How the Yanks should build a franchise

Hall Adds Goose
In Philadelphia, the Cashman vultures are circling

We’ve got quite the lengthy discussion going on in the comments to my post on Joba Chamberlain, but one in particular deserves some recognition. Written by Tommy, the Phillies fan who serves as one of the co-authors of RAB’s offshoot at Breaking Balls (which you should all read), the comment talks about player development and spending with the Yanks’ seemingly unlimited budget:

I think the key question here is how the Yankees ought to leverage their clear superiority in the “ability to spend” category. There are more or less two ways to acquire talent that cost nothing but cold, hard cash up front:

1. Free agency
2. Scouting and player development

Because of the way the rights to young players are distributed (especially under the new CBA), the Yankees enjoy a massive advantage in scouting and player development. They can dole out huge bonuses to foreign players, whether they pan out or not. Smaller market teams regularly fail to sign top international free agents because the ownership is unwilling to spend a few million dollars on a prospect who may never reach the majors. But, in terms of average expected value, these types of deals tend to be favorable.

But the Yankees comparative advantage widens even further when you consider the Rule 4 draft. There, the unrealistic slotting system is supposed to dictate the bonuses received by players taken at each spot in the draft, thus leveling the economic playing field. In reality, players with signability concerns drop to the second half of the first round, where teams like the Tigers and Yankees scoop them up. Phil Hughes at 23rd overall, when he was the best high school pitcher in the draft? Exactly.

And by signing free agents or trading away these youngsters, the Yankees either forfeit the draft picks or forfeit the potentially high upside of scouting/player development types.

The danger of evaluating prospects is that occasionally it’s a good idea to trade a few, because individually they don’t have a ton of average expected value. But if you make a habit of it, as the Yankees did consistently after the 2001 season, you will significantly worsen your team while spending steadily more money.

By getting away from that trend, they have completely turned around their entire farm system.

Tommy basically nails the issue. The Yankees need to strike the right balance among player development through above-slot signings (as they’ve done), free agency pick-ups to fill in the holes and trades at the right time. The Yankees shouldn’t trade their top prospects for low impact pieces that they can find within their own farm system.

Of course, another piece to this puzzle is knowing when to trade which prospects. Here at RAB, we’ve advocated against trading Phil Hughes because his potential is sky high. At the same time, that makes him valuable as a trading chip, but just imagine if the Yankees had traded another sky-high prospect 15 years ago named Andy Pettitte when other teams came knocking? At some point, the Yanks will have to trade prospects we all like, but I’m sure they’ll get the right pieces in exchange.

For now, though, the Yanks have the luxury of money and depth on their side, and that should be a lethal combination for years to come.

Hall Adds Goose
In Philadelphia, the Cashman vultures are circling
  • JRVJ

    There’s an additional point that bears mentioning, which is that the Yanks have had great sucess in getting good young pitching in the last few years through the draft and international (mostly Latin American) FA market (Japan’s system is too different, what with the posting fee and all).

    However, the Yankees have been a little weak at getting good position players through the draft and international FA market (though this was partially addressed by the 2007 draft).

    Sometime in 2008 (or right after) the Yanks may benefit from trading away young pitching in exchange for young position players.

    • dan

      Be patient, some hitting help is on the way. Granted, there’s no Jay Bruce in this system, but the hitting overall is about average.

      • Stu

        The lack of hitting prospects was largely intentional. The Yankees have focused on pitching, since they’ve felt they can sign free agent hitters. Hitters don’t decline as quickly as pitchers do, and the best pitchers rarely go on the market for less than a wagon load of prospects.

    • Tommy

      I think that’s true, but not necessarily a bad thing! On average, pitching prospects are less reliable than their hitting counterparts (hence the old saw: TINSTAAPP). This has two effects, which work at cross purposes. The first discourages teams from going after young pitchers and encourages them to go after young hitters. But that, in turn, makes young pitchers relatively scarce, and young pitchers who develop into major-league ready players scarcer still.

      I think the combined results of these two factors is to make hitting talent more valuable than pitching in the low minors, but pitching talent more valuable than hitting talent in the high minors.

