Watching Yankees Spending

New York YankeesLast Wednesday The New York Yankees beat the Philadelphia Phillies to win their twenty-seventh World Series. After a nine year title drought, the victory predictably thrilled Yankees fans like myself while also re-igniting the old complaint that the franchise is a bully in the baseball market, that the team uses an obscenely resourceful payroll to effectively and unfairly buy championships.

Actually, the pilot light for that particular criticism never goes out, whether the team has won or lost its most recent bid for the World Series (or even when they make no post-season appearance at all, as happened in 2008). For almost a decade, the Yankees have consistently maintained the highest payroll in Major League Baseball while failing to bring home a World Series title, and during that time the grousing took the form of ridicule. What Yankees fans heard then was: “See? You Yankees can’t buy championships, even with all of your money.” What we hear today is: “See? You Yankees just buy championships with all of your money.”

This is not a coherent line of argument, but then again it would be naïve to look for any motivation here other than envy, because the logic at work is so suspect. It’s pretty safe to say that a good number of those who hate the Yankees because of their payroll are unabashed capitalists, too; they’d be very unlikely to begrudge the fact that the highest valued, best performing organization in any given market also led that market. That’s not just capitalism, it’s the way capitalism is practiced in America.


Big Fish, Big Pond

I’ve always thought, too, that vilifying the Yankees payroll was a perspective that lacked dimension. Yes, it’s a consistently stratospheric number, but isn’t it significant, too, that by making their home in New York the Yankees are at the epicenter of the biggest baseball market on the planet? The team franchise has a payroll that’s commensurate with its huge valuation, if nothing else.

However, as a counter-argument, declaring the team a victim of its own incredibly lucrative circumstances seems equally one-dimensional. So I wondered recently if it might also be true that the Yankees are not just big spenders, but big investors, as well. Anecdotally at least, I knew that their single-minded dedication to winning championships year after year no matter the cost stands in contrast to the perpetual inefficiencies I’ve heard about at other clubs, where owners routinely pocket revenues from the so-called “luxury tax” that they receive from free-spending teams like the Yankees, rather than re-investing the money in talent.

So I dug around a bit online and compiled some figures, dumped them into Excel and found that, relative to the value of their franchise, the Yankees actually invest a fairly high percentage of their revenues directly in their payroll. Of the US$375 million in revenue that the club generated in 2008, in 2009 they dedicated US$201 million of it to talent, making for a 54% investment rate. That ranks them fourth amongst all major league teams.

Investment Rates for 2009 MLB Teams

That says at least something, I think, about the fact that the Yankees aren’t just rife with cash, but that they have the wherewithal to put their money to work, too. As the dominant team in such a large market, they could easily invest at a much lower rate, pocketing significantly more cash while still outspending their competition.

Their 54% investment rate certainly compares favorably with their division rivals, the Boston Red Sox, who invested just 45% of their revenues in talent, ranking them right in the middle of the pack — the average investment across all ball clubs is in fact exactly 45%.

While this investment rate may suggest that the Yankees have not just money but dedication, it doesn’t necessarily follow that the team spends that money wisely. In fact, there are some teams who invest a similarly high percentage of revenues in their talent and have little to show for it.

The New York Mets and the Chicago Cubs, for example, both rank higher than the Yankees on this scale, and yet their dedication produced thoroughly miserable results this season. What’s more, the Colorado Rockies, the Los Angeles Dodgers, the Minnesota Twins and the St. Louis Cardinals all managed to make it to the fall playoffs while spending even smaller percentages of their revenue on talent than the average. In the case of the Twins, their paltry 41% investment rate was still able to overcome the MLB-leading 62% investment rate of the Detroit Tigers; in a dramatic one-game playoff at the very end of the season, the Twins knocked out the Tigers and prevented them from advancing to the post-season altogether.

If anything, these results may prove only that payroll doesn’t matter, that just as neither large nor small payrolls can guarantee a team a post-season berth, so too is it true that a team’s investment rate has no bearing on its path to the playoffs.

