting to be such a great team so quickly after selling off a few players, but once it happened, I’m not sure there is a valid excuse. The team had the opportunity to add another star or two to the fold and they had the “financial flexibility” to do so. I know, I know — they added Giancarlo Stanton, but truly, he doesn’t make all that much money from the Yankees in the grand scheme of things. They could have added Stanton and more while still being the most profitable team in the league.
Prepare yourself for a long table of data. For the purpose of not having too many lines or dots on a chart, I ask you to scroll down this table which is in ascending order and find your beloved New York Yankees. This data is from the 2017-2019 seasons. It won’t take you long to realize that all three of those Yankees seasons are in the bottom third of payroll/revenue, including two in the bottom 11. This is all in terms of percentages.
League Wide Payroll/Revenue
Like I said, Gerrit Cole came a bit too late. While the team was raking in the cash and jumping through hoops to not pay too much luxury tax, they were among the league’s losers in reinvesting revenue into the team. It’s a significant opportunity lost! The trend continued into this offseason too. Prior to the free agent frenzy, reports that the Yankees were already out on Correa and Seager were mind boggling. Yes, they were affected by the pandemic more than any other team. Even so, they’re going to be fine! One season will not make the club bankrupt!
I present the following table not to defend the club’s habits, but more to show you what is in store for this offseason and possibly more if Hal is not content with the revenue stream in the immediate future. Like the previous table, this is in terms of percentages and revenue and payroll are in terms of millions. Also, the revenue data is from Forbes while the payroll data is from Cot’s Baseball Contracts.
|2020||116||54.6||Blue Jays||AL East||47.07|
|2020||124||52.6||White Sox||AL Central||42.42|
|2020||152||64.3||Red Sox||AL East||42.3|
This team was significantly affected by lost revenue relative to the rest of the league in 2020. In previous seasons, the team ended up with hundreds of millions in surplus when comparing revenue and payroll. In 2020, it was in the tens of millions. It’s not a good reason to cry poor, but it is the reason why we should not expect the team to go crazy in free agency this year, next year, or possibly further in the future. I really don’t know how long.
It’s disappointing. This team had such a strong core. The additions of Gerrit Cole and Giancarlo Stanton were incredibly exciting, but there could have been more support. What looked like one of the best rosters in the league should have been separated from the rest of the pack. Technically there is still time in this offseason if the owners ever get their act together, but that’s high hopes in itself. It might take a crazy change of mind for Hal to suddenly be okay with a larger payroll, but crazier things have happened, right?