The Red Sox have acquired quite a few players this off season. They brought in Carl Crawford, Bobby Jenks and Adrian Gonzalez, and didn’t shed all that much in payroll. The Yankees, on the other hand, have both freed up some payroll space and declined to bring in any big name free agents.
According to WEEI,com, the Red Sox are looking at a payroll of about $155 million next year. However, their luxury tax hit is a lot higher, since the Carl Crawford, Josh Beckett, and other deals are backloaded, and the luxury tax is calculated based on AAV rather than yearly salary. According to that WEEI link, the Red Sox have wracked up an estimated (after arbitration) of $182.33 million. That number could climb to just about $200 million if they lock up Adrian Gonzalez to a big deal.
The Yankees entered the off season with $144 million under contract. I’m not too sure what it is in terms of AAV, but I don’t think there is much of a difference, as Arod, CC, and Teixeira are a the peak of their contracts. Derek Jeter resigned for an AAV of $18.9 million and Mariano for $15 million. If you add in Martin’s 4 million dollars, we’re looking at about $190 million. If the Yankees do not bring in any more expensive players, the team will probably open with a payroll less than $200 million, and likewise an AAV luxury tax hit below that threshold.
So, there are two bits of news. First off, the Yankees do not have the financial advantage over the Red Sox that they used to have. But second, there is a pretty decent chance that the Red Sox start 2010, and possibly even end it, with a higher luxury tax hit than the Yankees. The next time your favorite annoying Red Sox fan uses the old, “The Yankees buy their championships” line, you can now point this out.
The second bit of news is that the Steinbrenners should probably be able to increase the team’s payroll by quite a bit. According to Forbes, the Yankees are valuable at $1.6 billion, roughly double the value of the second-place Red Sox. Assume that the Yankees had about $240 million budgeted for payroll and luxury tax in the next few years. Very quickly, the Red Sox are going to be near that $180 million payroll mark, especially as the luxury tax hits them. While its not reasonable for them to have double the payroll of the Red Sox, they should be able to top them by more than the 30% they are currently topping them by. Assuming they have the same budget/revenue/value relationships that the Red Sox do, the Yankees should be able to easily throw down $270 million per season in the nearish future.
This is important not just for the Boston Red Sox, but to compete against all MLB teams. The median MLB payroll in 2010 was about $92 million dollars, way up from about $81 million in 2008. And it looks like 2011 payrolls will be up across the board by quite a bit this year. The Yankee payroll has essentially remained the same for about 5 years now, and Hank appeared unwilling to budge last year off Cashman’s ~$212 million dollar budget. The Yankees are losing their mammoth financial advantage.
Look, Hank and Hal want to make money, I get that. I remember before they received control of the team that the rumor was that neither brother cared much about baseball, and simply wanted to sell the team or make a bunch of money. But the enormous value that the team represents is in large part predicated upon being the perennial top dog in the majors. Brian Cashman is a very good GM, but even if he makes all the right moves he can’t maintain that forever. Other teams are getting smarter, spending more money, and locking up their young players through their prime years. The Yankees will become something close to just another franchise if Cashman’s budget isn’t significantly increased. That doesn’t mean that Cashman should just throw money around when worthwhile players aren’t available (like, say, this off season), but he should have to freedom to go out and pay all sorts of players that much more than the Red Sox, Phillies, et al.
One more random stray thought: if the Yankee payroll is indeed going to be way down in 2011, the Yankees should have a lot more leeway to spend on the draft/international free agents this year. Its supposed to be a stacked year in the draft, and I’m sure there are some big IFAs out there. The Yankees could have $10 million or more extra to throw around. Hell yeah.
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I don’t know why a 270mil payroll would be a good thing, because odds are the money will be going to more aging superstars…use it to sign the right free agent, develop the best farm system in baseball, lock up arbitration players long-term, and dominate the international market. Do not use it continually on 32+ year olds which is what would probably happen if you increase your payroll from 190mil to 270mil.
How exactly does the luxury tax system work? Because didn’t we just get hit with an 18 million dollar luxury tax and the Red Sox got like 2.5 million?
I know it has to do with how much you spend on players but at which point do you start paying? Are there brackets like you spend x and you move up to the x bracket or do they just decide what they tax you with.
No other teams got one and it was our lowest in years according to the article.
I don’t think its just frugality, though I’m sure that plays a role. No matter the present capital value of the team, they probably have a substantial estate tax hit (despite what seemed like propitious timing they didn’t escape it entirely) and a stadium planned during economic boom times opened during a recession. But I think the wider point is that they realize that if they’re not at least somewhat judicious in utilizing their economic advantages those advantages will be trimmed, pruned, and whittled to virtually nothing. It is in their interest to keep payroll within shouting distance of the pack, or at least of John Henry and his merry band of hypocrites, lest hard slotting for draft picks, IFA drafting, a more punitive luxury tax and other measures become the law of the land.
1) did he really just say that cashman is a goo GM? Ha!
2) his numbers are wrong on every point he made except on how much the Yankees are worth. But the sox are worth 950mil. He’s also wrong on the payroll and luxury tax figures bc those are done with agon making 2mil next year which he want until the next when jd and Ortiz are off the books.
Indeed. For 2011, Sox have Beltre, V-Mart, and Lowell coming off the books- approx. 35 million. Also, next year they have Ortiz, Dice-K, and Drew coming off for another 40. They won’t sign Gonzalez until after the season begins, so he only counts 6 million for this year. The Sox will be barely over the threshold, only the 3rd time in the past 7 years. But it will correct itself in 2012.
The Sox are definitely a top spender, but Theo does an outstanding job keeping it right at or below threshold.