On the other hand, there’s the post-season. As is true with the post-season in general, the numbers tell a very different story once all of the teams are whittled down to just eight contenders for the crown. At least in the 2009 play-offs, looking exclusively at those clubs that advanced shows a very close correlation between a team’s investment rate and how well it did in the last weeks of the season.

Investment Rates for 2009 MLB Post-season Teams

Ranking those eight teams by their investment rate mirrors very closely the results of the race: four of the five teams with the lowest investment rates — all below the 45% average — were eliminated in the first round; the fifth team, the Dodgers, was dispatched easily in the second round. All of the teams with higher investment rates gave their opponents a run for their money, at least, even if none of the series came to a seven-game head. It’s also worth noting that the Phillies, in spite of carrying a payroll of almost less than half of the Yankees’, nearly matched them in their investment rate and came reasonably close to being world champions. Now that says a lot.

Conclusion

Of course, an amateur analysis of one year’s worth of data is too small a sample size to suggest that this simple calculation can be a reliable predictor of a team’s performance. As a belated disclaimer, I should also add that I’m really, really bad at math.

Still, I won’t be shy about suggesting one lesson: it matters how much a club is willing to put on the line to win a championship or achieve a goal, especially in the post-season. What made the difference with this year’s Yankees club was not really how much money it commanded, but rather how far the organization was willing to go to win once the prize was within grasp — further than twenty-six other teams, at least.

Admittedly, having the fattest wallet on the block is a fact that can’t be ignored, but it would seem to me to be less important and less of an advantage than most critics contend. What’s more, it occurs to me that what we want is more teams investing like the Yankees, not less. If the criticism is that the Yankees are too rich, even those who hate the team can’t really be arguing that the team should spend less on talent and take home more money, could they? There’s just no logic to that.

For my part, I’m now more convinced than ever that it’s a hollow statement to say that the Yankees simply bought their twenty-seventh world championship. As with everything in life, while it matters how much you have, what’s more important is how you use it.

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42 Comments

  1. As a kid, my parents always taught me never to envy people with more money, but to look favorably on those who spent what they had well. In the case of the Yankees, we can see that their bounty has (finally) begun to flow towards the exact types of players who can help them win — this was not always the case. The ship seems to be righting itself with the younger Steinbrenner at the helm.

    Still, as a football fan, I think the hard salary cap has done wonders for the competitiveness of the league as a whole. Sure, the teams in bigger markets are more attractive to free agents: signing bonuses, nightlife, etc. But it is nice to know that the quality of an organization can be judged by the product it puts on the field. And that the product is controlled for cost. In that sense, it’s interesting seeing how well some teams do as businesses despite the kinds of teams they field.

  2. Baseball is very similar to the to football (Soccer) here in the UK, Teams buy and sell players, i didn’t know that it was the same for baseball until i read this blog. The teams here in UK such as Chelsea and Man city spend ridiculous amounts on players, anything from 5 million to 80 million, Whats the most a player has been bought for in baseball?

  3. Khoi, it’s not just talent that you spend money on. There’s also scouting, stats, the minor leagues, and the medical staff. Spending more on talent may help you win now, but at the cost of future wins (when your top free agent gets badly hurt and there’s no replacement in the minors, etc.).

  4. Khoi – In the interests of full disclosure I’m a red sox fan so could be accused of being over sensitive to the issue ;-)

    That said, a few points
    Ћ Yes its not the Yankees fault they are in a huge market and they have deep pockets
    Ћ But you have to agree with Michael, how much you pay players is not much of indication of the investment you are making in a club. I think you have just found a stat that doesn’t have you massively beyond the rest of MLB so you are using it to suggest the playing field is level – it isn’t !!
    Ћ You can spin it anyway you like the Yankees have waaay more financial resources than those they compete against. The Sox are in that second tier of spenders below NYY but there is roughly the same $ difference between them and the lowest spending Marlins (36m) as them and the Yankees.

    Say what you like you have very poor results over the last decade. To win once in the last 9 years is awful with that market advantage.

  5. Taking Club Revenues and comparing that to payroll is nonsense. For instance, the Cardinals are paying for a new stadium that was built with limited city and state funding and I am sure that other clubs have similar restrictions that limit the amount of money that can be spent on payroll.

