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A recent profile of track prodigy Galen Rupp and his coach, former marathon champion Alberto Salazar, noted that it’s been forty-eight long years since an American man won an Olympic medal at the 10,000 meter distance. Salazar believes that Rupp, his twenty-five year old student of 12 years, can end that drought this summer in London. Rupp is an extremely talented runner, one of the best at the 5 and 10k distances, but both Salazar and Rupp know that besting the dominant Africans at this distance would require virtually everything to go right. And so they’re doing their best to ensure that it does. “The mantra is control the controllables,” explains Nike’s sports psychologist, Darren Treasure.

 “”We’re not at all intimidated by the Africans; they’re great runners but there’s so many of them. With our [American] runners, we have so few of them that we have to do everything perfect,” says Salazar…

Since 2001, Salazar has ensured that his small crop of Oregon Project runners have access to every technological, physiological and psychological advantage available. From altitude simulation tents and rooms to both anti-gravity and underwater treadmills to the Cryo Sauna, a cylindrical chamber that turns liquid nitrogen to gas to cool an athlete’s body at bone-chilling temperatures for rejuvenating purposes, Nike, who reported revenues of $19 billion in 2010, pays for and houses them on their 193-acre Beaverton, Ore., campus.”

So what do Cryo Saunas and altitude simulation tents have to do with Yankee prospects? The Empire State Yankees, the AAA affiliate of the New York Yankees, are currently without a home stadium. The Yankees are in the process of tearing down the old PNC Field and replacing it with a $40M facility, but in the interim the club has nowhere to call home. This means that players like Manny Banuelos, Dellin Betances, Francisco Cervelli and Austin Romine will be spending the entire season on a 142 game road trip, playing “home games” in six different cities. The hope is that the stadium will be completed in time for the 2013 season, but 2012 will be a tough order for these Yankee minor leaguers.

This is a more extreme example of the grind of minor league life, detailed in depth by Mike Ashmore here. While the facilities at the major league level are top notch, players just below that level often deal with situations that wouldn’t be suitable for elite athletes in other sports. Of course, plenty of these athletes are not elite, and the lion’s share of them won’t ever become major league regulars. Regardless it’s not a stretch to say that the nutrition opportunities in particular for players at the minor league level do not come close to that of an Olympian or a major leaguer. I asked Josh Norris, beatwriter for the Trenton Thunder, about the food habits of the players he covers:

 “The per diem is certainly meager, and the postgame spreads aren’t exactly Jenny Craig approved… Fast food is the only available option a lot of the time, but they can obviously choose, say, Subway over McDonald’s. A personal chef/nutritionist would obviously be helpful, but for 30 guys on the road and at home would get really, really complicated.”

Norris went on to astutely note that an in-shape ball player isn’t always the superior ballplayer:

 “A perfect example is a guy like Richie Robnett. With his shirt off, that guy was a Met-Rx commercial waiting to happen. At the plate, however, his washboard abs rarely translated into solid contact. Contrast that with a guy like, say, Prince Fielder, who obviously isn’t the picture of health. If you went in with no knowledge of the players other than their appearance and perceived health/strength, you’d take Robnett every time. Being a successful baseball player requires much more than pristine physical fitness. There’s coordination, adherence to practice regimen, and, on some level, I think, superior genetics.”

Given that prime nutritional health and peak baseball performance aren’t perfectly correlated, and given that most of these players have little ultimate value to the major league team, what’s the impetus to spend more money to institute a more rigorous exercise and nutrition program? New, advanced technologies don’t always translate directly into improved baseball skills. Maybe there isn’t a smart, snappy answer to these questions. But these players are athletes, and we don’t know what sort of talent and skill is left underdeveloped when they aren’t given every chance to become the greatest they can be.

Do the Cryo Saunas mean that Rupp recovers better from his hard workouts and gets faster, leading to one or two seconds gained on the track? Would he have been that fast if he had just used ice? You can’t know. But when there’s so much at stake, and so much money to be made (especially in baseball), it would seem prudent to take every avenue possible to maximize the value of your players. They may not need Cryo Saunaus, but ensuring that every minor leaguer in the Yankees organization gets the best nutrition and workout facilities available to them might lead to an organizational advantage and a more efficient development of talent. If I were the owner of a team and had some extra cash lying around, perhaps leftover thanks to new restrictions on how much I can spend on the draft, I might see if this would be a worthy investment.

