The prevailing wisdom around the Yankees is that big contracts like the ones Alex Rodriguez and Mark Teixeira have are what is killing the team. In reality, those contracts have been fine and fans in general worry way too much about them.
I never get fans who would rather see the money go into the pockets of the owner than into the players'. The difference in the Yankees over the last two plus seasons is that they've been spending less and the performance on the field has suffered. Sure, Hal Steinbrenner fooled most people with his shopping spree in the 2013-14 offseason. People didn't realize how much money came off the books and that the payroll was only about $120 million to begin that offseason, so the Yankees didn't really go above and beyond at all.
The business model the Yankees used from 2001 through 2012 absolutely worked. The lack of championships are lamented, but the reality is that the Yankees put themselves in the best position to bring home rings every season winning 95 plus games. Short sample sizes in the playoffs happen, but those were some dominant baseball teams that were awesome to watch. You have to build for the long haul of the 162-game season before you can worry about what happens in the postseason.
What we're seeing now with the Yankees is frugality that has hurt the product on the field. Sure, Steinbrenner will sell you that his payroll is almost $220 million and that the team is doing everything in its power to win a championship. It's all a bunch of nonsense. He will also sell you that you don't need a $200 million payroll to win a championship, which is also nonsense. Sure, in theory it's true, but why not use all the resources and advantages that you clearly have? It makes zero sense.
The Yankees have been blown away by the Dodgers by over $50 million in total payroll. According to William Juliano of The Captains Blog, the Yankees are only 11th in payroll and luxury tax as a percentage of team revenue at a little over 45 percent, which is right about the MLB average. From 2003-2005 the Yankees were over 80 percent and from 2006-2008 over 65 percent.
How much different would the Yankees look with Max Scherzer this season? I think they would be the clear cut favorites in this horrid division and going into a playoff series with Scherzer, Masahiro Tanaka and Michael Pineda would give them as good a shot as anybody at winning a championship. Most people scoffed at the idea of signing Scherzer because of the length and the money of the contract, but I don't think Nationals fans are scoffing at his 1.67 ERA and his 72 strikeouts to only nine walks. The reality is that the Yankees could have easily afforded Scherzer, and the likelihood is that he will be so good over the first four to five years of the deal that it will be worth it. Heck, the Yankees didn't even seem to consider guys like Francisco Liriano and Edinson Volquez who were great values.
The 10-year, $275 million contract Rodriguez signed is portrayed as the worst thing ever when really the Yankees have gotten more than their money's worth from it when you factor in what he brings in ticket sales and merchandise. According to Fangraphs' WAR-to-salary dollar conversion rate, Rodriguez has earned $132 million of the $179 million he has been paid from 2008-2013. This is with two big injuries in 2012 and 2013. When you factor in the championship the Yankees won on his back in '09 and off-the-field earnings, Rodriguez has probably covered the $47 million missing. So far this season, FanGraphs has Rodriguez earning almost half of his $21 million salary already.
Teixeira is viewed as another albatross contract that hasn't worked out when Fangraphs has him actually outperforming his contract. Teixeira has been worth $111.7 million since 2009 while he has been paid $107.5 million. This is even with the wrist injury and the fact that he was basically worth nothing in 2013 and 2014. His performance in the first four years (worth $32.7 million in 2009, $20.4 million in 2010, $32.4 million in 2011 and $18.3 million in 2012) covered for his two injured years. Also, Teixeira is off to a fabulous start this year even in the second to last year of his contract.
Also, everybody knows that CC Sabathia's first big contract was well worth it as well with the extension being a different story.
It's no coincidence that the Yankees have been mediocre since they started to put lackluster effort into spending and winning. The only way it will change is if the Yankees completely bottom out -- which is unlikely in this division-- or if fans stop buying the company line. The Yankees are still printing money, folks. Don't worry about their bottom line and start worrying about the lackluster product on the field.