"A New York Treasure" --Village Voice

Pocket Change


That is what the Yankees apparently have left to spend on a second left fielder and according to Joel Sherman that makes bringing Johnny Damon back the longest of long shots. No real news here but I figured it’d give you guys some baseball stuff to schmooze about that doesn’t have to do with Big Mac. I like the idea of Reed Johnson, but really, I like most of the options that are being discussed because we are talking about a role player not a key figure. And if things fall apart, we know the Yanks can always swing a trade before the trading deadline in the summer…

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1 Diane Firstman   ~  Jan 13, 2010 10:54 am

Hinske not an option anymore .... Hairston now too expensive? I think the Yanks should (could) break their budget a bit to sign someone so versatile.

2 Mattpat11   ~  Jan 13, 2010 10:56 am

This is where I remind everyone that we're still paying Kei Igawa.

3 rbj   ~  Jan 13, 2010 11:13 am

[2] Ugh.

Though I suppose the Yankees can afford, lineup-wise, to have replacement level player in LF.

4 williamnyy23   ~  Jan 13, 2010 11:47 am

[2] Igawa or no Igawa, you can't blame the Yankees for having a budget, especially one so high.

5 Paul   ~  Jan 13, 2010 1:14 pm

Let's be perfectly clear: the Yankees are absolutely rolling in cash. They clear $200M in ticket sales alone. Then add in TV rates (and a network they control), advertising, suites, concessions. $400M in revenues isn't out of the question.

The absolutely criminal result is how little the Bronx benefits.But that's on the scumbags in office.

I bet the budget is as simple as the Steinbrenner kids now having direct access to the numbers and how much each sibling stands to gain on a yearly basis. Once there's a standard in place, how to get four siblings to agree on all giving up money to get a middling improvement? For logistics, the budget is the only way this will make sense going forward. And $200 million is as good a number as any, especially since they just won a Series with that standard and without the extra $5M spent on Cameron. That's the reason Brett Gardner will start.

6 rbj   ~  Jan 13, 2010 1:26 pm

And at least the Yankees aren't in the Marlins situation, where if I read the story correctly, they are going to be forced to pay more in salary. Now I somehow doubt that this means they are going to be able to attract one or two star players to play with a bunch of scrubs. So would increasing each Marlin player's salary by $100K or so turn them into better players? No. I'd rather they show that they are working on improving their farm system: go after better players with signing bonus affordability issues, better MiL facilities and scouts & such.

Marlins did have a better season than the Mutts last year.

7 ms october   ~  Jan 13, 2010 1:39 pm

[6] it will be interesting to see how that will play out. the marlins farm is actually pretty good - that is basically the main way they are staying competitive. having to spend extra money might keep them from trading someone like johnson before he hits arb and pay him his arb increases.

[5] the stein kids wanting some more of the money to be available for themselves is my theory too as to why there is a budget.

8 williamnyy23   ~  Jan 13, 2010 1:44 pm

[5] Accepting your $400mn in revenue estimate (which I think is more than reasonable), you then need to factor in the expenses. Player payroll is at least $225mn ($200mn + $15mn in tax + $10mn in benefits) + about $50mn in debt servicing + payroll for on field and front office administraion as well as support staff + marketing and operations expense + $26mn in revenue sharing. Forbes has actually calculated the Yankees running at net loss, so by no means are the Yankees pocketing large amounts of what they take in.

As for whether or not the Bronx benefits, if they don't, I wonder why every politician and civic leader objected to the notion of the team leaving the borough.

9 williamnyy23   ~  Jan 13, 2010 1:47 pm

[7] I think a more likely reason for their being a budget is because of the enormous debt that the Yankees now have to service. Besides, we need to keep in mind that the Yankees budget is over $200mn!...not including the 40% luxury tax on every penny over $170mn.

10 Mattpat11   ~  Jan 13, 2010 2:05 pm

[4] The original defense of the never-a-good-idea Igawa signing was that the Yankees were rolling in money and could afford waste it in such a fashion. Now we have no money for a left fielder.

11 williamnyy23   ~  Jan 13, 2010 2:10 pm

[10] The original defense holds. In spite of Igawa, the Yankees can still afford a $200mn+ payroll. In a perfect world, the Yankees would never make any mistakes and be able to afford All Stars at every position. The Yankees world may not be perfect, but it is damn near close.

12 Horace Clarke Era   ~  Jan 13, 2010 2:11 pm

Regime change, MattPat! Mistakes wuz made. Cash is working to rectify.

And william's on the side of the angels (no, not those Angels) with his analysis here. I'm surprised to read someone saying the Steins are being greedy and hurting the team. Really? After a World Series, the three signings last year ... regarding a left fielder issue? Ouch.