Categories : Minors
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Apr
03

The RAB Bracket Challenge Winner

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After a long hard fight, a victor has emerged. By correctly picking Kansas and Kentucky to meet in the final game, and then picking Kentucky over Kansas, the appropriately named RightPicks has won the RAB Bracket Challenge with a score of 1460. RightPicks didn’t pick very many upsets, but he had a very strong showing in the first four days of the tournament and picked the final two teams and the winner correctly. It was an all around great performance, and it goes to show you that the most important picks you make in a bracket are the last three.

Finishing immediately behind RightPicks were cplatt2003 and awp1990. Interestingly, both of them correctly picked Ohio State to advance to the Final Four, whereas RightPicks incorrectly had Kansas State. Despite this, RightPicks had built up just enough of a lead to withstand their challenge. Congratulations to the three of you on your great brackets. You’ve won something greater than any national championship: free gear from the RAB shop. Please get in touch with josephp at riveraveblues dot com to claim your prize. Thanks to all of you who participated, I hope you enjoyed yourselves. Except for Moshe Mandel, who may or may not have beaten me. The world may never know.

Categories : Asides
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March Madness kicks back up tonight, and by the end of the weekend we’ll know the Final Four teams. With so much swag gear from the RAB Shop at stake, it’s time to take a look at the leaderboard. The current first-place bracket is sitting pretty with seven of eight Elite Eight teams still alive and all four Final Four teams still alive. He smartly took NC State and Florida to the Sweet 16, and his score of 530 gives him a sixty point lead over the next closest bracket. Each round is worth more than the next, so his lead could evaporate in a night. One possible contender? Joe Pawlikowski, currently tied for 14th place with a score of 450. If he wins, can he still qualify for the prize? We may have to run this by the legal department.

I would like to think that I have had better brackets than this one. Four of my Elite Eight teams and two of my Final Four teams are out (Memphis and Florida State). It was fun while it lasted, Tigers and Seminoles. My current score is 380, good for 41.8% of all brackets. It’s ugly, but it’s not as ugly as the view of RAB’s Moshe Mandel. His score of 330 beats only 10.7% of all entries. They say that a chimp picking stocks blindly can do better than stock analysts. One has to think the same would have held true for poor Moshe.

Of course, things can change quickly in bracket challenges, and the most important decision you make is who you have winning the championship. There’s plenty of time for this thing to get shaken up.

Categories : Asides
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Mar
13

Join the RAB Bracket Challenge

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On Monday we introduced the first ever RAB Bracket Challenge, March Madness bracket pool hosted on ESPN.com. If you haven’t joined already, please do so by clicking here and adding your entry to our group. We’re giving away prizes from the RAB Shop, but no RAB hoodie can match the feeling of knowing you bested all your fellow readers. Either way, be sure to join and give it your best shot. For those of you who have joined and filled out a bracket already, it’s not too late to change your entry and have Syracuse getting knocked out a little earlier than you did before. Tough break for the Orange. We’ll be around to answer any questions in the comments.

Categories : Asides
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If you’re a sports fan it’s hard not to get swept up in March Madness. It’s the first competitive playoff sports action since the Super Bowl, and the knockout format usually leads to big-time upsets, Cinderella teams and high drama. Last year, 5.9 million people filled out brackets on ESPN.com alone, so we’re introducing our own first official RAB Bracket Challenge. Entering is free and easy. You have to create a bracket entry on ESPN.com and join our group, which you can find here.

No contest is complete without prizes, so we’re offering RAB gear to the top three entries. Third prize is an RAB mug or tote bag, second prize is an RAB T-Shirt and first prize is an RAB Hoodie. The deadline to finalize your bracket is tipoff on Thursday afternoon, and we’ll be checking in frequently throughout the tournament with group scoreboard updates. Join today and show the RAB community what you know. Feel free to leave your questions and/or predictions in the comments.

Categories : Asides
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Mar
01

Like Daisuke, only good

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“Blame Rob Neyer for sending me on this quest, and blame me for most of the confusion over the last few years regarding the gyroball. To answer the most popular questions: Yes, it exists; yes, Daisuke Matsuzaka throws it; yes, I can teach it. That’s just half the story, and the rest is so much more interesting…

One final note on Matsuzaka: the gyroball is really irrelevant when discussing his talent. He has a plus fastball, plus breaking ball, and plus-plus change, which appears to be a forkball. He pitches aggressively with good velocity, movement, and command on all his pitches. He has an innate sense for keeping a batter off the ball, varying his pitches with no discernible sequence. While he tends to use the change as his out pitch, he’ll use any pitch at any count in any situation to any batter. I compared Matsuzaka to Roy Oswalt and Tim Hudson due to their demeanor on the mound and their body types, but Clay Davenport’s statistical comparison to Roger Clemens surprised me. The more I think about it, though, the more it holds true. Both are fearless and when standing on the mound–they own the game.”