    Regardless of that fact, I disagree with the premise that just because the Yankees “only” won 2 World Series titles this decade means that spending well above their competition isn’t a significant advantage. Its horse-crap, in fact. 4 out of the 10 World Series titles in this decade went to two teams who are #1 and #2 on total payroll spent in this decade. Furthermore, while spending money doesn’t guarantee success, its exponentially more efficient than trying to develop talent and add key pieces via free agency to win within the constraints of limited financial resources.

  6. What’s not noted in the stats above is the cost of doing business beyond the player salaries. I would expect that it costs more to operate the Yankees than it does Minnesota or St. Louis. While greater revenue allows a team to spend more on player salaries, teams with lower revenue probably spend a larger percentage of their revenue on other team expenses.

  7. Return on investment matters! Small market teams have less incentive to invest in talent since their market can only support so much revenue. They can’t buy themselves into the game because teams like the Yankees, Dodgers and Red Sox make the going rate too high.

    So the small market teams end up effectively as farm clubs developing talent so that the big teams can buy them on the free agent market. Yes, I’m a long suffering, bitter KC Royals fan. The league is littered with former Royals that KC was unable to hold onto (Johnny Damon, Raul Ibanez). There is literally no reason for any hope in Kansas City. As soon as Zack Greinke’s contract is up, he’ll be off to play for whoever pays him the most. If they pony up and pay him, they won’t have the cash to build a team around him.

    Envy has nothing to do with my hatred of the Yankees. Their massive resources give them an unfair advantage. Lack of competitive balance is bad for the game. Not that anybody cares.

  8. Just an FYI … St. Louis’ Opening Day payroll was actually $88,528,409.

    The annual salary survey understated St. Louis’ payroll total by $10.9MM, listing Troy Glaus at $1,213,700. His salary should have been $12,137,000. (They apparently dropped a zero.)

    That would put the St. Louis investment rate at 45%.

  9. I suspect that if currently-bitching fans of some smaller-market team suddenly found that their team magically had the highest payroll in baseball, those fans would, equally magically, find nothing wrong with their own team’s fiscal matters.

  10. This is a very partial analysis without considering a team’s fixed operating costs.

    For example, in 2007, the Mariners (near the center of the payroll curve that year) had revenue of $182M, payroll expenses of $101M and operating revenue (profit, basically) of $22M.

    It cost them $60M non-payroll dollars to field a team. If you adjust their revenue by this fixed cost, they spent 82% of their available cash on players.

    Had they signed Texeira (mixing up years a a little here), they would have lost money.

    The 2007 Yankees spent 112% of their available 2007 cash on players (they lost $25M dollars that year). The red sox spent 88% of their available cash on payroll in 2007. (They made $20M that year after losing a combined $29M in 2005, 2006).

    Forbes, in 2007, created a great team by team breakdown of operating revenue, cost, payroll, team evaluation and relative-wins per dollar of payroll – wonderful clicking:

    link

    Baseball financing is so messed up – at the top and bottom of the scale – it makes for great fan speculation!

  11. Another way to look at the Revenue vs. Payroll numbers is to say that Revenue minus Payroll equals amount not spent on players. In that case, the Yankees come off looking the worst with ~175 million of revenue that they aren’t spending on Payroll.

  12. @lawrence, that’s beside the point, and in no way refutes the argument that there is a completely uneven playing field here. of course every fan wants their team to be dominant. the point is that the yankees are dominant in large part due to circumstances that no other team can influence (the market they’re in). it’s not like a real free market where another upstart company can move in on their turf and outdo them.

    khoi, i don’t know who’s arguing that the yankees shouldn’t spend on players and winning. of course that would be illogical. it would be stupid. in fact, it’s a strawman. of course how the money is spent matters, and when the big spenders mess up then other smart teams can take advantage. but the point is that, just as being a power hitter can make up for flaws playing defense, having a big bank roll covers up a lot of mistakes. with tightly constrained resources, every misstep is magnified.

    so the argument i think most people are making is that achieving some kind of parity would benefit the entire league and allow small-market teams to compete. until that changes, everyone expects rich teams to spend more, and win more.