Take that one to Marlin country.

13 Yankster   ~  Jan 13, 2010 2:20 pm

There are good reasons to SAY you have a budget too. If you are credible, and I think the Yankees are working on building up their credibility with respect to their budget, it gives them a somewhat stronger negotiating hand: "We really only have $2m available in the budget." If the player wants to play for the Yankees, he might blink first when faced with a "budget." Stating that you have a budget is a classic negotiating tactic that a buddy of mine tells me is still taught in law school.

(7)(9) I read (somewhere, back when it was being built) that the debt service cost toward the stadium loans actually occur above the "revenue" sharing line. So it's not "revenue" sharing, it's "revenue net of selected expenses" sharing. This is one of the reasons the Yankees were able to build a stadium without all the grant money that a lot of other stadiums get: it reduced their payments to other teams.

14 Yankster   ~  Jan 13, 2010 2:20 pm

[12] Hear hear!

15 ms october   ~  Jan 13, 2010 2:31 pm

[12] who said the steins are being greedy and hurting the team?
rhat is not what i meant by my statement - just that i can see it being possible, i repeat possible, just my speculation, that they don't want to spend as much on player salaries as their father .

16 Mattpat11   ~  Jan 13, 2010 3:04 pm

[12] The Igawa Debacle occurred during this regime. [11] And yes, in a perfect world mistakes wouldn't be made. But its not and they were and because of it I have to watch Brett Gardner get 500 AB.

17 Horace Clarke Era   ~  Jan 13, 2010 3:49 pm

It was [5] I was reacting to Ms Oct. Paul's comment.

MattPat, we know the regime changed from Tampa to Cash. We are seeing the results.

On our other Hot Button, SI.com has this


On the allegation by McGwire that steroids don't help. He's raked (hard) over the coals for this, in terms of losing credibility as an advisor of the young, among other things.

18 a.O   ~  Jan 13, 2010 3:51 pm

[16] But at least you can always relive the memory of Johnny Damon throwing by visiting any local girls tee-ball game.

19 Mattpat11   ~  Jan 13, 2010 3:57 pm

[17] The power shift occurred after the 2005 season. Igawa was signed a year later.

[18] Or Brett Gardner. He's not exactly Vlad either.

20 ms october   ~  Jan 13, 2010 4:07 pm

[17] okay (and sorry if i came off as harsh) - just wanted to make sure my comment was not interpreted that way - because i don't think that.

[19] one thing in cashman's defense is we don't know if geroge wanted igawa. just like the arod re-signing was hank (not that i am complaining about that, but the deal was certainly too long).
beginning last year is about the first year we can really say it was cashman without tampa, without the steinbrenners.
if anyone can every really pinpoint yankee moves and attribute who is responsible for what, that would be an interesting read.

21 Mattpat11   ~  Jan 13, 2010 4:15 pm

[20] Honestly, I don't care whose fault it is. Someone or a group of people screwed up royally there. And I'm just pointing out that it was a stupid move then, and now that we are operating under a budget, past stupid moves that were easily avoidable but dismissed as "the Yankees can just flush money away" have contributed to a hole on the team.

22 ms october   ~  Jan 13, 2010 4:23 pm

[21] i completely agree with that. hopefully under these new budget rules a craptastic signing like igawa will not happen again.

23 williamnyy23   ~  Jan 13, 2010 5:24 pm

[13] Debt service is deductible to an extent from total revenue for purposes of revenue sharing, but it should be noted that with the expected increase in revenue, the Yankees would wind up paying close to the same amount. The expected increase in revenue is really what made building the stadium possible, although being able to deduct debt expenses is definitely a huge plus.

One other financial aspect to keep in mind is that with taking on debt comes covenants, including maintaining certain levels of financial health. This is especially true for instruments like interest rate swaps, with which the Yankees are heavily involved. In other words, the Yankees have to make sure their counterparties and the rating agencies are happy with how they are running their business. Having a budget, or at least saying you do, would definitely be a good idea toward that end.

24 Horace Clarke Era   ~  Jan 13, 2010 5:35 pm

Mattpat, if you are sure of 2005, I am going to defer to you. My own sense (very probably wrong) is that while George was in decline but still formally in charge, a power struggle took place wherein the Tampa advisors had too much say over signigns and decisions and Cashman almost left. I was under impression that his period of full GM autonomy only began in the last Torre year.

If someone has the actual sequence well-remembered, I'd be grateful to hear it.

On the wider question, can anyone point to a team that does NOT have stupid signings (often pitchers!) in their closet?

