This off-season has been one mired with frustration for Yankees fans. With the not so distant memory of the big money off-season that netted CC Sabathia, AJ Burnett (meh), and Mark Teixeira, the Yankees’ failure to land a highly touted free agent has disappointed many, especially after the team’s inability to score runs in the postseason. Furthermore, getting outbid for Russell Martin—by the Pirates no less—and not even competing for Nick Swisher has been vexing, but it shouldn’t be.
In 2003, Major League Baseball decided to penalize teams for investing in a winning product. A luxury tax was instituted to prevent
the Yankees big market teams from using their superior resources to invest more in their rosters. The New York Yankees have contributed 95% of the collections paid to Major League Baseball from this tax, with the Red Sox, Tigers, and Angels also contributing.
This comes on top of the revenue sharing which costs the Yankees about $70 million annually. Although they’re the most valuable team in the league, they’re not profitable. In fact, they lost $28 million in 2011. It’s a bit asinine to complain about an unprofitable company not spending more money on its employees, isn’t it?
If a small business was losing money, would you expect them to make an expensive hire? Doubtful, unless of course that hire could somehow generate more revenue. The problem with that though is a big portion of revenue goes into the pot for revenue sharing. So why spend more money, when you’re already unprofitable, and a big chunk of the revenue you generate goes to teams like the Marlins who understand the system and use it to their advantage.
Furthermore, this year of free agency marks the first with the new change in draft pick compensation. Type A and B free agent designations have been eliminated , and teams are now compensated with a first round draft pick or a sandwich pick so long as they submit a “qualifying offer.” A qualifying offer is defined as one at or above the league average for the top 125 player salaries, this year that figure is $13.3 million.
For submitting a qualifying, albeit uncompetitive, offer to Nick Swisher, the Yankees receive a valuable draft pick. The Indians paid not only $56 million for Swisher, but also that valuable draft pick and the slot value of that pick, which will be deducted from the amount they are allowed to spend on their 2013 draft picks.
So between the valuable draft pick, the salary expenditure, and the luxury tax, how would the Yankees sign a player like Josh Hamilton or Michael Bourn? There may not be a hard salary cap in baseball, but there are stiff restrictions that are starting to weigh on even the mighty Yankees. So while David Loria’s Marlins may lose in the court of public opinion for their complete lack of interest or investment in competitiveness, they win on the income statement, where they’ve collected $300 million in revenue sharing between 2002 and 2010. So for a moment, realize the Yankees are as dedicated to winning as ever, and it’s baseball socialism that’s choking its flagship franchise, not a sudden lack of interest in winning in the post-George era.
Plus, the Yankees inked Kevin Youkilis to a one-year deal anyway, and you know how much Yankee fans love him!
Ryan Kantor is a new contributor to Sports-Kings.com. He is a life-long Yankees fan and a proud Clemson alumnus, residing in North Carolina, where he works in marketing research. For more stories like this, you can visit his personal blog at RyanKantor.com and follow him on Twitter at @Ryan_Kantor.