      Fortunately for the Yankees, as I see it, they have good hitting talent in the low minors and good pitching talent in the high minors/majors.

      • JRVJ

        Again, it remains to be seen how things shape up during and after the 2008 season, but I could seriously see the Yankees having a glut of MLB level pitching in their system, which they would be wise to commoditize into young players.

  • dan

    A prime example from this year’s draft of how rich teams get the top talent later in the draft… Yankees get Brackman and Tigers get Porcello, while the Pirates get stuck drafting Daniel Moskos

    • Mike A.

      That’s the Pirates’ own damn fault. Maybe if they didn’t waste millions on Matt Morris or Jeromy Burnitz or Mark Redman, they’d be able to shell out the extra million bucks to get Matt Weiters.

      Throw an extra $1.5-2M in your draft budget each year and you’ll significantly improve your farm system in short order. It’s not brain surgery, if it was none of baseball’s execs would be doing it.

      • Tommy

        Worse even than the Pirates? The Astros. Look at their top two picks “Signed” dates.

        That’s right. They didn’t sign them because Drayton McClane is a crazy old man. Their first pick didn’t come until the 5th round! Brutal!

        • Mike A.

          In their defense, their top pick (3rd rounder Derek Dietrich) agreed to a pre-draft deal, but changed agents right after the draft and demanded more money. But signing only 3 players in the first EIGHT rounds is inexcusable.

          • steve

            wow that sucks … please tell me he switched to boras?

  • Steve S

    See while I agree with this, it sounds a lot better on paper than it does in practice. This whole revisionist history of the dynasty and the preceding and following years is a little annoying. Lets not forget they havent missed the playoffs yet this decade, which no one else can say, and they have played in two World Series. And were three outs away from making another one.

    From 2001 on there are very few players the Yankees “traded away” that ended up being quality players. I mean Brandon Claussen, Dioner Navarre, Brad Halsey, Willy Mo Pena?? Ted Lilly is the only guy I can think and he came from the Expos in the IRabu deal which was a miracle in it of itself.

    The problem from 2001 on was poor drafts and player development. To be honest its the guys they gave up when they were winning that could have made a bigger impact- Lowell, Westbrook, Milton, Guzman. It comes down to talent evaluation. Looking at it even now they traded Nick Johnson (and others) for Javier Vazques and Alfonso Soriano for Arod. The Diamondbacks wanted to both for Schilling. Anyone pre-2004 would have told you the Yankees would be crazy to invest in a post 35 Schilling, rather than a 28 year old Arod and a 28 year old Vazquez. And all of Vazquez’ peripherals and saber stuff indicated he could be good, if not great. The move ended up back firing, but no one in baseball would have done it any other way given the choice with the information available. Its just bad luck.

    The difference between 1996-2000 and now has nothing to do with young talent. Its the fact that Yankees managed to get David Cone, Roger Clemens, David Wells, El Duque for practically nothing (whether it be through free agency or trade). They also made mistakes back then: Irabu, Neagle and Rogers. But they had such a good rotation no one noticed. andy Pettitte was a nice pitcher and he was a huge piece of the puzzle. But I dont think its fair to say the Yankees won because they hung on to him. They also managed to trade a pretty good thirdbaseman for Ed Yarnell and some other parts. And pre-1996 we also had the Mark Hutton, Bobby Munoz, Scott Kaminieki, Wade Taylor and Jeff Johnson. So sometimes the youth movement doesnt work out.

    The Yankees did manage to hang on to Cano and Wang post 2001 (even though they may have dangled them). Ill agree that they need to focus on player development and scouting but I think this whole idea that they shouldnt trade away prospects is more of an urban myth. Look the Red Sox have done a great job in the last couple of years, but they also traded Hanley Ramirez for Josh Beckett. Looking long term, Ramirez is going to have a huge career, probably bigger than Becketts (looking at Becketts health history and the likelihood of a power pitcher like him lasting). BUT right now, the Red Sox dont seem that foolish EVEN with Julio Lugo playing shortstop. And they probably wont look that bad going forward because its hard enough to win one world series, let alone try and plan out a team for ten years. Its about taking calculated risk because you can build a team as dynasty until you actually win one world series.