– Will Carroll, November 15, 2006.

You don’t need me to tell you the sad story of Daisuke Matsuzaka. You know all about the posting fee and the contract, the fabled gyroball that Matsuzaka does not throw, the feuds with management and his difficulty adjusting to American baseball. The Daisuke Matsuzaka story is one we all know and one we all reference when demonstrating the perils of importing Japanese pitchers to Major League Baseball. Yet some five years after the Yankees were outbid by Matsuzaka and watched him go to their biggest rival amid great fanfare only to see him disappoint, they landed their own import, albeit one who came to America four years ago. Kuroda had been watching, observing Daisuke’s transition before deciding himself to come to the United States one year after Matsuzaka. Daniel Barbarisi had the story in Tuesday’s Wall Street Journal:

 ”At the time, [Hiroki Kuroda] was weighing coming to the United States himself, after pitching 11 years in Japan. He saw the initial success Matsuzaka had and decided that he, too, could make the jump overseas.

“Because he was the best pitcher at the time, and everyone thought, well, if he doesn’t succeed in the States, then no one’s going to succeed in the States. So it obviously had a big impact on my decision to come to the States.”

The two men had chatted in Japan and got to know each other better as teammates prepping for the 2006 World Baseball Classic. At the time, Matsuzaka was the best pitcher in Japan, and his name was on everyone’s lips as he considered coming to America to pitch. Kuroda was a good starter in Nippon Professional Baseball, but not a star on Matsuzaka’s level.”

As Barbarisi goes on to tell, the tables have been turned. Most observers would agree that Daisuke’s career has been a disappointment, certainly if judged against the outrageous hype heaped upon him prior to his arrival. But even by most objective measures, Matsuzaka hasn’t exactly been superb. He has constantly struggled to stay healthy, perhaps a product of the difficulty adjusting to pitching every five days. He’s only stayed off the disabled list one season in his career, and last summer he underwent Tommy John surgery. When he was healthy he wasn’t spectacular, going 49-30 over 105 starts. He’s thrown 622 innings of 4.25 ERA ball, a number that matches neatly with his 4.26 FIP. Those are mid-rotation numbers, not sort of numbers one pays over $100 million for over 6 years. They’re certainly not the sort of numbers one sees from Tim Hudson, Roy Oswalt, or Roger Clemens.

Interestingly, it doesn’t seem as if the level of disappointment surrounding Matsuzaka has ever been commensurate with the level of surprise over what Kuroda has been able to bring to the table. Maybe it’s the fact that he’s pitched on the West Coast and saw the playoffs only twice or maybe it’s his age and the fact that he came from a far less renowned Japanese team, but the hype surrounding Kuroda never came close to sniffing Daisuke mania. Check out this prescient scouting report from Mike Plugh exactly one year after Carroll wrote his profile of Matsuzaka:

“He’s not Daisuke Matsuzaka, but Kuroda a very strong power pitcher with a low to mid-90s fastball and a wicked forkball. In addition, he features a plus shuuto, something like a screwball, as well as an effective change. Even if he only pans out as a third or fourth starter in the majors, he will give you innings, work deep into games, and he should be fairly consistent start to start.”

In one fewer season, Kuroda has thrown some 70 innings more than Daisuke (699.0, to be exact) and has started 112 games. He missed significant time in 2009 due to an oblique injury and a concussion suffered when he was struck in the head by a batted ball, but in the three other seasons he’s been as durable as Plugh expected. His numbers have been better than Daisuke’s as well, even if he was pitching in the NL West: he’s gone 41-46 with a 3.45 ERA and 3.55 FIP. True to form, he’s shown a good, hard fastball and shuuto (which is more of a two-seamer or sinker than a screwball), and generates a ton of groundballs while limiting his walks. In sum, he’s not the ace Daisuke was supposed to be, but he hasn’t been as bad as Daisuke was either.