  13. Khoi, you mentioned the luxury tax – do these numbers take into account the payments that the Yankees make and other teams receive? What about revenue sharing?

  14. It’s not just about the most recent decade. The Yankees have been out-spending the competition for many decades. Do Yankee fans really think it’s natural that one team win so many championships?

    What the league needs are rules that keep teams closer aligned in terms of salary. Without that, the Yankee phenomenon will continue.

    Since 1903 the Yankees have appeared in 40 World Series. 40! And, they have won 27. I’m sure Yankee fans are very proud of this (disclosure, I’m a Phillie fan and would love to be able to cite more appearances and victories), but come on, nearly 40% of the time the Yanks are in the series? There is something wrong with this.

    Fire away.

  15. To whoever it was that said that the hard cap in the NFL has done good things for the sport’s parity, it has certainly increased parity. But I would say the NFL has way too MUCH parity. There is way too much player movement, everything changes from year to year, and there’s just no continuity between seasons. The NFL’s “parity” bores me to death. Now, that’s not to say that I think the big market teams should always dominate the small market teams. But I think some semblance of continuity between seasons is essential to keep things interesting.

    I mean, people always whine about how players always just jump from team to team this year and how it was better back when they spent basically their whole career with one team. A salary cap just worsens that problem by forcing teams to drop players just based on cost to a much greater extent than what happens now.

  16. There are lies, damned lies & statistics – this is one of those statistics that looks like it means something but means very little. The biggest factor in success is player talent and the Yankees are spending $200M on players. They also have the advantage of evaluating other clubs talent and buying proven talent. Would the Yankees have won this year without Sabathia, Burnett & Texiera – NO! Just because the Yankees don’t win the World Series every year doesn’t mean the system is not skewed heavily in favor of the Yankees – it is, that’s why they are in the playoffs every year, not because they want it more or are willing to invest more, it’s because they can spend more and buy talent. Hate the Yankees, but don’t blame them – blame baseball and the ridiculous system of inbalance.

  17. The numbers make sense when put into charts like this.

    I ask those who are harping on the idea that the Yankees buy championships: What is the team supposed to do with all that money? They LOWERED season ticket prices this year and gave tickets to those people who were season ticket holders this year, despite selling more than three and a half million seats to baseball games. The Yankees logo is insanely popular around the world and no matter how silly it might sound to sell bricks of the old Yankee Stadium, people are buying them.

    If the Steinbrenner’s kept the cash that their team was making, they would be vilified for being greedy. It’s lose-lose for the Yankees in the eyes of everyone else, but in the eyes of Yankees fans it’s win-win, this year anyway.

  18. It’s not easy to win a championship no matter what. But all that analysis and number-crunching to show what? The Yankees are able to go out and get the best free-agent talent every year. They can sign both CC and Teixeira in one offseason, no one else afford that. The Yankees have a competitive advantage over other teams, period. Of course if they don’t get good ROI then they still won’t win. But they still have more dollars to spend. It gives them a good buffer if not everything goes right (they lose Chien-Ming Wang, they gain CC Sabathia.) And now I hear they might be going after John Lackey as well. You know what happened after the the Marlins won their World Series? They had to blow up the roster because it cost too much, they could afford to keep the team.

    OTOH I’m not complaining at all- they are simply playing by the rules that MLB has in place. Anyone that whines should not be criticizing the Yankeees, but MLB.

    As far as parity and salary caps go, I think the NBA has the best system in place with its ‘soft cap’ that allows teams to go over the cap to retain their talent. The maximum player salary limits the upside of the superstars, but its still a very high salary and I think is on the whole good for the sport (players, organizations, and fans.)

  19. HEY YANKEES FANS. No one is arguing about how the Yankees do things. Yes, they have the most money and yes they spend the most and they are succesful. They are using the system to their advantage and they should. The problem is not the Yankees the problem is the baseball system. There is no possibilty in baseball of having an organization like the Steelers in football or the Spurs in basketball. If basketball & football had the same system as baseball Rothlesburger, Polamalu and Duncan would be playing in New York and that blows.

  20. Nowhere do you mention where you got these “revenue” numbers from. What goes into them? Ticket prices? TV revenue? Merchandise? For all we know you could have just made them up.

