Are the Yankees paid too well to win?

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McCutchen to Scranton, for real this time!

This is a guest post by Paul Vinelli.

After enduring another horrific start from Andy Pettitte (earning $16 million this season), a strange question enters my mind:

Are the Yankees’ players paid too well to win?

I’m not an economist, so my logic is almost entirely anecdotal. My formative years with the Yankees were the late 1980s and early 1990s. Back then, the team nearly always sported one of the largest payrolls in baseball. Steinbrenner and company signed “tough, proven” pitchers (Rick Rhoden, Andy Hawkins), over-hyped “stud prospects” (Hensley Meulens), platooned “aspiring sluggers” (Kevin Maas, Mike Blowers) and routinely overpaid one-dimensional outfielders (Deion Sanders, Jesse Barfield). It was a culture of meddling ownership, fiscal irresponsibility, reckless trades, and dismal grooming of young talent.

As a result, while growing up I always believed in the illusion that the Yankees could compete because the team could afford to swallow its most dreadful mistakes in supplementing the efforts of superstars like Mattingly, Henderson, Winfield, and Righetti. However, with the introduction of sabermetrics and the new generation of free-spending owners, I fear that the current squad fields too many mistake signings and that this affects overall performance.

While the current Yankees administration continues to overpay its players, the competition has become far savvier in how it allocates its resources. The Angels and Tigers have owners that are willing to spend money — and they do so relatively intelligently. The A’s have Billy Beane. The Mariners’ front office is clueless (witness the Bedard trade), yet their team still competes somehow. Cleveland has a bunch of young studs, and the Rays’ collection of prospects might be the best in baseball. Most terrifyingly, the Red Sox employ terrific scouting and top sabermetricians while wielding a payroll that rivals New York’s.

And what of the Yankees? Two years ago I considered the Mussina signing to be unwise ($22 million for 07-08) and in 2001 I was rabidly against bringing on Giambi (my friends and I deem the current championship drought as “the curse of the contract”). Andy Pettitte earns $16 million this year, though fortunately his deal is only for one year. Left field is entrusted to the immobile Matsui and the feeble-armed Damon ($26 million combined this year and next). Abreu was re-signed for a ghastly one-year sum, and his effort in RF is best categorized as “easy-going.” If Jorge isn’t splitting time between 1B and DH by the end of 2009, I’ll honestly be surprised. Carl Pavano – ’nuff said.

I believe that the Yankees have repeatedly tendered these ridiculous contracts in the past few years in order to give the elder Steinbrenner one last shot at the title. I respect this win now approach — however, the dynastic nucleus is aging (Pettitte, Jeter, Posada, Rivera) and there is a management struggle at the top (Hank vs. Hal vs. Cash vs. Levine). I’m not sure that if the team even wanted to make a big move (e.g. trade for Sabathia mid-season) that it even could foster the consensus to do so.

Hopefully when the current contracts expire the team will choose to focus on building from within instead of signing another big name to patrol left field. This might require a year or two of non-playoff growing pains, but I’m just hoping that 2008 won’t be one of those years.

Olbermann: More Red Sox stuff buried under new Yankee Stadium
McCutchen to Scranton, for real this time!
  • Bo

    it is all well and good to build from within but you need to add free agents and great players to that from within structure.

    • Joseph P.

      I think it’s a matter of how smart we’ve been with supplementing the internal growth.

      • yankeemonkey

        A large part of the problem is the fact that there hasn’t *been* any internal growth up until a couple of years ago (with the emergence of Cano and Wang).

  • Rich

    I have long believed that the payroll can be as much of a curse as a blessing because it tends to breed inefficient decision-making.

    • Joseph P.

      Couldn’t say it better myself. Over the winter, and even now, people say that the Yankees shouldn’t care about payroll, because they have more than enough money to cover the costs. And that’s fine and good. But I think the bloated payroll is certainly a symptom of a larger problem. Hopefully, the money coming off the books this off-season helps to lead us to a bit more fiscally responsible operating manner.

  • question mark

    The Daily News made an apt comparison to 1990 today. We were a bloated veteran team there with no easy answers, and we’re one today.

    • Joseph P.

