Why Hal Steinbrenner should open the books a little for Johnny Damon

The common line is that right now, the Yankees have about 2 million dollars left in their budget for the 2010 season. I think that this is entirely plausible. Hal Steinnerbrenner gave Brian Cashman a hard number, and said that he would have to approve any spending over that number. He did so last year with Andy Pettitte, and I think we’re going to see the same thing with Johnny Damon.

On one hand, the Yankees needed a budget. In both the free agent market and the draft, they often found themselves taken advantage of by free agents. I would probably put Jorge Posada and Mariano Rivera in this category (both received over market value contracts), I would probably expect Derek Jeter to sit there after this season, and I definitely think that Johnny Damon expected the same thing to happen to him.

Think of it this way: Andrew Brackman got almost 5 million dollars guaranteed from the Yankees even though everyone in the world knew he needed Tommy John surgery. Teams have been able to on an individual level leverage the Yankees needs against their individual budget. Without short term alternatives (the Yankees weren’t going to go out and find other players instead of Posada and Mariano) or a hard budget, individual were able to game the market to get much more money than any other team would have paid them. I honestly believe that Damon thought that he could get a Mo-like deal this offseason – 3 years at his current salary. The hard budget – even though the Yankees could spend a lot more and still make a profit – removes their leverage.

Johnny Damon could probably be had for about 6-7 million dollars. Xavier Nady signed today for 3.3 million with incentives, so we’re probably looking at a Baldelli type as the best possible solution for 2 million dollars. Reed Johnson will probably close to the Nady range, and there isn’t much else out there. But let’s say that the choice is between Johnson at 2 million and Damon at 7 million.

I think it makes rational economic sense for Hal Steinbrenner to pay the extra 5 million dollars for Johnny Damon. Reed Johnson is a decent little player. So are Brett Gardner and Rocco Baldelli. They all have their strengths. However, they aren’t on the same level as Johnny Damon. Damon had one of the best offensive years of his career last year. A batting line of .282/.365/.489 is damned impressive, and there is reason to believe that he’ll be a better defensive player too. There is a very good chance that he is worth twice the potential salary in 2010. His power surge may be due to Yankee Stadium, but the fences aren’t being moved in any time soon, so it may be here to stay.

In addition, signing Damon helps the Yankees bench. With Austin Jackson gone, the team is very short on outfield depth. Brett Gardner would become one of the better 4th outfielders in the major leagues, and a major defensive and speed asset off the bench. I hate the term “situational hitting”, but there are certainly a lot of situations where Gardner will be useful, and he’s well above replacement level in case of injury.

But the 5 million dollar difference is all about marginal value. The Yankees face a very tough fight for the division this year. A lot of Yankees are ripe for regression, and the Red Sox added a lot of talent to their already great roster. I think that the Yankees are still the better team on paper, but Damon would give them considerable insurance in the division. Making the playoffs will be a huge economic plus for the Yankees. It will make them tens of millions of dollars – more if they advance to or win the World Series. The payroll spent on the team is a considerable investment that should be protected.

Let’s assume that the team budget is 210 million. Damon’s extra 5 million pushes it to 215 million. Let’s say that on average, missing the playoffs will cost the Yankees 50 million dollars. This are abitrary numbers, I know. But a quick and dirty calculation tells you that if Damon increases the Yankees chance of making the playoffs by 1 in 10, then it is a good bet.

The division is very tight. The Twins, Rangers, Mariners, Rays, Red Sox, Yankees, and maybe a mystery team or two will be fighting for the Wild Card slot. If the Yankees suffer a major injury or two, they could very well end up fighting for their playoffs lives. But Damon makes them one injury deeper. If I were Hal Steinbrenner, I’d stare at that big pot of playoff money (not to mention benefit to the Yankee brand) and poney up the relatively small extra cash. The 210 million is already spent. All he has to think about is “5 million or not”. Its  the right decision.

I think that he’ll take it. I think that we’ve seen a lot of posturing on Cashman’s part, and it certainly seems to have spooked Damon, who was a fool to turn down a 2-year contract. But I very much expect Johnny Damon to enter spring training as a member of the New York Yankees.

My bet is Tuesday. Any takers?

About EJ Fagan

E.J. Fagan been blogging about Yankee baseball since 2006. He is a Ph.D. student at University of Texas at Austin.

16 thoughts on “Why Hal Steinbrenner should open the books a little for Johnny Damon

  1. I don’t know how much Damon is worth, but there is no reason to think his defense will get better, he has no arm at all and will be pulled in the 8th or 9th for defense. he has had problems with his calf and legs in general and at 36……..Jorge and Mariano were apecial players and special yankees and I think their contracts were rewards…i like Damon, but he is an good offense player, and I think that is were it ends…another point to consider is were are the yankees with the luxary tax. Will they have to pay more if they sign him?

    • We are already over the luxury tax but we’ll actually pay less tax this year than last as it adjusted about 6mil or so.

  2. I hope you are correct, EJ.

    I’m amazed at how many people don’t recognize the Rays as a legit playoff threat. That team is loaded. Great lineup, great rotation, great defense, solid pen. They can do some serious damage.

    • Absolutely. If you match up position by position with the Rays, Red Sox, and Yanks, I see the teams as really even. In my mind, it’s just going to boil down to what their pitching staff does. Neimann and Price have the ability to be really good. Shields and Garza are good but need to bounce back (like Verlander did last year) and Wade Davis or Sonnanstine can handle the 5 spot. Plus the bullpen is fixed. This team could easily win another division title if they perform well.