    Without any proof of these amounts (which you will never get as league revenues are private and not publicly announced or audited), this already flimsy analysis is meaningless.

  21. Admittedly, having the fattest wallet on the block is a fact that can’t be ignored, but it would seem to me to be less important and less of an advantage than most critics contend.

    The #1 starters for both World Series teams were the #1 and #2 starters for the Cleveland Indians on Opening Day 2008. The team could afford to keep neither, and traded them to the eventual two World Series teams (and highest spenders) over the course of the next season and a half.

    the Yankees actually invest a fairly high percentage of their revenues directly in their payroll.

    Yankee payroll alone is greater than the TOTAL revenue of 23 of the 29 other teams, so their “same percentage” is a lot more money.

    For almost a decade, the Yankees have consistently maintained the highest payroll in Major League Baseball while failing to bring home a World Series title

    Only a handful of teams in the history of the sport went as short a time period between non-consecutive championships.

    a team’s investment rate has no bearing on its path to the playoffs.

    Your team has been IN THE PLAYOFFS 8 of your 9 non-championship years (twice losing in the World Series) and won 4 of the previous 5 WS they played from 1996-2000. They’ve made 40 WS appearances while the next closest I believe is the Dodgers with 18. Investment rate indeed has a bearing on the path to the playoffs.

    Others make a great point about extra money adding to better scouts, facilities, trainers, equipment, etc.

    What Yankees fans heard then was: “See? You Yankees can’t buy championships, even with all of your money.” What we hear today is: “See? You Yankees just buy championships with all of your money.”

    Most fans have a problem with baseball as a whole allowing the Yankees and a few others to spend unchecked while bottom-feeder teams have no minimum spending requirement to stay competitive.

    The three Yankees’ “homegrown” All Stars and possible HOF’s (Jeter, Mariano, Posada) who “stuck around for the team” have combined contracts higher than the Pirates’ full team payroll. The Pirates have the fourth lowest payroll.

    Sports is about hope. Yankees fans have hope every year because their team is in the playoffs almost every season. Most other teams cannot reasonably maintain that hope because all their elite talent funnels to the Yankees or other high-payroll teams. Whether those teams use the talent correctly is another discussion, but keeping elite talent is the fastest way to maintain fans’ hope annually.

  22. The investment rate also highlights another issue: teams that receive transfer payments through the luxury tax are not required to invest that money into payroll. Instead, they can spend this money on “player development” and in other ways. This needs to be fixed. A minimum payroll level should be set by MLB.

    If you look at the last 10-15 seasons, more teams have made the playoffs, won pennants and championships than during any other period. Free agency notwithstanding, more teams have a chance now than ever before. By comparison, from 1947-1964, the Yankees played in the World Series almost every year, and more often than not, they matched up against the Brooklyn Dodgers and/or the NY Giants.

    People like to hate the Yankees. But, they also like to go see them play. The Yankees are good for attendance, revenue, and baseball. As Bobby Valentine recently said on ESPN radio, everyone needs a bad guy. The Yankees play that role, and the game is better for it.

  23. Teams have to spend money on more than payroll. There are minor league salaries, minor league operating costs, and MLB operating costs. I have no idea what those are, but if you add $25M to $50M more to each team’s expenditures, the percentage invested by the Yankees doesn’t go up nearly as much as lower payroll teams.

  24. Lawrence, my Lakers have the highest payroll of any NBA team this year, and I’m a lot more sheepish about it than the average Yankees fan seems to be about their team’s situation. However, you would have to compare the Lakers payroll with that of the 17th-largest payroll in the NBA to match the discrepancy (percentage-wise) that existed this year between the Yankees and the second-highest payroll in baseball.

    Or how about this. The percentage difference between the Lakers payroll and that of the lowest-paid NBA team (the Thunder) is about equal to that between the Yankees and baseball’s 7th-highest-paid team (the Phillies).

    Something in baseball has to change.

  25. The surest way to signal a weak argument is to base it on statistics … “Lies, damned lies, and statistics”. Here’s the problem in this case: the revenues are not accurate. One, Forbes doesn’t even cite a source … because they can’t! I think after News Corp. sold the Dodgers there were no teams owned by publicly traded companies, making getting accurate revenue numbers nearly impossible.