When thinking a way to put this piece together I asked Over the Monster‘s Marc Normandin  if he had written anything lately putting a bow on Matsuzaka’s Boston career, figuring that Matsuzaka’s Tommy John surgery last summer likely marked the end of any meaningful relationship between the pitcher and the team. Marc’s answer surprised me. He said no, because Daisuke was ahead of schedule and might return sometime this year. Part of me wanted to scoff at the idea of Matsuzaka making any further contribution this year, but to do so would be to miss the point. Here on the first of March, with the promise of spring and meaningful baseball blooming in full, isn’t the lesson of Matsuzaka and Kuroda that  anything can happen and that the game will always surprise and confound you no matter what you expect or project? It’s why we always keep coming back for more, and it’s why baseball will never die.

Categories : Musings
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(Drew Hallowell/Getty Images)

One of Larry’s objections to the Pineda/Montero swap is the future availability of Cole Hamels on the free agent market. If the Yankees can pick up Hamels to slide in behind Sabathia, the argument goes, then perhaps they should have kept Montero to provide cheap production out of the designated hitter slot over the next few seasons. I wrote about Hamels last week, speculating that the Yankees might be preparing to make a run at him next winter.

Last Friday’s trade radically altered the landscape of the Yankees roster. In acquiring Michael Pineda from the Mariners, the Yankees acquired a potential number one or two starter with five years of cheap team control. According to well-sourced reporter Joel Sherman, the price was particularly important because the team is serious about getting under the $189M luxury tax threshold in 2014. With the new roster in place, it seems reasonable to wonder whether the team will be able to afford Hamels, or their own Curtis Granderson, Robinson Cano, and/or Nick Swisher, all of whom hit free agency in the next few years.

In projecting precisely whom the Yankees will be able to afford, it helps to have a handle on a reasonable estimate of future prices. Towards that end, I asked  Joe, Mike, Ben, Moshe and Larry to all provide me their best estimates for what they expect Swisher, Granderson, Cano and Hamels to pull in in their new contracts. These were the results of our inputs:

Robinson Cano: AAV of $22.0M, high of $23M, low of $20M.
Nick Swisher: AAV of $12.67M, high of $15M, low of $12M.
Curtis Granderson: AAV of $17.0M, high of $18M, low of $15M.
Cole Hamels: AAV of $21.67, high of $23M, low of $20M.

I’ll be using these figures going forward, and also making a few assumptions about the future Yankees payroll. The first one is that the Yankees won’t allow Robinson Cano to leave via free agency. He’s a homegrown star at a difficult position to fill, and he’ll only be 31 when he hits the free agent market after the 2013 season. It’ll hurt, but I expect the Yankees to resign Cano at $22M per year, the average listed above. The second assumption is that Alex Rodriguez will hit his 660th home run this season, and will hit his 714th home run in 2014, thus triggering his second $6M bonus. The third assumption is that Russell Martin does not sign an extension with the Yankees, and that they’ll use Austin Romine by 2014. With this in mind, this is what the roster would look like heading into the 2012-2013 offseasons:

The specific names attached to the $500k salaries aren’t all that important, but the idea that a cheap player will occupy the fifth starter’s spot and most of the bullpen. Banuelos, Betances, and Warren are interchangeable with whatever young player your heart desires. The cost is important.

The Yankees will have roughly $40M to spend on their rotation, bullpen, center field, right field and designated hitter positions. If they pay Granderson $17M and Swisher $12M, they’ll have around $10M to fill out the final rotation spot and the bullpen. They could go with a cheap arm in the fifth starter position, fill out the back end of the bullpen with minimum salary guys, and sign a decent set up reliever. If they choose to let Granderson walk and sign Hamels and Swisher, they’d have about $7M left over for the center field position (or left field, if they shift Gardner to center), bullpen and DH. This would be difficult to pull off. If they chose to forgo both Granderson and Swisher and sign Hamels, then they’d have around $18M left for two outfielders, the DH and the bullpen.

There doesn’t seem to be any way that the Yankees can get under $189M with Robinson Cano, Curtis Granderson and Cole Hamels all under contract at market rates.  From a financial perspective, the “easiest” solution would be for the Yankees to acquire a cheap, cost-controlled outfielder (like a Domonic Brown) who could step in and fill Swisher’s role for cheap. This would allow the Yankees to move Gardner to center and allow Granderson to walk, replacing Gardner with a relatively cheap left fielder and spending big on Hamels and the bullpen.