      The difference is clearly in the talent, though. There wasn’t nearly as much talent on the 1990 team. This makes for an interesting study, though.

  • A.D.

    It’s true that the Yankees huge payroll and unlimited ability to write checks can cause a lack of effeciency in signing free agents. If we look at this from an Economic standpoint:

    Cash & The Yanks: Money essentially no object, though more rumblings lately, which will go away with 70M off the books, but if Kei Igawa doesn’t pan out, eh just 4 mil a year, sure Pavano is injury prone, but the 10M won’t kill us and there is upside

    Billy Beane, A’s: Completly cash strapped, he cannont make a wrong move or it can set the franchise back years. Therefore everything is very calculated, he essentially makes no moves for a nice to have, and if he does they are efficent (Frank Thomas league min, Ray Durham mid season gets a supplemental draft pick). Downside doesn’t have that little extra money to go get it done.

    Theo Epstien, Red Sox: They have money, they can sign high profile guys such as manny, make a trade to take on payroll (Beckett & Lowell), but there is a limit to the spending, they don’t have limitless money, so you see creative deals Nomar for Mien. & Cabrera, protecting Bucholtz, Lester & co. But still opening the check book for Diaske

    There is something to be said for ineffiencies in the yankees ability to essentially print money, they can be lazy about talent assesment, not that they do this actively, but it can happen anyways, essentially impulse shopping the free agent market.

    The other thing is one assumes that a vet should still be motivated to succeed even after the big contract, but you frequently see guys have amazing years in walk years, which again begs the question for shorter or more incentive laden deals.

    Personally I think we’re seeing a market correction, the Scott Boras & Hendricks brothers of the world have driven up the price of free agents both in cash and years, and had some busts (Pavano, Zito, Andruw Jones) to the point that teams are responding by locking up young talent, or bawking at the price. Kyle Lohse went unsigned until spring training (Boras client), A-Rod appeared to have no suitors when he opted out, Kenny Rogers fired Boras for shopping him when he said he wanted to stay in Detroit.

    With this movement it should be interesting, free agent classes will get thin, which should put the power in the player & agent, but if teams balk for cheaper guys, i.e. Hinske over Tex this winter, then players salaries have to come down in years or price. Especially if the big market teams lock up their own talent and don’t drive up value

    • Mike A.

      All the young players signing long-term deals to buy out arbitration and even free agent years is driving the MLBPA nuts I bet. They’re dragging down arbitration rates for all the players not agreeing to these days.

      Imagine if Evan Longoria is hitting .300-30-110 in 2010 and making only $950k, and then Ian Stewart is doing the same thing in his first year of arbitration. What kind of case can Stewart make that he’s a $5M a year player?

      • A.D.

        Thats the beauty of free market economics, it’s fresh for the game, I like it

        • Paul V.

          I disagree with your use of the phrase “free market economics.” Major League Baseball operates under an anti-trust exemption. It’s as “free market” as a monopoly can be.

  • Badhay

    Just out of curiousity, anyone else believe that 6 IP, 3 ER, 7 H, 2 BB, 7 K is a “horrific” start? Not that I agree with it, but I’m pretty sure 6 IP, 3 ER is the definition of a “quality start.” Right off the bat this guy’s credibility can be questioned.

    • Joseph P.

      Sorry. This was written before Pettitte’s last start.

    • Paul V.

      Hi Badhay — I wrote this guest column about a month ago (after a completely atrocious start from Andy). My mistake for not insisting that the first line be updated accordingly. So feel free to question my credibility for other reasons.

      Paul V.

      • Whitey14

        Then again, just because the pitching standards in MLB have drastically lessened over the years there is no reason to think that a 4.50 ERA and a 1.50 WHIP in an outing should be considered quality. It’s not, it’s league average at best. Teams that feel those type of stats are acceptable do not compete for Championships.

  • LiveFromNewYork

    Arod is the highest paid player in baseball and he wants a ring.

    He has said that none of the records are going to be enough without a ring. I’m not sure it’s the money, I think it’s the fire in the belly.