  3. Nice job EJ. I’ve been saying all along that they will bring back Damon, and I still believe it. That said, I’m not sold on guaranteeing him 7 million. That 7 million on the Yankees will actually cost them 10.5 after luxury fees. Damon at 3 million is outstanding. Damon at 5 million is a good signing. Damon at 10.5? Not so much…

    The one aspect that I enjoyed the most about the article is the net value of Damon to the team from a financial aspect. Let’s assume that the team is worth 2 billion (including the YES Network). If they take a loss of 1% as a result of missing the playoffs, that would knock the value down by 20 million dollars. .5% would be a loss of 10 million dollars. So if they gave him 5 million, and it cost 7.5, and they would lose 1% without a playoff spot and no Damon means no playoffs (figuring something like outfield depth and injuries, regression by some hitters, Gardner not playing well, etc… might occur), Damon would be WORTH 12.5 million dollars. Now this is all hypothetical sure, but none of us know what exactly the ramifications could be. It just seems a solid investment all around.

    • One other point… everyone is expecting a smooth transition from Granderson. Now, I am a huge Kevin Long guy. That said, we have all seen before that there are times when a player struggles in his initial season with the team. If that happens, and an injury to Swisher occurs (or a Swisher slump, which will happen a couple times during the season), the team could be in some serious trouble.

  4. EJ – I agree with you that I think we should do all we can to bring Johnny back. I think you’re also right that there is a lot of posturing happening on both sides, but I also get the feeling that Cash is getting sincerely fed up with Boris. It worries me that he might just get to the point where he’s inclined to move on. If he signed someone like Josh Willinghelm – I’d be fine as I’m sick of the BS myself. That said, I really think Damon is a special player that we should try our best to keep.

    • Yeah, don’t forget that because of Boras we’re paying an extra fortune to A-Rod. Before the opt-out he was making less and Texas was paying a bunch of it. Cash may have an emotional investment in sticking it to him.

  5. JeffG: Sonnanstine can handle the 5 spot

    Sonnanstine sucks. Really, there’s no other way to say it.

    In fact, it’ll take a whole lot of things to go right for the Rays to make the playoffs again. I’m not saying it’s impossible, I’m just saying it’s not likely. Will they finish over .500? Yes. But I just don’t see them making the playoffs unless the Yanks or Boston fall apart (as we did in 2008).

    • Sonnanstine held his own in 08 (101 ERA+) and he’s pitched well against us in a lot of games that I have watched… by no means is he a middle or front of the rotation guy but for the 5th starter spot they could do worse (think Mitre last year). Plus he is more like the 6th starter anyways.
      All in all it is hard not to like the team they have I was really surprised last year that they did not push harder, that said, as these guys get a little more mature I think they might have a bit of a resurgence like Detroit did last year. In my opinion the best three teams in the AL are in the east.

  6. the other Steve S.: Cash may have an emotional investment in sticking it to him.

    High doubtful. Cashman made Teixeira a very rich man last year and he is a Boras client. Clearly, the A-Rod situation of the previous year did nothing to sour Cashman on signing players represented by Scott Boras.

    • Since then A-Rod’s steroid news came out… part of the contract has pretty big paydays for a feat that will not garner the same sort of publicity. Then again I doubt that matters much. I think the bigger issue is being pissed on and told it is raining… when you speak with someone you expect some sense of honesty just out of respect.

    • I don’t think you can really compare the Tex signing to JD. We needed Tex, 1b was going to be Swisher and Tex was headed to the BoSox. Lots of good reasons to make that happen. JD would just be nice to have. You have a lot more leeway here to be creative or vindictive. I don’t think Cashman would do anything that would hurt the team just to teach Boras a lesson but we just don’t need to sign JD like we did Tex.

  7. Not entirely sure about this. Don’t get me wrong, I’d like to have Damon back. For shits and giggles, let’s say Gardner’s WAR will be around 1.8, and Damon’s at around 3.2, the marginal utility value of spending an extra $5-7 million for roughly one, maybe two wins doesn’t seem compatible with the team. It’s possible the Yanks could be a major injury or two from scraping out a Wild Card spot, but the same could be said of any team. You can’t operate on the philosophy that some guy may get injured, so we ought to have another starting-caliber player on the bench as a just-in-case; it would be a great luxury to have, but it’s outside the lines of budgeting and how players value themselves. Say it were to happen (a major injury, that is) but it isn’t in the outfield. What has that accomplished? You’ve removed a good deal of rainy day flexibility money by overextending the budget, and are now stuck with Russo or Pena. There are far too many variables to account for, but grabbing Damon is not a catch-all. Now if we really do have $8 million to spend and are playing hardball with Johnny, and we can grab him for $4 million, hell yeah, grab him. But I’m operating under the assumption there is a hard budget and the budget exists for a few purposes, one of which is to ensure there is some neutrality when it comes to negotiating. You can bend a bit when the need is great enough and attractive enough (see Teixiera, Mark), but not for an atrocious-fielding, late 30s left fielder with no other firm offers or attractive recourse. He’s exactly the type of player you don’t budge on—if you’re willing to break philosophy for Damon, you’ve lost any precedence you should be setting.

    If the Yankees appeared to be a team that were not as offensively impressive across the board, with an excellent rotation and potentially great bullpen, the move would make a lot of sense. This should be a 100 win team. If there are significant injuries, Damon being on board will not make enough difference to offset the production. Damon is not a need, and the upgrade of him over Gardner is not significant enough to override budget constraints, or improve the bottom line from both a financial and performance prospective.

    Seacrest out.

    • This was all written before I received word (via the internet) of the Winn signing.