Personally, I’d very much like for them to spend on Hamels, probably even at the expense of Curtis Granderson. The offense would take a bit of a hit, but the idea of a Sabathia-Hamels-Pineda-Nova rotation is enticing. That’s just me, though, so I’m providing the link to my Google Doc with all the relevant numbers. If you save your own version, you can edit and mess around with various roster scenarios and post your version in the comments. Any way you cut it, though, there are some very hard decisions ahead for the Yankees front office.

Categories : Hot Stove League
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On Tuesday Jim Salisbury of CSNPhilly.com reported that the Phillies and Cole Hamels were not likely to reach a long-term extension before the start of the season and were more focused on inking Hamels to a one-year deal in 2012, which represents his final year of arbitration eligibility and team control. While assistant general manager Scott Proefrock insisted that there is plenty of time to reach a deal at a later date, this admission represented the strongest possibility yet that Hamels would reach free agency after the 2012 season and hit the open market as the best left-handed pitcher, if not best overall pitcher, available. Salisbury mentioned that Jered Weaver’s five-year, $85M extension with the Angels would be a reasonable comparable for the Phillies and Hamels, but Hamels may have something far more lucrative and long-term in mind.

A lot of digital ink has been spilled and a lot of hands have been wrung lately over the Yankees insistence on watching their payroll. At this point, no one knows whether they’re serious about a long-term reduction in payroll towards a $189M target, or whether they simply have disliked the prices on the free agent market thus far. In the past, the Yankees have always shown a willingness to pay a premium for what they deem to be premium talent. Alex Rodriguez, CC Sabathia, Mark Teixeira and A.J. Burnett are all beneficiaries of this approach, and Cliff Lee could easily have joined them. The operative turn of phrase though is “what they deem to be premium talent”. Their approach towards middle-of-the-road talent is far more mixed. The team has been slow this offseason to pursue current available pitchers Hiroki Kuroda, Roy Oswalt and Edwin Jackson, and they avoided spending $80 or $100M on C.J. Wilson and Yu Darvish, respectively. Is this because they want to reduce payroll, or is it because they don’t deem them to be premium talent and want to keep their powder dry for bigger targets? No one seems to know.

If they’re keeping their powder dry for bigger targets, it would make sense why they haven’t been so eager to snap up one of the currently available pitchers. It would also explain their interest in a one-year deal with one of Kuroda or Oswalt, provided the salaries drop. It doesn’t mean that they’re cheap; it means they’re serious about getting good value for their dollars (A.J. Burnett laughs) and saving room for the players they deem to be truly worth a nine-figure investment. This is where Cole Hamels (or Zack Greinke or Matt Cain, if you prefer), come in. As pitchers go, Hamels would likely be the third best starting pitcher to hit the free agent market in the last decade, behind CC Sabathia and Cliff Lee. As Joe noted to me, one Hamels will actually hit the market with a better track record than Cliff Lee. He would end the Yankees pursuit of a number two starter behind Sabathia. In fact, his career performance really makes him worthy of the title of co-ace with CC: 8.45 K/9, 2.26 BB/9, 1.09 HR/9 and a 3.39 ERA. If you’re going to spend on premium talent, Cole Hamels is at the top of the list.

As the Yankees dance with Kuroda, Oswalt and Jackson over the next few weeks, it’s important to keep the long game in mind. If the team has no intention of moving the payroll permanently to the $225M+ range, then fans should root for them to preserve long-term payroll flexibility over the next ten months until Hamels becomes available. In fact, Joel Sherman noted that they appear to be doing just that and will be pursuing one year deals and one year deals only. If Kuroda or Oswalt can fit into this year’s budget as the team looks towards next winter’s bonanza, then great. If they sign elsewhere for $12M per year (an amount which would actually represent close to $16M to the Yankees with the luxury tax added in), then the team can make due with what they have now and retain the ability to add payroll in July or August via trade. Someone like Greinke or Cain could become available, or someone entirely unexpected such as Ubaldo Jimenez this past season. Regardless, there remains reason to be cautiously optimistic that this team’s rotation could see a temporary improvement this year and a serious long-term improvement next winter.