  • Steve S

    Thats a complete exaggeration. There are plenty of bad ocntracts, but to be quite fair, the financial aspects of baseball now and then are completely different. And since I am at work and dont have time to go into detail. There is one major part missing from this analysis and the premise that these contracts were all for George and his ego.

    We as fans have to look at ourselves and the guy next to us before casting that stone. Those free agent signings are as much a product of the fan bases’ unrealistic expectations as they are a product of the owner.

    This franchise has made the playoffs thirteen years in a row. The comparisons to the 90’s are simplistic and a product of the media feeding into the lowest common denominator, its almost as bad as the comparisons to the late 90’s teams. You would think after thirteen years there would be a level of optimism that pervades this constant negativity.

  • Chris

    I think it’s unfair to point out how ‘brilliant’ some other teams have been and how stupid the Yankees are. In particular, look at the Red Sox. They missed the playoffs in 2006. Going into 2007, their major moves were:
    1. Sign JD Drew (a $17 million grand slam)
    2. Sign Daisuke (4.4 ERA in 2007, for about $100 million)
    3. Bring up Pedroia

    Not really the moves that suggest they would jump to the top of the pack.

    There’s a lot of luck and uncertainty to any of these moves, and particularly in the playoffs. If a team gets hot or cold at the end, it can mean the difference between getting swept and winning the world series. I think you can see the result of the Yankees spending as the fact that they have made the playoffs every year since 1997.

    • Mike A.

      You forgot $36M for Julio Lugo.

  • JRVJ

    “Hopefully when the current contracts expire the team will choose to focus on building from within instead of signing another big name to patrol left field. This might require a year or two of non-playoff growing pains, but I’m just hoping that 2008 won’t be one of those years”

    I’m going to concentrate on this quote, which I think summarizes Mr. Vinelli’s POV.

    I made this point in a recent thread, but let’s be objective here: the Yankees have all sorts of revenue stream in place (and will (a) Have more coming in due to new Yankee Stadium; and (b) will decrease their revenue sharing obligations due to new Yankee Stadium).

    They will have up to $78MM coming off the books after this year (though I suspect it will be less, depending on what happens with Pettitte, Mussina and Abreu), and $31MM after next year.

    Building from within is fine as PART of the solution (both in the short and long term), but it is no benefit to us fans to have the Steimbrenners pocket an extra $80 million per year so the Yankees can build from within.

    What the Yankees SHOULD DO is maintain their present course of paying over slot in the draft and signing good international FAs WHILE judiciously signing top-tier FAs (both their own and others).

    This would leverage the Yankees greatest competitive advantage ($$$) while allowing for a more balanced team.

    What the Yankees SHOULD NOT DO is take their eye away from player development (like they did around the turn of the century) and try to fill all their holes through FA (especially in case of marginal, often injured talent).

    One final thought: developing young baseball players is an inexact science. Even with the best sabermetricians AND scouts, some players will simply not pan out or get injured. To SOLELY BUILD FROM WITHIN is nice as an intellectual exercise, but I disagree about the wisdom of that decision in case of the Yankees.

    • Chris

      How do you identify top-tier FAs? Giambi was considered a top-tier FA when he was signed, but now everyone criticizes that deal.

      • JRVJ

        It’s usually pretty clear who the top-tier FAs are (e.g., Sabathia and Teixeira this year).

        In re: Giambi, the two criticisms against that deal are all very unique, since they tie into steroids, namely:

        (a) That Giambi would be so mysteriously injured during much of the middle years of the deal;

        (b) That his output would be so depressed in the latter years (NOTE: aging players, especially those with old players skills such as Giambi usually age badly, but CLEARLY Giambi’s deterioration has been influenced by steroids, both because of the nature of some of his injuries and his decreased output when he stopped taking steroids).

        In any case, the problem is not so much the Giambi deal (which was actually quite good in the earlier years), but the fact that the Yankees wanted to solve ALL of their issues via FA (which lead to eventually signing Pavano and Wright, and we know how well that turned out. Heck, even Johnny Damon’s signing was the by-product of not having a farm system that could fill-ín the gaps) .

        That makes no sense, and I certainly don’t espouse that POV (in the same way that I do not support SOLELY BUILDING FROM WITHIN).

