Saturday, January 24, 2009

The Real Problem with the Yankees

I will eventually finish my detailed post about the problems with the Yankees receiving so much money, but a recent article in the Chronicle by Bruce Jenkins made me post this. Basically he makes the old tired argument that baseball doesn't need to stop the Yankees, look at how much they spent and yet it was the Rays in the World Series, then discusses the World Series since 2001. He notes, "Teams fail because of their own stupidity and ill-advised transactions, not because they're short on cash."

What he and others are missing is that this has nothing to do with competitiveness or success in the World Series, per se, but the long-term competitiveness and success of teams. Using simple economics, it's clear: when you have a team with resources up to 5 times more than other teams, they can overbid for the players they want, which raises the costs for similar players on the other teams.

Yankee Tax

That's what I would call the "Yankee Tax" on the rest of the MLB. I don't know exactly what that tax percentage is, but because the Yankees can pay more for their players, that raises the price for all other teams. And if the other teams are paying more for their top players, that means that they have less to pay other players and eventually be unable to keep a talent they would have otherwise been able to afford. That reduces the talent level for all other teams in terms of what they could have acquired had there not been a Yankee team bidding up the costs of players. That weakens other teams and make it easier for the Yankees to both make the playoffs and to get deeper into the playoffs as the talent level is lowered for other teams.

That the Yankees cannot win the World Series year in, year out, is due more to the playoff structure requiring two rounds of playoffs before reaching the World Series. The Yankees from 2001 to 2008 had the best record in the AL 4 times in 8 seasons, were 2nd in one, 3rd twice, and 4th once, out of 14 teams and was within 4 games of leading another 2 times. They would have been in the World Series 4 times had we still had the winner takes all that existed during the Yankees heyday from the Babe to the Mick. Because of the playoff system, even when they have the best team, the difference is so marginal that it is almost basically a coin flip whether they make it past the first round and two coin flips whether they make it to the World Series.

Counting from 1993, when their latest success streak begun, the Yankees have had the best record in the AL 7 times in 16 seasons, were 2nd in 3 seasons, 3rd in 4 seasons, 4th once and 5th once, out of 14 teams (12 teams in 1993) and was within 4 games of leading another 3 times. That would have been 7 times in the World Series in the last 16 seasons. They ended up getting in 6 times during that period. So random luck worked out during that period in allowing them to be in the World Series as many times as they would have had the playoffs not been created.

That is a pretty long streak of dominance, similar to what they did long along, just tempered for the times.

8 comments:

  1. Nice work.

    So you're saying this equation works:

    (Zito being a FA)+("yankees tax")+(Sabean+Magowan)*Boras = Shitty contract for the Giants

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  2. You wrongly assume that since this is a Giants blog that Martin is trying to make excuses for a Giants blunder. Not once in his post does he mention Zito or anything relating the Giants.

    The truth is it's ridiculous that the Yankees are allowed to have a payroll so much highewr than the league average. On the same note it's not fair that teams are allowed to field crappy teams with low payrolls while they sit back and collect their checks for the revenue sharing. MLB should institute a maximum salary cap. If they did they should also insitute a minimum. $150mil max, $70mil min. or something similar to that.

    ReplyDelete
  3. MLB already has a type of salary cap, albeit an ineffective one. There is an annual luxury tax for teams that exceed the payroll limitations each year. I think, but am not sure, that those funds are redistributed in some way to the other teams who are below the salary cap.

    The owners would love a salary cap. However, the players union would never agree to one. They know that the owners have a hard time controlling themselves when it comes to paying salary, so why should they agree to one?

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  4. Matt,

    Maybe the word "sarchasm" should have been put at the bottom of my post, so some wouldn't wrongly assume that the post wasn't sarcastic. Sorry you missed that.

    ReplyDelete
  5. I didn't pick up any sarcasm at all. My mistake. I apologize.

    ReplyDelete
  6. I didn't pick up on the sarcasm either. I must be still sick with my cold...

    ReplyDelete
  7. These are the same old "Yankees are killing baseball" arguments we've been hearing for ten years, but guess what, they aren't killing baseball. There's more competitive balance now than at any time in the history of the sport. It takes more than a checkbook to win games, and the Yanks are probably going to have a lower payroll than last season, when they missed the playoffs altogether.

    I think more outrage should be directed at teams like the Royals, who whine about baseball needing a salary cap and then go out and throw money at Jose Guillen and Kyle Farnsworth, or at Jeffrey Loria for pocketing revenue sharing money and holding his fanbase hostage instead of investing it in the team.

    ReplyDelete
  8. I agree with your additional problems Paulie. Both the Royals and particularly the Marlins are also sore points with me.

    I didn't get into it because the article I linked to mainly got into the Yankees, and I wanted to point out how they got the issue wrong and what I thought was the correct issue.

    I disagree with you on the level of anger. I loved the old-time baseball where the stars were with one team for much of their career, if not all of it. The Yankees raising the costs of retaining such players creates a downward cycle for a team in that paying more for your stars lessens the team's success by reducing your buying power and thus your talent level, which reduces your attendance eventually, which reduces your revenues, which reduces your talent level, and so on until you stop the cycle by losing a whole bunch of years (typically). If their revenues were closer in aggregate to most other teams, then this wouldn't be a problem and teams would be able to afford to sign their team favorites long-term at a rate that is market-driven rather than Yankee driven-up.

    And even with revenue sharing, the Yankees can out spend 27-28 teams by double their spending and not blink an eye. That is not right.

    I forgot to mention that the solution is coming eventually to the MLB, I believe. The MLB's Internet unit is split evenly 30 ways and I believe (or rather hope) that eventually the radio and TV broadcasts will be internet driven (as would most other content providers eventually) and thus fall into this units revenue stream, stripping the Yankees and other high revenue teams's advantage in locally derived revenues outside of tickets and luxury boxes.

    If someone knows this to be true (or false), please tell me, but that's has been my hope for the past few years, and if true, should be true within most of our lifetimes, perhaps by the 2020's when most content will be driven by the internet (and companies like Comcast won't be able to gouge consumers).

    What's competitive balance? If that's having different World Series winners every year, that is driven by our playoff format, not by revenue distribution.

    And while having more money than anyone by a large margin does not guarantee World Series championships, it does make it easier to make the playoffs, as I showed above, which earns you more money (both playoffs and season ticket renewals, and ticket demand) and give you that much more advantage over other teams. Each little/big bit of advantage counts and helps them.

    Money has kept the Yankees competitive over the past 10 years or so when most teams would have lost a number of key competitors on their team roster due to less revenues. It has kept them competitive throughout much of Steinbrenner's reign as owner, though ironically it took his suspension from baseball for illegal political contributions to allow his baseball people to compile the prospect talent that has driven their success over the past 15 years or so, players Brian Sabean helped them acquire as their head of scouting: Jeter, Posada, Mariano Duncan, Andy Pettitte.

    I give the Royals some slack because part of reason they have to throw money at Guillen and Farnsworth is because they no longer is a destination franchise that they have to overpay lower tier players to get them to join your team.

    The Marlins are just not spending their money, which I find unethical, they should be forced to at least spend the money they receive in revenue sharing plus a percentage of their regular revenues. However, again, I don't blame them, the system forced them to trade away Miguel Cabrera, who is and should continue to be one of the top stars in the game for the next 10 years. They can't really afford to pay players what they should be worth and still be competitive, as that player take up 30-50% of their payroll.

    ReplyDelete

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