Categories : Hot Stove League
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Dec
14

The $189M Payroll: Part 2 of 2

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This post was written by Moshe Mandel and Stephen Rhoads

In part 1 of this series we went through six different payroll scenarios for the Yankees over the next decade. We were careful to distinguish between total savings and CBA savings, noting that how you treat the difference in payroll can make a big difference. Where you come down on the question of how much the Yankees can save is very much determined by which figures you’re examining. Let’s use Scenario 1 as an example. In this Scenario, payroll goes from $210M in 2013 to $189M in 2014, and then goes back to $210M in 2015. We summarized the savings accordingly:

2014: Payroll at $189M
Payroll savings: $21M
Revenue sharing refund: $10M
Luxury tax savings ($21M*50%): $10.5M
Total saved: $41.5M

2015: Payroll back at $210M
No payroll savings
No refund
Luxury tax savings ($21M*50%) – ($21M* 17.5%): $6.825M
Total saved: 6.825M

2016: Payroll stays at $210M
No payroll savings
No refund
Luxury tax savings: ($21M*50%) – ($21M*30%): $4.2M
Total saved: $4.2M

2017: Payroll stays at $210M
No payroll savings
No refund
Luxury tax savings: (21*50%) – (21*40%): 2.1M
Total saved: $2.1M

TOTAL SAVINGS: $54.625M
CBA Savings: $23.125M

Now, how you account for 2014 really determines whether the savings are significant or not. We peg the initial savings figure for 2014 at $41.5M saved. This number is comprised of a $21M reduction in payroll, a $10M refund from revenue sharing, and a $10.5M savings in luxury tax. However, the $21M reduction in payroll and the $10.5M reduction in luxury tax don’t really have anything to do with the new CBA per se. This $30.5M savings is a savings they could have gotten at any point in the last decade simply by reducing payroll. Thus, the $30.5M is comprised of savings prompted by the CBA, but it’s not comprised of savings emanating from the new CBA. It’s a $30.5M they could have gotten at any point in the last few years and chose not to. It’s still a cash item – it’s not depreciation in a cash flow statement – and it still means more money in the coffers, but it’s not a CBA savings per se, at least in our estimation. This is an important distinction.

In 2015, the payroll goes back to $210M, which means there are no payroll savings and no revenue sharing refund. There is a luxury tax savings though, as the new CBA allows teams to “reset” the luxury tax by going under the threshhold in just one season, an option that was unavailable under the old agreement. This means that any savings reaped due to the reduced tax rate can be attributed to the new CBA and can therefore be included as “CBA” savings. In this particular scenario, these savings are comprised of a $6.825M difference in what their bill would have been had they not gone under $189M in 2014 compared to what it is since they did go below the threshold. In other words, had they not gone under $189M in 2014, their luxury tax rate in 2015 would have been 50%. Since they did, it’s $17.5%. The difference is $6.825M. This is a real CBA savings and it plays out over the 2016 and 2017 as well (rate goes up to 30% and 40%, respective, per the CBA). Thus, the total amount saved in Scenario 1 is about $55M, but only $23M of it is prompted by the new CBA. Here’s the summary, then, of all six scenarios and how much the team could save by going with each option.

Scenario 1 ($210M to $189M in 2014, returns to $210M in 2015 and beyond): total savings of $55M, CBA savings of $23M.

Scenario 2 ($210M to $189M in 2014, stays at $189 for 3 seasons): total savings of $147M, CBA savings of $53M.

Scenario 3 ($210 to $189M in 2014, stays at $189 for 2 of 3 seasons): total savings of $116M, CBA savings of $54M

Scenario 4 ($220M to $189M in 2014, returns to $220M in 2015 and beyond): total savings of $76M, CBA savings of 29M.

Scenario 5 ($220M to $189M in 2014, stays at $189M for 3 seasons): total savings of $199M, CBA savings of $59M.

Scenario 6 ($220M to $189M in 2014, stays at $189M for 2 of 3 seasons): total savings of $152M, CBA savings of $59M.

Clearly the Yankees would save the most total money in Scenarios 2, 3, 5 and 6. In these scenarios, they’re dropping their payroll down to $189M and keeping it there for a substantial amount of time. The most they could save would be in Scenario 5, in which they shave nearly $40M off their payroll and maintain the reduction. In this case they’d net nearly $200M more, $59M of which would be a derivative of the new CBA.

These gains would be real, but they’re not entirely relevant for our purposes. Saying the team could save nearly $200M in Scenario 5 is true, but it’s also true they could save $75M right this moment if they dropped their payroll down by $75M. Of course, they haven’t done that at any point in recent memory. Our concern is the CBA savings.