        • Chris

          Except that’s not a fair assessment of Giambi.

          He’s been on the Yankees for 6 seasons, plus this year. In 4 of those 6 seasons he’s played basically a full season. In the other two (2004 and 2007) he played basically half a season each time due to injury.

          In his full seasons, he’s had the following stats:
          OBP > 400, SLG > 500, HR > 30. In 3 of those seasons he had > 100 RBI.

          Also, it’s not like they significantly shifted him to DH as the contract wore on. In his first season he played 92 games at 1B. In 2006, he played his fewest with 68 at 1B.

          The only stat that has shown a significant decline is his BA, which isn’t that significant if he keeps getting on base via the walk.

          • JRVJ

            Ok, let’s be clear on something: I’m not criticizing the Giambi deal.

            YOU seem to be implying that it was a bad deal (“How do you identify top-tier FAs? Giambi was considered a top-tier FA when he was signed, but now everyone criticizes that deal.”).

            If you take out those two injury years, Giambi has actually been a good signing for the Yankees (in fact, Giambi is certainly not the biggest problem on the Yankees right now, what with his OPS+ of 125, no matter how many biased commentators – cough, SJ44, cough – like to claim otherwise).

            • Paul V.

              I’d like to get in the mix and declare that I think the Giambi signing has been a poor one for the Yankees.

              Consider that Giambi might have been willing to sign for 5 years instead of 7; he’s never been an adequate defender, which means he takes up 2 spots in the lineup — one for himself and one for the weak hitting first baseman who has historically played the field in his place during important series; and, he’s always griped about not being allowed to play the field. It’s not like he’s a “complete” player akin to comparably priced/experienced players throughout this decade (e.g. Ichiro, Vlad).

              I’ll grant that Giambi’s numbers — when healthy — have been impressive. But he’s unreliable — and I think his signing is symptomatic of larger internal difficulties within the organization Signing veterans in their early 30’s to contracts that pay heavily until their late 30’s — and then feeling the pressure to play those veterans — is just bad strategy.

  • Eric SanInocencio

    I find it funny that often times the Red Sox get credit from building their lineup from within the farm system, and not succumbing to the idea of trading away their young talent. While they have done that a fair amount, to me the one move that put them over the top had to do with trading away their prized prospect.

    The Hanley Ramirez/Josh Beckett + Mike Lowell trade was the exact opposite of refusing to move your youngsters, and this is often not brought up. The got the ace they needed (Beckett) along with a very good third baseman from the Marlins. Without that move, in my mind there is no doubt that they aren’t World Series Champions last season.

    So, yes they’ve kept prospects and worked them into some of their lineup. But six out of the starting nine (Lowell, Manny, Drew, Ortiz, Lowell, Lugo) are from outside the organization.

    • Whitey14

      Yeah, but I’ll trade a 20 year old shortstop with a questionable attitude and great upside for a 24 year old ace with post season dominance under his belt any day of the week, especially if you want to throw in a 30 year old all-star caliber thirdbaseman. You have to decide when it’s right to trade a young prospect and I don’t think either team would reverse this trade now if given the option.

      Now Jeff Bagwell for Larry Anderson…different story!

    • Chris

      That ‘very good third baseman’ was completely washed up in Florida, and they were forced to accept his contract if they wanted to get Beckett.

      As for the ones from outside the organization, you count Lowell twice.

      Ortiz, Manny, Drew, Lugo – Signed as FA
      Varitek – acquired in a trade (give up veteran to get prospects)
      Lowell – acquired in a trade (give up prospects to get veteran)
      Pedroia, Youkilis, Ellsbury – drafted

  • Nefarious jackson

    McCutchen to scranton— thanks to Pete A

    • A.D.

      They’ve seen enough of Heath Phillips starting, CJ is reporting the same and that Alceves is taking McCutchen place at AA…..maybe McCallister will go to A+, but that’s completle speculation on my part

  • RustyJohn

    First, as I’ve asked before, I would be curious to see how New York’s tax and high cost of living situation plays into what we believe is “overpaying” for a player. If a player makes $10 million a year in Seattle, a city with no city income tax in a state with no state income tax, is that equivalent to a NYC player who earns $15 million a year? We say, “Shit, why did the Yankees overpay by $5 million for this guy?” when that is a comperable market rate given the differences in cost of living.

