Doing austerity right

More than any potential free agent signing or trade, the storyline that’s likely to loom over all others this winter is the Yankees’ intention to get below the luxury tax threshold in 2014. It’s already popping up in rumors about the team’s interest in Torii Hunter to fill their right field hole, and you can expect similar reports any time a multi-year deal is mentioned in conjunction with anyone the Yankees might be targeting. It’s a radical new way of life for Yankee fans, and as the deadline grows near it promises to create plenty of frustrating moments of watching preferred acquisitions going elsewhere with minimal interest from the Yankees.

Now, I know that there aren’t many non-Yankee fans who want to hear about the Yankees not spending enough money, and to some extent I sympathize with that viewpoint. In Buster Olney’s telling, so does the Yankees’ own general manager:

Cashman has always believed that the Yankees should be able to do more with more, and that it’s the responsibility of the baseball operations department to build a winning team with the sport’s largest payroll. Hal Steinbrenner has stated he wants to get the Yankees’ payroll in line with the luxury tax threshold of $189 million, a vision Cashman has long embraced.

That’s all well and good, but it’s not as though Cashman is really averse to spending money by any means. He had no problem aggressively pursuing C.C. Sabathia and A.J. Burnett when the team was in desperate need of pitching in 2008, and then he lobbied ownership to let him sign Mark Teixeira as well when the Red Sox let him hang in the breeze while they picked over nits with Scott Boras. What he has been against is paying large over market premiums to Derek Jeter and Alex Rodriguez before they signed their most recent contracts and giving a multi-year deal to Rafael Soriano when they didn’t need any help in the bullpen.

That, to me, is what a more efficient Yankees should look like: still spending big on players who are worth it, but avoiding the temptation to overpay for others just because they can. It bears mentioning, however, that Cashman and the baseball operations team have been pretty good at doing just this, and that it’s been the people above him who have come in to make the deals that have really bloated the team’s payroll. This is not a minor point: critics of the austerity budget’s critics like to point out that $189 million is still more than enough money with which to build a championship team, and indeed it is. The problem is that the Yankees don’t actually have $189 million to spend building the 2014 team right now, but $189 million minus their already existing commitments. Those commitments include roughly $50 million allocated to A-Rod and Mark Teixeira, two declinging middle of the order hitters whose production the Yankees really should be looking to begin replacing over the next winter or two.

This, then, is ultimately the biggest problem with the plan as currently being practiced. The Yankees have been operating under a certain business model for over a decade, but with the passage of the new CBA they’re suddenly implenting a radical new reality with essentially no time to transition between the two, and with relics of the old MO now hampering their ability to put the best team possible on the field. The A-Rod albatross is the most visible example, but I also suspect that, had Cashman known then what he knows now, Austin Jackson and Ian Kennedy would be Yankees today, and Teixeira very well may not. A more sober way of implementing the new policy would be to acknowledge that, and begin getting smart with the way the team is spending their marginal dollars while resigning themselves to the fact that the deals that have already been made can’t be wished away, but will expire at some point, at which time the Yankees shouldn’t have any trouble getting their payroll below $189 million, or even lower.

Alas, such a long term implementation would leave the team’s owners unable to collect their financial largesse from Major League Baseball in the form of revenue sharing refunds. For that, they have to be below the luxury tax threshold before the 2014 season opens, and there’s tens of millions of dollars at stake for the Steinbrenner family and their partners. That’s all this is about: not getting more efficient, not getting smarter with the team’s purse, certainly not earning a miniscule reduction in the luxury tax rate the team would pay in the future, but simply picking up some free profits for the team’s owners. Profits in the form of kickbacks from MLB for complying with Bud Selig’s roundabout salary cap and from reducing the organization’s labor costs. Which is their right, of course, but it sure would be nice if everyone would at least admit to what’s going on.

7 thoughts on “Doing austerity right

  1. a57se

    And here I thought the Yankees ownership was just trying to be sound in there use of resources and player acquisitions…..silly me!

  2. jay_robertson

    look on the upside – if they're REALLY going to pursue austerity, maybe they won't grossly overpay a player for years after the death of his career. At least, not until 2015.

    Someone with more time and ambition might want to keep an eye on how many FA contracts and extensions expire AFTER 2014.

    • Did you just nominate yourself, Jay?

  3. " but simply picking up some free profits for the team’s owners. "

    Well, sorta. By resetting the lux tax % to 17% from 40/50% (I think, need to confirm), the team will again be positioned to spend with a less onerous tax.

    I expect spending to again eclipse $200M once they reset.

    • It’s not that onerous, in context. Considering that it’s only applied to money spent above the tax, the difference between a 50% rate and a 17% rate as it relates to a $200 million payroll is pretty miniscule. Also too, there’s no need to get below the threshold by a 2014 deadline to reset the rate. That’s just for the revenue sharing refund.

  4. friend

    "the Yankees don’t actually have $189 million to spend "

    I've been hoping for quite some time that someone would realize this and write the article that it deserves. Thank you.

  5. Derpy

    I know a lot of Yankee fans don't want to think this way, but the Yankees cutting back on payroll is a really good thing for baseball.

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