Yankee Economics 101

With the world economy in turmoil, the Yankees have spent money with seemingly no regard for the markets, and they’ve taken their fair share of criticism for it. Some other owners think they can’t compete with the Yanks’ millions. Other commentators think the Yanks are showing an insensitivity to the struggles of most Americans during a recession.

Maury Brown succinctly summed up this spending. “The total base salaries of A-Rod ($32 million), Jeter ($20 million), Teixeira ($20 million), and Sabathia ($14 million) for 2009 will be $86 million,” Brown writes, “or more than the Opening Day payrolls of more than half the league last year (Brewers, Indians, Giants, Reds, Padres, Rockies, Rangers, Orioles, Diamondbacks, Royals, Twins, Nationals, Pirates, Athletics, Rays, and Marlins).”

On the flip side, however, are those who see the Yankees’ spending as the perfect storm at the right time. The Yanks cleared a lot of money off their books this year, and they are simply replacing those contracts in the most efficient way possible. They’ve signed pieces they need, and even Peter Gammons offers up praise for the Yanks’ approach. Meanwhile, as Cliff Corcoran noted earlier tonight, the Yanks are basically replacing their 2008 free agents dollar for dollar.

Take a look at the chart Corcoran drew up:

He adds some commentary (emphasis mine):

As you can see, even after signing CC Sabathia, Mark Teixiera, and A.J. Burnett, the Yankees’ commitments for 2009 are still within $4 million of their 2008 payroll. That number will increase. Coming off a career year, Xavier Nady will earn a few million more via arbitration (Brian Bruney and Melky Cabrera are also arb-eligible, but unlikely to get significant raises), and there’s still a chance that the Yankees will add payroll via a one-year deal for Andy Pettitte or an alternate fifth-starter or a veteran center fielder. There are also automatic incremental raises due to the team’s pre-arbitration players based on major league playing time. Even still, the net change in team payroll will be negligible relative to the massive dollar figures connected to those three new contracts.

In the end, the Yankee spending seems to look bad, but they’re not doing much more than filling holes with large contracts. It’s sort of crazy to realize that the Yankees now have the top four contracts in the game, but a free agent class similar to the one we’ve seen in 2008 doesn’t come along that often. The last time this much talent was available for only money was in 2000 when Manny Ramirez, Alex Rodriguez and Mike Mussina signed some of the wealthiest deals around.

I certainly understand why some people may be uncomfortable with the spending, and why some Yankee fans — my dad included — may view it as ostentatious spending. But it’s part of the system. The Yankees are replacing old contracts with new ones, and they’re doing it with the resources they have and can spend. Until or unless someone comes along to limit that spending, the Yankees will keep on doing what they do best, come economic hell or high water. It always has been and always will be a business, and the Yanks are at the top of the game in that regard.