    Also, in the case of the Yankees, Mets, and RED SOX (!), they all own hugely profitable cable operations … much more than any other team. There is no way that revenue source is included …

    Today’s most profitable teams have revenue coming from a wide variety of sources, and there is no way a magazine could untangle all that.

    And, to further demonstrate that these revenue numbers are bogus, the Forbes revenue number for the Yankees in 2005 was $265 million. Is that possible, before the new stadium was built, that revenue increase more than a $100 million in 3 years? Not likely. Forbes was probably adjusting their formula, thus the huge difference.

    Finally, it’s not so much that the Yankees can buy any player they want, it’s that they can take many more risks and paper over the mistakes. And the Yankees have made a lot of mistakes between their last two championships.

  26. @Jeffrey

    “If you look at the last 10-15 seasons, more teams have made the playoffs, won pennants and championships than during any other period. Free agency notwithstanding, more teams have a chance now than ever before. By comparison, from 1947-1964, the Yankees played in the World Series almost every year, and more often than not, they matched up against the Brooklyn Dodgers and/or the NY Giants.”

    This has nothing to do with parity in the sport nor does it in any way suggest the playing field today is more level than ever before. All it shows is that since the advent of the LCS in 1969 and more recently the Wild Card and Divisional Series in 1995, more teams make the playoffs now.

    In the 1947-1964 span you referenced, there were only two teams in the “playoffs” each year… and those “playoffs” were the World Series. Since 1995, however, 8 teams make the playoffs each year.

    In addition, the use of short 5 and 7-game series in the baseball postseason makes it a legitimate possibility that a worse team will beat a better team. So you’re absolutely right to note that “more teams have a chance now than ever before.” They do. However, I repeat, that’s not because of parity. It’s because the playoffs include 8 teams rather than 2 teams, and because short series give the underdog a fighting chance.

    This also connects to the idea that the World Series Champion is **not** necessarily the best MLB team in a given year. The team with the best record over 162 games is much easier to prove/defend as being the best overall team. Again, given the large number of teams in the playoffs and the dynamics of 5-7 game series, a Wild Card team that barely squeaks into the playoffs has a legitimate shot to put together 3 solid games and knock out a dominant division champion in the first round of the playoffs. It didn’t happen this year, but it can and it has. Remember, we’re only 4 years removed from an 83-win team (the ’06 Cards) winning the World Series.

    So let’s go back and look at the team with the best regular season record in the AL over the last 15 years. In 7 of those years, it’s been the Yankees. You can argue all you want about championships being all that matter, but the truth of the matter is that win-loss record over a 162-game season is better indicator of overall team strength than performance in a couple 5- or 7-game series. Moreover, the same people who downplay the Yankees huge financial advantage tend to play up the AL East as being baseball’s toughest division. So if we accept that claim, the Yankees managing to put together the best regular season record for 7 of the past 15 years while playing in that cutthroat division becomes an even more lopsided feat.

    All I’m saying is that the World Series Champion and best team in baseball are rarely one and the same. This year, they happen to match up. Although I’m not Yankee fan, I 100% believe they were the best team in baseball this year. That fact would **not** have changed if they had somehow been knocked out by the Twins in the ALDS, the Angels had managed to squeak by in the ALCS, or the Phillies had triumphed in the Series.

    Those who use the Yankees’ 9-year World Series “drought” as grounds to show that you can’t buy success are wrong. Those who use the same drought to claim that the Yankees don’t really have any sort of advantage are also wrong. Just because the Yankees haven’t been raking in World Series championships does not mean that they haven’t been regularly putting a superior product on the field.

  27. This is definetly a nice try at trying to figure out the problem, but this is as you admit, a very simple look at an incredibly huge industry and your inability to account for the actual numbers involved – as well as looking at investment rate over and above all else – merely serves your initial ideological/analogical reasoning of “this is how capatalism is practiced in America.” Im sure this is a case of the fish being unable to see the water in his tank, but still, were not fish. You set up a simple dichotemy of how the power of investment within a given economy is able to produce wealth while those who fail to invest and simply hold onto their funds are in actuality hurting the economy. I like what your trying to do, but honestly, you have simply transposed an arguement from South Park and legitimized it with cherry picked statistics. The fact that a few people are impressed with your analyses is more than amusing.