    • steve

      very well said.

    • Tommy


      My argument post-2001 was that the Yankees lagged in scouting/player development in general, not particularly in trades. I am sorry I wasn’t clearer.

      I agree completely with your analysis. The players traded away post-2001 were the failed prospects of a bad scouting system. The Yanks swindled my Phillies out of Bobby Abreu for nothing more than Matt Smith and the dregs of their 2005 draft (C.J. Wilson, I’m looking at you).

      But at the same time, they signed a large number of free agents in the 2000s, and most of them were A type under the old A/B/C Elias rankings. This cost the Yankees a great many draft picks, which did nothing to improve the already weak system.

      Add in the fact that when you sign the /wrong/ free agents (Sheffield instead of Vlad, for instance), it negates the advantage you got by acquiring the right players (ARod, as you note), and you’re left with a system that treads water as the core ages.

      As you said, “sometimes youth movements don’t work out,” but when they do, it’s with shrewd evaluation. I’m not so sure it’s “just bad luck.”

      • Steve S


        Thats cool, but I just disagreed with the concept that spending money on free agents made them worse. The only type A free agents that really were a disaster were Pavano, Giambi, and Karsay (if he was a type A). Mussina was a disappointment but considering free agent pitching, he was a success. I thought the Weaver deal was an smart move at first glance, especially considering the fact that Lilly’s motion frightened everybody so much. And like I said they have managed to win 90 games and make the playoffs with the free agent additions.

        I agree with you about the right path, but I just think its more related to the change in the economic landscape following the 2002 CBA. These smaller teams have been subsidized by the Yankees (primarily) since that point. Which also allowed them to hold on to some of their young pitching by gamblng and buying out their arb years and maybe getting one of their fa years. That is dramatically different than pre-2002 when these teams would get ready to dump at the deadline and know that there were two or three teams that could do it. And you would actually see impact pitchers ages 28-33 being made affordable. There have also been a flood of new stadiums that have made certain teams more flexible in spending for young players.

        But we can agree that their scouting and development from 2000-2005 were horrible.

  • Ricochet

    Thats more of less what I’ve been saying for some time now. It’s not an either or type situation and there is no true way to build and run a franchise and you have to know when to change and when not to.

    Of course the Yankees should capitalize on there advantages of spending money when they have and owner/organization that will supply the club with what it needs with a payroll that will stand between $150M and $200M. They should without question spend money in the IFA market as well as going after high ceiling prospects in the draft. It’s really killing 2 birds with one stone because those players will fill the roster as well as give them the chips need to make trades which in turn allows them to not to have to dependent on FA to fill all the little needs here and there which causes them to overpay. By spending the money necessary to sign the top players out of IFA and the draft as well as putting the money in scouting and development it will not only will it save money in the long run but it puts the club in the position to dip into trades as well as FA with more power because they are no longer dependent which mean more cost effective trades and only trades to top talent.

  • Sky

    Here’s my opinion on how the Yankees should build a championship team. The summary:

    – Build like a low-payroll team.
    – Spend on high-bonus picks, lock up players through arb and 1/2 years free agency
    – Sign mediocre, short-term free agents to fill holes
    – Sign the superstars to big time free agents.

    If spent wisely, a $200 million payroll should win at least 105 games each year.

  • Rich

    As a result of the Yankee tax (i.e., revenue sharing), fewer quality free agents are hitting the market because many more teams now have the money to sign their own players, so allocating money to free agent signings has taken on less importance.

    When teams cannot sign their veterans who are becoming too costly, they now look to trade them, with the Cabrera and Santana situations being cases in point.

    I don’t believe it’s usually prudent to trade multiple top tier prospects (and/or young, cost controlled veterans) for pitchers, even those who are as good as Santana (as an aside, I believe that trading for Beckett made more sense because he was younger and had a more durable body type). If the Yankees were going to trade Hughes (which I oppose), I would have much preferred that he be packaged for Cabrera.

    I do, however, support trading lesser prospects for assets like Abreu, as well as trading veterans like Sheffield for prospects.