    Two, each individual signing needs to be assessed at the time the signing was made and at the specific needs the team had at the time. When Damon was signed the Yankees were lacking a legitimate lead-off hitter and desperately needed one. Kenny Lofton isn’t exactly the solution to those problems. Matsui overpaid? He’s been the most consistent (props to Joe Morgan) hitter this year and I doubt many teams would hate having a LF/DH who hits .330/25-30 HR’s/100+ RBI/nearly 100 runs scored every year he has been on the team (minus the injury year). Abreu- a one year deal done when the FA market is lacking comperable RF’s.

    The contracts that we despise (Pavano, Igawa, Giambi, Pettite) can all be explained when looking at the circumstances involved. Everyone wanted in on Pavano coming off his best year. The Yankees have had starting pitching issues for the past few years and have been looking how to plug that void while rebuilding the farm system. Can anyone have predicted the bizarro injuries that occurred? Giambi? Former MVP with monster HR and OBP numbers signing a contact at a time when 6 and 7 year deals were not unheard of looking to replace Tino at 1st?

    Even last year’s contracts- Mo, Posada, ARod and Pettite were explanable when looking at losing the one steady part of an unproven bullpen, having three open spots in the starting rotation (want to start a season with two proven starters in Wang and Moose?), and losing the best player in baseball and the best offensive catcher in baseball with no viable replacements.

    The problem has been the farm system had been so depleted of both position players and pitchers until 3 or 4 years ago there were no viable in-house solutions. With a farm system full of pitching prospects, a couple of which can be easily traded off for position players in the coming year(s), this team is set for a decade of dominance.

    • RustyJohn

      Oh, and in comment to one part of this posting- something about Seattle suceeding despite Bavasi, Seattle sucks. Last year they were an about .500 team even though they scored fewer runs then they gave up- a complete statistical aberration. This year they are the worse team in the AL- they have some of the best starting pitching but their offense is absolutely dreadful and they have all of this for the 6th or 7th biggest payroll in baseball.

    • JRVJ

      Surely that’s a mistake when you mention that Pettitte’s is one of the contracts the Yankees despise…. (you probably meant Farns or even Wright. I doubt you mean the 2 year deal Moose got after 2006, since he is actually a bargain this year).

      • RustyJohn

        Jaret Wright was a whole other matter- other than his first year in Cleveland and the Leo Mazonne magic in Hotlanta, he sucked to begin with.

  • RustyJohn

    I don’t despise it but the author of the post talked about Andy earning 16 million this year- I think Andy was a good pick-up given the reasons stated above (three holes in the rotation if he isn’t signed).

  • chris

    face the the factss – csashmana aside ffrom gettinh justices has done nthing fo thie team has done nothing, besides passinind on johnan jhas dond done nothing for this team. he is the most overaterd GMs in the game.

    they once calld th mets the worst money can buy, nut the yankees now tale the cown. i say he gets one more chance and80 millionn dollars to show some balls amd get a real team out there – if dor he nees to be gone

    this teak is an absolute joke and should be embaressed

  • adam b.

    i like the post its all very true, but this was more true say three years ago rather than today. only since cashman was given the reigns did we start to run an actual organziation instead of fielding an all star team with the payroll to prove it. its easy to say that cashman has done nothing and he’s overrated but in reality we won’t see the fruits of his labor for another year or so you can’t just re-build organziational depth overnight, developing talent takes time and if you read any knowledgeable writers or listen to anyone who knows baseball knows that the talent we have drafted since then has been generally good to great. right now we’re paying for the sins of the past mis handling of the yankees and it shows, but to say we’re lost or that theres no hope is short-sighted. patience is not a word associated with yankee fans but we’re going to have to be for awhile if we want to see the changes cashman has made to make an effect on the field. teams like the brewers or the angels or the dodgers didnt just wake up one day with a great farm system they had to cultivate it. today is bad but tommorrow will be better and maybe that means no first round exit this year but when talent rises to the top of the organization we’ll be primed for that run with a new core of great young players that made us great before

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