The team would obviously save the most by dropping the payroll and keeping it low. Their tax bill would be lower, and they’d receive money back from the revenue sharing refund. However, these CBA-related savings don’t seem to amount to more than $60M. If they don’t maintain the new low payroll, the savings are even less. In Scenarios 1 and 4, in which they drop the payroll for one year and return it to prior levels immediately after, they’d only save $23M-$29M over four years. At most, this amounts to a little over $7M per year. In the latter scenarios, this annual savings figure rises to a little less than $12 million per year.

It’s our opinion that if the Yankees were interested in saving fifteen to thirty-five million dollars a year in payroll and tax, they should have done it already. They could have done it at any point in the last decade. We’re told that the new CBA incentivizes them to get below $189M to incur specific savings, but we see that the only time those savings are truly noteworthy is in the unlikely scenario in which the Yankees stay under $189M for a significant amount of time. Furthermore, we see that the CBA-related savings, at their most extreme, are about $12M a year. Are the Yankees really concerned about $12M a year in “new savings”? Are they suddenly concerned about the fifteen to thirty-five million dollars a year that they could have been saving all along? Perhaps most importantly, are they willing to forgo top free agents and risk missing the postseason to garner those savings?

Without further guidance as to what the true long-term goal is, we can’t get more specific than this. But it seems to be the case that the team will only realize serious, significant gains if they make a permanent move towards a payroll level more reminiscent of the early part of the last decade. Perhaps we’re stuck in the denial stage of the 5 stages of grief. It’s hard for us to understand the prospect of a “new normal” in which the payroll drops 10-20% while the team simultaneously reaps greater and greater revenues from a lucrative television network and new stadium. It’s even harder for us to understand risking contention in an increasingly competitive American League with an already-expensive roster to simply eke out a pittance in savings relative to the team’s balance sheet. But this may be the new Yankees reality, in which the Steinbrenners reach for a modicum of fiscal responsibility at the expense of some performance certainty. If it is, we all need to adjust our expectations accordingly.

Categories : Analysis
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Dec
14

The $189M Payroll: Part 1 of 2

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This post was written by Moshe Mandel and Stephen Rhoads

Yesterday Joe walked through the different stages of grief Yankee fans have been going through since learning that a $189M payroll was a realistic option in the near future. Part of my frustration when reading this (still in stage 2, I suppose) was that I didn’t have a firm handle on how much money the Yankees would actually be saving. If the amount they could potentially save ranges into the nine figures territory, then it’s hard to quibble with the team tightening the belt. If it was significantly less, then a whole host of options come into play, including the possibility that the team is not serious about getting below $189M in 2014 and was using Sherman to broadcast their bluff in advance of the Yu Darvish bid.

Accordingly, Moshe and I have run the numbers for six different payroll scenarios. We used the basic parameters set forth by Sherman in this quote to try and estimate the proper figures for each scenario:

For if they are at $189 million or less for the three seasons from 2014-16, they not only avoid paying one cent in luxury tax, which would rise to 50 percent for them as repeat offenders, but they also would get roughly $40 million in savings via the to-be-implemented market disqualification revenue sharing program. However, only teams under the luxury-tax threshold get reimbursed in this program, which is designed to prevent big markets such as Toronto and Washington from receiving revenue sharing dollars, which in turn will lower how much teams such as the Yanks pay (as long as they are under the threshold).

And even if they just went under $189 million for 2014 before going over again in 2015, the Yankees would receive serious benefits. They would get about $10 million in the revenue sharing disqualification program. Also, by simply going under the threshold once, the Yankees would go back to having a 17.5 percent tax rather than the 50 percent that begins in 2014 for them if they never go under. Keep in mind that since the luxury tax went to 40 percent for them in 2005, the Yankees have averaged paying $25.75 million in tax annually.

In the first three scenarios, we use a $210M payroll in 2013, and then assume that they go back to $210M in later years. In the second three scenarios, we use a $220M payroll. In each scenario, we provide savings figures per year. At the bottom of each scenario we provide a total amount saved, and also provide what we’re calling “CBA Savings”. This figure emanates directly from the new CBA, and would include revenue sharing refunds, and luxury tax savings resulting from a new, lowered rate. It would not include the $21M they’d save from going from a $210M payroll to a $189M payroll, for instance. We get down to business after the jump.
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