  • eric from morrisania

    The difference between 1996-2000 and now has nothing to do with young talent. Its the fact that Yankees managed to get David Cone, Roger Clemens, David Wells, El Duque for practically nothing (whether it be through free agency or trade). They also made mistakes back then: Irabu, Neagle and Rogers. But they had such a good rotation no one noticed. andy Pettitte was a nice pitcher and he was a huge piece of the puzzle. But I dont think its fair to say the Yankees won because they hung on to him. They also managed to trade a pretty good thirdbaseman for Ed Yarnell and some other parts. And pre-1996 we also had the Mark Hutton, Bobby Munoz, Scott Kaminieki, Wade Taylor and Jeff Johnson. So sometimes the youth movement doesnt work out.

    But that’s not really true either. David Wells and El Duque cost nothing, yes… they were free agents.

    To get David Cone, we traded Marty Janzen, Jason Jarvis, and Mike Gordon. Janzen was high-ceiling 22 year old power righty; Jarvis and Gordon were mid-level pitching prospects (and Gordon was a lefty.) Janzen, in 1995, was probably comparable to Ian Kennedy, in terms of perceived value. Fernando Seguignol, who we dealt to get Wetteland, was a highly regarded former international signing who, at 19, had Jose Tabata-type buzz. To get Tino Martinez to replace Don Mattingly, we gave up Russ Davis and Sterling Hitchcock; Davis was an average defensive catcher who showed huge power hitting potential (73 HR in three minor league seasons), Hitchcock was a 24 year old lefty who had 121K in 168 ML innings with the Yanks and was considered one of the top 10-15 young pitchers in all of baseball at the time. To get Chuck Knoblauch, we gave up Cristian Guzman and Eric Milton (along with Brian Buchanan and Danny Mota), who were blue chippers on the levels of an Austin Jackson or a Joba Chamberlain… they were both ticketed as surefire stars. Clemens, of course, cost us David Wells (with Homer Bush, a young speedster), a lefty who had just come in third in the Cy Young balloting and pitched a perfect game for us, so it’s ludicrous to say we got Clemens for “nothing”.

    Ultimately, The dynasty was constructed EQUALLY by three avenues: good internal promotions, wise free agent acquisitions, and targeting proven winners through trades by dealing away some of our minor league depth at the peak of it’s value. People love to talk about Andy Pettitte, Mo Rivera, and Ramiro Mendoza. Those three homegrown Yankee pitchers were only 3 out of dozens of pitching prospects we had in our farm system in the early-to-mid ’90s… the rest were dealt to get guys like Cone, Wetteland, Knoblauch, and Tino, guys who were proven winners and established producers.

    • Steve S

      You in essence agreed with what I said. My point of contention was the idea that the 1996-2000 Yankees were a model of player development, while the 2001-2005 Yankees lost sight of that. My whole point was the myth that between 1996-2000 the Yankees hung on to their prospects and therefore won. I think as mentioned by others the economic landscape was very different. By the way the Cone package was not competetive. David Cone was making $8M a year, which was the second highest salary in the AL that year and was headed into free agency. In 1995 baseball was not doing well coming off the strike. The Yankees were really the only team in the thing. The Yankees got him because they were willing to pay and everyone knew that. And they overpaid for El Duque (considering the previous Cuban imports) and they got Roger Clemens, the guy who had just won back to back cy youngs and essentially the pitching triple crown, for David Wells, Homer Bush and Graham Lloyd. Think about that. It was a very different landscape back then, something that revenue sharing, the luxury tax have completely altered.

      And the reality is that people have these fantasies. The youth of the 1996-2000 team was acquired for the most part when the team was towards the bottom of the pack- Jeter, Pettitte, Rivera and Posada were all a product of the 1990-1994 development period. Guess what 1990-92 were awful years for the major league team. And even in 1993 when they started the resurgence they did it despite themselves- they were dieing for Maddux but he used them- so they went with Jimmy Key. They signed Danny Tartabull to a monster contracy

  • Lanny

    This ain’t exactly revolutionary thinking here on building a team.

    You draft smart, use your resources to stock the system, dont overspend on aging vets and make the right prospect trades for in their prime talent.

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