25 williamnyy23   ~  Jan 13, 2010 5:46 pm

[17] That was a pretty weak article. I am not sure what value there is in citing a scientist who doesn't cite science. The more interesting tidbit from the piece is if steroids were so prevalent in the NFL during the 1970s, why does every assume that the steroid era began sometime in the 1990s?

26 williamnyy23   ~  Jan 13, 2010 5:52 pm

[21] Your basically saying the Yankees should never make mistakes, so unless they are perfect, you'll be upset. That's fine, but I think that's an unrealistic standard. Also, I would hardly call Igawa's $4mn salary a colossal impediment.

[24' If Cashman's comments about Igawa at the time are worth anything, I think it's safe to say he had little to do with the signing. Cashman openly expressed skepticism about Igawa, even calling him a potential reliever. That's not the talk you expect from someone fully invested in a big signing.

27 Horace Clarke Era   ~  Jan 13, 2010 6:25 pm

I'm not a big Heyman fan, but McGwire struck me as so lame it pains. The whole notion that for years he only did it for his health and got no no power benefit takes us back to ostrichland. How dumb are we expected to be? And the pre-'93 and post-93 Big Mac stats are stunning.

Here's Heyman:

He said he really started to get serious about steroids after the 1993 season, after dabbling in them for several years before that. Take a look at his baseball card. That is precisely when McGwire became superhuman. A coincidence? Highly doubtful.

Assuming that is the truth, that makes it clear just how much the steroids mattered. Through 1993, McGwire's numbers were these: .249 batting average, .359 on-base percentage and .509 slugging percentage -- very good numbers but not Hall-of-Famer material. As Joel Sherman from the New York Post pointed out, the comps for McGwire through '93 are Jay Buhner (.254/.359/.494), Troy Glaus (.255/.359/.497), Darryl Strawberry (.259/.357/.505) and Carlos Pena (.247/.355/.502).
But from 1994 on, there was only one comp for McGwire, whose numbers in his later years were .277/.429/.674. That one comp was Babe Ruth.

Ruth is the only player whose career on-base percentage was over .420 and whose career slugging percentage was over .670. But even Ruth wasn't close to the juiced-up McGwire when it came to hitting home runs. McGwire hit 11.88 home runs every 100 at-bats from 1994 on. As Sherman pointed out, Ruth never had even one season in which his home run percentage was that high.

28 Horace Clarke Era   ~  Jan 13, 2010 6:27 pm

[25] Fair query. And I've been noting that if you want to widen the whole discussion to drugs in sport, you get to the 60s and VERY widely reported clubhouses full of amphetamines. (Reported by players, ignored for the most part.)

It is also fair to note that football, basketball, hockey get next to no grief on the issue compared to baseball.

29 Mattpat11   ~  Jan 13, 2010 9:34 pm

[26] Four million dollars in this market turns a 2 million dollar bench player like Johnson or Thames into a six million dollar player like Matsui or Vlad, which is where I think Damon might eventually wind up.

30 Start Spreading the News   ~  Jan 14, 2010 1:20 am

[8] "Forbes has actually calculated the Yankees running at net loss, so by no means are the Yankees pocketing large amounts of what they take in."

That's because the Yankees true profits are hidden by the YES network. YES network pays a fee to buy the right to broadcast yankee games. But it is hardly a fair market price since both the Yankees and YES network are owned by the same corporation.

"Fortune reported that the six-year-old YES Network, jointly owned by the Yankees, Goldman Sachs and the former owner of the New Jersey Nets, may be the ultimate MLB team brand extension. According to SNL Kagan Media Research, it took in revenues of $340.5 million in 2006 — almost $40 million more than the team itself brought in that year. As a media property it might be worth about $3 billion — or roughly three times its centerpiece content provider, a storied franchise dating back to 1901."

31 Paul   ~  Jan 14, 2010 6:37 am

[17] I wasn't saying they're being greedy. Not at all. Just that they finally have a full view of what's at stake. Anyone else ever try to make a decision with three family members? It's usually a mess most especially if money is involved. So an agreement about a budget is probably the most practical thing they can do. Part of it is self-interest, but a big part is also how to run the organization as a family. And I've got no complaints for their first two years. If anything, they seem to be doing a better job than their Dad.

[8] Why politicians didn't object? Seriously? Hmmm, what's the difference between being a politician from the Bronx and one from Harlem? Moreover, do you want to start digging into campaign contributions, free tickets, etc.? Yankee Stadium 2 opened on time. How is the new parkland looking?

[30] Excellent rejoinder. But even based on the napkin accounting in [8], the correct view of the debt in [13] and leaving aside the YES revenues, the Yankees are clearing somewhere between $50 and $100M each year. That's a pretty successful family business.

