The Yankees have to be willing to spend to compete in their division

The Yankees are in a difficult position in the American League East, where 92 wins is a middling result. Next season should be equally difficult to win the division, if not more so, with the Toronto Blue Jays quite likely to improve.

Logically, the Yankees will have to to get better to avoid the Wild Card Game, and teams that get better accomplish this goal by either promoting good young players from their farm system or by signing or trading for better players. Furthermore, if Keith Law’s farm system rankings (subscription required) are correct, the Yankees might need to drop their aversion to spending big in free agency if they want to keep up with the Rays, Red Sox, and Blue Jays.

Law has the Rays and Blue Jays farm systems ranked fourth and fifth in MLB, respectively, with the Baltimore Orioles in 10th place and the Red Sox 20th. The Yankees are near the bottom of baseball, ranked 22nd. I’ll discount the Orioles for now, since they still appear years away from being even competitive. However, the other teams’ successes — even if only marginal in Boston’s case — spell bad news for New York.

The Rays’ pipeline of homegrown players has led to their recent success despite tons of disadvantages, and they aren’t letting up any time soon. Wander Franco and Shane Baz could be thorns in the Yankees sides for years. The Blue Jays have position player prospects to supplant their offensive core, which is still quite young. And the Red Sox nabbed possibly the best player in the 2021 draft in Marcelo Mayer despite picking fourth.

The Yankees have an eye-popping prospect of their own in Anthony Volpe, but one star doesn’t make a system, and while Oswald Peraza has his fans, the Yankees’ other top prospects are generally years away from potentially debuting. If Volpe were to struggle severely, get injured, or be sent away in a trade (every team the Yankees negotiate with is sure to at least inquire about him), the system very quickly looks a lot worse.

Law’s rankings aren’t gospel, obviously. Other evaluators see the division differently, and while an outlier, one even had New York in the top 10. Nonetheless, if the other competitors in the division already seem to have more well-rounded rosters than the Yankees, then an influx of quality talent coming up from the minors is bad news for their playoff chances. If these systems develop as Law expects, then the Yankees’ front office might have no choice but to shed their spending concerns in the future and be more willing to go after stars in free agency.

The Yankees have spent, of course, and the signings of Gerrit Cole and DJ LeMahieu were significant transactions. When the lockout ends, they might make another Cole-level splash by signing Carlos Correa. Jon Heyman has said the front office is willing to exceed the luxury tax threshold if it gets them a star shortstop.

Still, the front office has been uncharacteristically frugal for years now. There’s a fine line between wanting to avoid the ends of the Alex Rodriguez and Mark Teixeira contracts and refusing to engage with big-time free agents who can unquestionably play a vital role in a championship window. There has to be some sort of medium to pursue, especially in the competitive landscape of their division. For example, I still haven’t been able to figure out why the Yankees didn’t get involved in contract negotiations with Max Scherzer once it became clear that he would be willing to play in New York after all, for the right price.

As it stands now, to win the AL East, a team has to essentially be the best in the entire league. If the prospects in the division pan out as expected in the near-term, the Yankees might have to spend more than they have been if they want to get there.