The Red Sox have acquired quite a few players this off season. They brought in Carl Crawford, Bobby Jenks and Adrian Gonzalez, and didn’t shed all that much in payroll. The Yankees, on the other hand, have both freed up some payroll space and declined to bring in any big name free agents.
According to WEEI,com, the Red Sox are looking at a payroll of about $155 million next year. However, their luxury tax hit is a lot higher, since the Carl Crawford, Josh Beckett, and other deals are backloaded, and the luxury tax is calculated based on AAV rather than yearly salary. According to that WEEI link, the Red Sox have wracked up an estimated (after arbitration) of $182.33 million. That number could climb to just about $200 million if they lock up Adrian Gonzalez to a big deal.
The Yankees entered the off season with $144 million under contract. I’m not too sure what it is in terms of AAV, but I don’t think there is much of a difference, as Arod, CC, and Teixeira are a the peak of their contracts. Derek Jeter resigned for an AAV of $18.9 million and Mariano for $15 million. If you add in Martin’s 4 million dollars, we’re looking at about $190 million. If the Yankees do not bring in any more expensive players, the team will probably open with a payroll less than $200 million, and likewise an AAV luxury tax hit below that threshold.
So, there are two bits of news. First off, the Yankees do not have the financial advantage over the Red Sox that they used to have. But second, there is a pretty decent chance that the Red Sox start 2010, and possibly even end it, with a higher luxury tax hit than the Yankees. The next time your favorite annoying Red Sox fan uses the old, “The Yankees buy their championships” line, you can now point this out.
The second bit of news is that the Steinbrenners should probably be able to increase the team’s payroll by quite a bit. According to Forbes, the Yankees are valuable at $1.6 billion, roughly double the value of the second-place Red Sox. Assume that the Yankees had about $240 million budgeted for payroll and luxury tax in the next few years. Very quickly, the Red Sox are going to be near that $180 million payroll mark, especially as the luxury tax hits them. While its not reasonable for them to have double the payroll of the Red Sox, they should be able to top them by more than the 30% they are currently topping them by. Assuming they have the same budget/revenue/value relationships that the Red Sox do, the Yankees should be able to easily throw down $270 million per season in the nearish future.
This is important not just for the Boston Red Sox, but to compete against all MLB teams. The median MLB payroll in 2010 was about $92 million dollars, way up from about $81 million in 2008. And it looks like 2011 payrolls will be up across the board by quite a bit this year. The Yankee payroll has essentially remained the same for about 5 years now, and Hank appeared unwilling to budge last year off Cashman’s ~$212 million dollar budget. The Yankees are losing their mammoth financial advantage.
Look, Hank and Hal want to make money, I get that. I remember before they received control of the team that the rumor was that neither brother cared much about baseball, and simply wanted to sell the team or make a bunch of money. But the enormous value that the team represents is in large part predicated upon being the perennial top dog in the majors. Brian Cashman is a very good GM, but even if he makes all the right moves he can’t maintain that forever. Other teams are getting smarter, spending more money, and locking up their young players through their prime years. The Yankees will become something close to just another franchise if Cashman’s budget isn’t significantly increased. That doesn’t mean that Cashman should just throw money around when worthwhile players aren’t available (like, say, this off season), but he should have to freedom to go out and pay all sorts of players that much more than the Red Sox, Phillies, et al.
One more random stray thought: if the Yankee payroll is indeed going to be way down in 2011, the Yankees should have a lot more leeway to spend on the draft/international free agents this year. Its supposed to be a stacked year in the draft, and I’m sure there are some big IFAs out there. The Yankees could have $10 million or more extra to throw around. Hell yeah.
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