A $300 Million Juggernaut?
By ANDREW JOHNSON,
AOL
Posted: 2008-04-03 07:49:09
Sports Commentary
Would you like the good news or the bad news first?
A wise person once said “always the good news first,” so let’s start there. The measures baseball has taken to increase competitive balance are working. 10 teams opened the 2008 season with a payroll exceeding $100 million and three more are on the cusp of that threshold. That’s up from six teams last year.
5. White Sox | Payroll: $121.2 million
Fresh off a 90-loss season, the White Sox added slugger Nick Swisher, pictured, and Orlando Cabrera, pushing them all the way to fifth in total salary.
Whether you think ballooning salaries are a bad thing for baseball in general, having almost half of the league spending competitively is an overwhelming positive. It’s not just the Yankees and Red Sox show at the top of the payscale anymore. That’s why 2/3rds of major league teams enter each season with a chance at a playoff spot now.
Now for the bad news, or at least the bad news for everyone living outside of the Bronx. The Yankees still have the largest payroll. There’s still a larger disparity between them and the No. 2 team in payroll (the Tigers this year) than there is between the Tigers and all but six other teams. And worst of all, that gap could grow exponentially larger over the next five seasons, so much so that it’s possible to imagine a Yankee team with a $300 million payroll.
Since 2000, when their payroll was a comparatively meager $92.9 million, the Yankees’ spending has exploded, but over the last four seasons they’ve settled into the $189-209 million range.
Why has New York slowed down? The influx of young talent under GM Brian Cashman’s watch has helped decelerate spending, but there are real bottom line concerns at play as well. The Yankees pay the luxury tax every season (40 percent of player salary) and have the largest revenue sharing bill of any team in the majors (31 percent of eligible revenue). In real dollars and cents the Yankees are shelling out well over $100 million in revenue sharing and luxury tax.
That is going to change starting in 2009. New Yankee Stadium will open next year, and what it lacks in aura and mystique it will make up for in cold hard cash.
Because the Yankees are financing the new park on their own, they’ll be exempt from 40 percent of their annual revenue sharing payment to Major League Baseball, and while they’ll still be paying off the debt for their new stadium, the revenues it creates will more than make up for it. Unlike in the old Yankee Stadium, the Bronx Bombers won’t pay any rent to the city of New York, and Forbes speculated last year that the new stadium will generate more than $50 million annually for the club.
The new stadium is going to simultaneously create organic revenue for the Yankees and save them tens of millions in revenue sharing payments. Put another way, the Yankees are going to have even more money to spend.
That’s a frightening thought for pretty much everyone else in baseball. Carlos Beltran is playing in Flushing right now in large part because of the luxury tax, maybe Johan Santana too. (It’s worth mentioning here that the Mets are opening a new stadium next year and are by and large in the same spot as the Yankees.) Even with a rapidly improving player development machine in place, the Yankees probably won’t be nearly as bashful in free agency with all the extra revenue they’ll be generating in 2009.
That means free-agents-to-be Mark Teixeira and C.C. Sabathia, who would both fill holes in New York, could very easily become Yankees this winter. Both Teixeira and Sabathia figure to make $20 million annually in free agency and if the Yankees signed both, their payroll would be pushing $250 million. It’s not that much farther to the big 3-0-0.
Other clubs have relied on the Yankees’ general dysfunction and misallocation of resources to bridge the payroll gap in recent seasons, but New York has still made the playoffs every year this decade. If the disparity gets any wider, teams might not be able to bridge that gap anymore -- to the delight of fans in the Bronx and to the despair of fans everywhere else.
Cleveland Indians' Cliff Lee pitches against the Chicago White Sox during the second inning of a baseball game Tuesday, July 1, 2008, in Chicago. (AP Photo/M. Spencer Green)
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The Minnesota Twins are in contention at midseason because of their reliable rotation which includes Glen Perkins, left, and Kevin Slowey, shown Wednesday, July 2, 2008 in Minneapolis. (AP Photo/Jim Mone)
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Houston Astros starting pitcher Brandon Backe reacts to giving up a two-run single to Los Angeles Dodgers' Blake Dewitt in the first inning in a baseball game Thursday, July 3, 2008 in Houston. (AP Photo/Pat Sullivan)
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Los Angeles Dodgers' Blake DeWitt heads toward first base on a two-run single in the first inning against the Houston Astros in a baseball game Thursday, July 3, 2008 in Houston. (AP Photo/Pat Sullivan)
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Los Angeles Dodgers' Andre Ethier breaks his bat on his way to a ground-out to the mound in the first inning against the Houston Astros in a baseball game Thursday, July 3, 2008 in Houston. (AP Photo/Pat Sullivan)
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Los Angeles Dodgers Chad Billingsley delivers a pitch in the second inning against the Houston Astros in a baseball game Thursday, July 3, 2008 in Houston. (AP Photo/Pat Sullivan)
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Detroit Tigers pitcher Joel Zumaya pumps his fist after Minnesota Twins' Joe Mauer grounded out to end the game as the Tigers beat the Twins 5-4 in a baseball game on Monday, June 30, 2008, in Minneapolis. The Tigers' flame-thrower is back and, after a few false starts, seems to be heating up. For at least one pitch, the radar gun read 99 mph during Zumaya's 1-2-3 inning stint in Monday's win over the Minnesota Twins. It's a step in the right direction for the reliever who became one of the most popular athletes in Michigan by throwing triple-digit pitches. (AP Photo/Jim Mone)
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San Francisco Giants pitching coach Dave Righetti is shown in the dugout before a baseball game against the Chicago Cubs in San Francisco, Wednesday, July 2, 2008. Friday July 4 marks the 25th anniversary since Righetti no-hit Boston for the Yankees in 1983.(AP Photo/Jeff Chiu)
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San Francisco Giants pitching coach Dave Righetti is shown in the dugout before a baseball game against the Chicago Cubs in San Francisco, Wednesday, July 2, 2008. Friday July 4 marks the 25th anniversary since Righetti no-hit Boston for the Yankees in 1983. (AP Photo/Jeff Chiu)
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San Francisco Giants pitching coach Dave Righetti is shown in the dugout before a baseball game against the Chicago Cubs in San Francisco, Wednesday, July 2, 2008. Friday July 4 marks the 25th anniversary since Righetti no-hit Boston for the Yankees in 1983. (AP Photo/Jeff Chiu)
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