32 williamnyy23   ~  Jan 14, 2010 6:38 am

[30] As your link explains, the Yankees are not YES. Both entities are owned by Yankee Global Enterprises LLC. Furthermore, Yankee Global Enterprises LLC only owns 60% of the YES Network. Goldman Sachs and Providence Equity Partners combine to own the other 40%.

So, it isn't necessarily so that the Yankees aren't being paid a fair market price for their rights fees. If that was the case, then the Yankees would be subsidizing both Goldman and Providence.

While it is true that the Yankees are better off keeping revenue away from the team because of revenue sharing, the 40% minority stake trumps the 30% revenue sharing rate. So, the Yankeees are better off getting $1 from YES (Yankees keep $.70) than allowing YES to keep it (Yankees get $.60).

Finally, MLB does review the rights fees paid by team owned RSNs and reserves the right to both determine if it is a fair value and penalize the team if they are trying to skirt the revenue sharing rules.

In summary, the YES network and the Yankees are not the same entity, so they do need to be considered separately for the purposes of financial analysis.

33 williamnyy23   ~  Jan 14, 2010 6:42 am

[31] Maybe the Bronx needs to start electing/supporting local politicians and community leaders who support their interests then. If the people aren't interested in doing so, why should the Yankees be?

Do you have any evidence to support the notion that the Yankees are clearing $50-100mn? If so, I'd love to see it.

34 Paul   ~  Jan 14, 2010 6:43 am

By the way, as one who thinks Gardner could be a pretty decent complement - on defense and in the 9 slot - I'd have no problem if they were under budget and still went with him. He's essentially Jacoby Ellsbury but without a big green wall to turn shallow flys into doubles.

35 Paul   ~  Jan 14, 2010 6:56 am

[32] "So, the Yankeees are better off getting $1 from YES (Yankees keep $.70) than allowing YES to keep it (Yankees get $.60)."

That's an interesting way of looking at it. And perhaps some of that thinking goes into the current budget. No doubt some decent accounting is being done. But also no doubt that each family member, as well as minority shareholders, are doing just fine.

[33] Democracy fails when corporate interests buy politicians and when there's only one political party. In the Bronx both conditions apply. The voice of any aggrieved party is very, very small. You tell me: How much do the Yankees pay in local taxes? Or on the land they play their games on? Isn't the latter $0?

"Do you have any evidence to support the notion that the Yankees are clearing $50-100mn? If so, I’d love to see it."

Do you have any evidence they're not? :)

Even still, you agree with the $400M figure. I fail to see how all of the things you list add up to the "missing" $200M. And the biggest chunk - the debt - means much smaller revenue sharing payments. Splits the difference and that's $50M. The rest you list - "payroll for on field and front office administraion as well as support staff + marketing and operations expense" - don't add up to $150M.

36 Paul   ~  Jan 14, 2010 7:12 am

On topic:

YES Wins, YES Wins

A 13% ratings bump over 2008. Given that the figures in [30] are from 2006, it looks like YES is easily clearing $400M/year and perhaps much more.

What's the city's share of revenue from the team and from Yankee Stadium? I see a lot of cops on gameday to say nothing about the infrastructure.

37 williamnyy23   ~  Jan 14, 2010 7:28 am

[36] I believe the cops outside are part of an assigned Yankee Stadium detail, but the ones inside are off duty officers for whom the Yankees must pay.

38 Paul   ~  Jan 14, 2010 9:34 am

[37] And the infrastructure costs (roads, trains) to shuttle people to their ballpark?

I mean, simple question: Do the Yankees pay property taxes?

39 Start Spreading the News   ~  Jan 14, 2010 1:21 pm

[30] “So, the Yankeees are better off getting $1 from YES (Yankees keep $.70) than allowing YES to keep it (Yankees get $.60).”

Yes, the Yankees team gets $.70 but since the team is owned by the larger corporation, don't the profits go back to the parent company?

If so, then the Steinbrenners see 40% of .70 (assuming all .70 are profit) which is .35. If the YES Network would have paid less, the Steinbrenners would have kept more money since there is no revenue sharing for the YES Network. So the Steinbrenners would get 40% of the YES network profits.

[30] "Finally, MLB does review the rights fees paid by team owned RSNs and reserves the right to both determine if it is a fair value and penalize the team if they are trying to skirt the revenue sharing rules."

Hahaha. MLB owners do a terrible job of policing its own. Marlins have been pocketing the revenue sharing cash all this time. And it took the players' union to force the MLB owners to act. And that act has been simply a stern press release so far.

So no, I don't think the owners care about the Yanks paying less. If anything, they would want more owners to hide the money the way the Yanks are.

Next step for the Yanks? Hide the Stadium revenues. Yes, Yanks have created a company (Legends Hospitality, LLC) to handle the concessions at Yankee Stadium.

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