The notion that the Yankees are playing by a different playbook than the other 29 teams when putting together their baseball team has been tossed around the blogopshere a lot recently. David Cameron at Fangraphs said it as well as I’ve ever read before on Friday:
Not that this is any real surprise, but the Yankees don’t have a payroll limit, they have a “target area”. Ownership probably wouldn’t go for a $300 million payroll, but as long as Cashman can make a compelling case that there’s value to be had in spending a bit more money, he has the ability to dip into an essentially unlimited pool of resources.
As Cashman notes, this isn’t how it works for most teams. Pretty much every other baseball operations department is operating under a budget that isn’t a moving target, and they have to build out their roster knowing that it can’t exceed a set number of dollars for the upcoming season. Thus, every dollar they spend on one player is money they cannot spend on another player, and every player’s salary represents an opportunity cost. This constraint serves to keep salaries somewhat in line with market rates, as even though teams are operating under different budgets, they’re all still incentivized to try to get the best deal they can in acquiring talent, because resources saved on one deal can be used to make another.
The Yankees simply don’t have that constraint. Their only opportunity cost is roster spots – they can’t have Prince Fielder or Albert Pujols because they already have Mark Teixeira playing first base, not because the salaries are a deterrent. We saw this last year with Rafael Soriano, in fact – ownership overruled Cashman and gave Soriano a monster contract to serve as a setup man because it made the team better and the cash spent on Soriano would not prevent the Yankees from doing anything else they wanted to do.
I disagree a little bit, but the general point is fantastic: the Yankees are more constrained by roster spots (specifically, starting roster spots) than they are by a budget.
The Yankees have a budget, like any other team. The difference is that they don’t use their whole budget every year. They spent less money on player salary in 2011 than they spent in 2008, despite obvious revenue growth. Given the right opportunity, they would increase payroll (like they offered Cliff Lee before the season), but they have enough money that those opportunities don’t always present themselves. The Yankees have excess capacity.
This explains why the Yankees can afford to give a quickly declining Derek Jeter a monster contract, but won’t resign Jorge Posada for even the league minimum. If Posada was still capable of playing catcher and hitting OK, I’d bet that they would have a hard time cutting ties with him, and might even send him a substantial payday. Ditto for Bernie Williams a few years ago. The difference is that while Derek Jeter isn’t worth close to his salary, the Yankees are content to commit to starting him at shortstop for 2-4 years and remaining a competitive team.
The Yankees can easily have 7-10 expensive contracts on the roster and still not break the bank, but they do still have a budget. They can’t afford to pay Mark Teixeira to ride the bench for half a decade in order to sign Albert Pujols. When they sign a big name player, they lock themselves into planning on that player every day for the vast majority of the contract. It means that even if Alex Rodriguez plays 90-120 games every year, they have to deal with it.
This certainly seems like an argument for locking up Curtis Granderson and Robinson Cano for long term deals right now. The Yankees will be hard pressed to ever find free agent replacements for either that come close to their production. While I argued last week that they should wait on Cano, maybe I was wrong. And Cameron makes the case for why this may justify the stupid Rafael Soriano contract.
I think it also underscores the need for patience from the Yankees. Brian Cashman made the decision before 2008 to avoid trading for Johan Santana, and instead wait a year and bring in C.C.Sabathia, a choice which worked out wonderfully for the Yankees. Likewise, Yankees’ excess capacity makes a very large bid for Yu Darvish highly attractive, especially considering their constant need for starting pitching slots even after free agency is considered.
But I think that the biggest lesson learned here is that the Yankees aren’t maximizing their full potential. Excess capacity by definition means that you could do more. Last season’s $197 million payroll figure is actually a bad thing, because it means the Yankees couldn’t find free agents to spend their money on, and are therefore winning fewer games than they should. This doesn’t mean they should pay (much) above market rates for free agents, but means that they should plan years ahead of time to make sure they are ready to take advantage of the best players when they hit the market. In some small theoretically (I’m not suggesting they should have done this) way it means they should wait on the Mark Teixeira’s to get the Albert Pujols’ of the world more often. Or more specifically, wait on Derek Jeter to pick up someone like Jose Reyes.
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What puzzles me is how the Yankees are outbid on top prospects from Latin America. Given that they have so much cash sloshing around, shouldn’t they be able to snatch up a greater number of blue chip latin american prospects? Obviously when signing 16 year olds, there’s plenty of risk that the prospects won’t work out. But if we’re talking about signing top prospects for roughly $1-3 million, shouldn’t the Yankees be loading up on these kids?
The only thing I disagree with is you can’t just pass on the Mark Teixeira’s of the world hoping Pujols will be available later. Let’s not forget when we signed Mark no one expected this kind of drop off from him, and without him we likely don’t win the 2009 World Series.
The same argument could be made as don’t trade for Granderson because Matt Kemp will be available after 2012. But the problem with this strategy is that Kemp has agreed to an 8 year deal with the Dodgers, so if you were planning in the future for him the plan is now gone. Sometimes you have to sign the top free agent now (Teixeira) because he is available, and the slightly better free agent 3 years from now might not ever be.
Well said, you can’t predict who is going to actually hit free agency. You know, the old adage about how a bird in hand is better than two in the bush.
In a real way this is something Cashman has to deal with this offseason when judging the pitching talent available (both trades and free agents), versus next years free agent market. I know many fans are really stuck on this idea of be careful and limit investing this year, because next offseason a goldmine of pitching will be available. When in reality we are already seeing next years market start to thin out. If Cashman feels strongly about someone this year be it Wilson, Darvish, Gio, etc… he needs to go with that feeling over hoping a better option comes along next year. I think the worst thing a GM can be is scared to fail, failure is part of the game. You just have to believe in your scouting, and your own personal assesment enough to make the moves you think are right at the time. Cashman is luckier than most since his budget can absorb failures better than most.
I disagree with your last point about passing on Mark Teixeira to sign Albert Pujols. As we found out with Cliff Lee, there’s no guarantee the player will sign with the Yankees based solely on money offered. Jeter bounced back with a strong second half and is more durable than Reyes, plus Jeter has a popularity factor with the fans that Reyes will never touch, financially speaking. Overall, I agree with your article, and I believe the Yankees are using their resources more wisely now than in the past.