    Does this legitimize those owners who receive the luxury tax and pocket it ? No obviously not, but that is not the counter arguement to what you are saying, far from it, that arguement is actually the ideological necessity you need in order for your arguement to function. You need to rationalize the function of the monopoly which the two New York teams hold over the biggest sports market in North America. In a geographic region in which normally four teams would operate you only have two. When the realignment of the leagues happened and expansions were opened up the most logical place in which to make money and expand the power of the league would have been to locate another one in New York, but no, thats impossible since the Yankees and Mets hold vicious control over those zoning rights.

    But like you said this is how Capatalism is run in America. State sanctioned monopolies which have been established long ago and which wont ever be put in question. Not the free market, or the best run team as you are trying to suggest, if what you say you believe is correct then there would be four teams in New York instead of two. Now that would be free market capatalism, but then again, that’s not what capatalism we have here. Don’t get me wrong, im a Yankees fan, but i don’t go trying to justify the teams success by saying its the best run organization or the product of capatalism in America. To do so is just naive and ideological at it’s purest.

    What your analyses fails to take into the account is amoung other things, is the percentage of the payroll allocated to each win the teams accumulate. And yes, their are formula’s to measure this. Thats why you hear the Yankee anouncers talking about how the Yankees can outspend their mistakes, because their loss of wins on each player is able to be absorbed by the other players around them, as well as the higher payroll.

    Also, how much of the total budget is made up of off field expenditures ? Stadium costs, minor league teams, staffing, drafting; all this stuff bites into those revenue numbers which you mistakenly believe exist within a vacuum. Look them up youll be suprised.

    I didn’t mean for this to be this long, but this is just a great example of why people hate us Yankee fans. It is exactly this type of ignorance that people rail against when they take pleasure when we fail to get to the world series. Its not the team they hate, its this blind sense of entitlement that people like you try to justify with these flimsy smug arguments.

    Come on Yankees Fans, lets hold ourselves to a higher standard then this !

    BTW soooo glad Jeter got another GG ! Good work.

  28. I just came to this page off chance, so if the writer of this post is actually a highschool student just trying to make a stab at this I apologize I was just looking at the argument presented and meant no offense to the author. Their are many reason’s for us winning this year, its on the web, so if anyone’s interested they can look. I named a few points missed by the author, but, their are many many others. Baseball is a fascinating economic entity in America, but it’s been around for over a hundred years, so don’t go thinking you can summ its economics up in a simple online post.

    Thanks for the input though Khoi you gave me something to think about which is what I was looking for.

  29. If the trend continues the disparity will become greater. Capitalism arguments do not really work in this environment because what benefits the Yankee bankroll is simply not available to the Royals or the A’s even IF they spent and even IF they won. So while some teams can be labeled cheap, many cannot, and these teams are STILL at a disadvantage with no extra revenue to post for free agency and MORE IMPORTANTLY the financial repercussions of those moves into subsequent seasons.

  30. “If you look at the last 10-15 seasons, more teams have made the playoffs, won pennants and championships than during any other period.”

    I don’t think this is even close to being true — in fact, there were only 8 series winners from 1995 to 2009, while in the previous 15 World Series there were 12 winners. And throwing the amount of teams that made the playoffs in there makes for a bit of an unfair comparison, as the past 15 years were the only years in which the wild card existed in MLB play. And that’s not parity, so much as it is opening the barn door a bit wider.

    But since someone earlier mentioned the English League soccer, I’m all for punishing under-performing teams by placing them in a lower level of play (something I was adamantly in favor of when my Phillies were floundering in the late 90s).

  31. Team revenue has no business in this report. Because revenue is unverified, all the numbers cited are unreliable. Payroll numbers are regulated due to the MLB payroll tax on high payroll teams.

    Also, there is a strong correlation between team payroll and chances of making the post-season. See this post.