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Is the Yanks Budget Coming from MLB?



By Mike Silva ~ January 13th, 2010. Filed under: Business of Sports.

Two interesting pieces of business news came out yesterday regarding MLB.

First, it was reported that both MLB and the players association came to an agreement with the Florida Marlins that mandated them to invest more on payroll. The agreement goes as far to state that disagreements by the three parties could lead to arbitration. I wouldn’t be surprised, despite the prospects of a new stadium, if the league winds up taking over this team, like it did with Montreal, in the near future. 

On the same day the Marlins were asked to invest more on their on field product, the Yankees reiterated their “budget” claiming only $2 million dollars was left to spend. Joel Sherman stated that a deal for the team to acquire Mike Cameron last July was agreed to, but ultimately fell through because Hal Steinbrenner would not approve the additional payroll plus luxury tax it required. I don’t think I have ever heard of the Yankees reneging on a deal over money, especially someone like Cameron who made $10 million last season. According to Sherman, it would have only set the Yankees back about $5.5 million for a half season of his services. 

So what gives? My theory is the Yankees budget is just as much about the commissioner’s office as the Marlins salary mandates. It’s never going to be made public but, with collective bargaining on the horizon, payroll is something the league will be very sensitive about. Remember, this is the same league that mandates “slots” for draft picks so I don’t believe its farfetched they are suggesting “budgets” for teams based on their revenue. 

Obviously no one will be crying about the Yankees being “pressured” to operate with a $200 million dollar payroll. In all likelihood this will prevent them from even signing someone, like Johnny Damon, for a value contract. They will survive and still have a great shot at another title. In some ways the Yankees should be happy that MLB is getting involved since they consistently dole out revenue sharing to teams. Why should they give up hard earned revenue to watch Jeffrey Loria run to the bank and pocket the money? 

This is, however, is dangerous territory. When a league starts to mandate spending it may not just stop there. New MLBPA executive Michael Weiner has already suggested making a case for collusion with the 2009 free agent class. This winter’s crop is experiencing a similar dry market. I wouldn’t be surprised if the league is instituting a free agency “slot” and pressuring teams to not go over years/dollars with certain players. This is something that will be difficult to prove, but is a fair question to pose. It ultimately will lead to bad blood with the MLBPA, and potentially lead to another “94′ like showdown” when the CBA expires in 2011.

There is no question the league needs to address its economic system. Billy Beane proved with “Moneyball” that a team can compete despite the unfair economic conditions of the sport. The fact remains that, even the most solid business plan, requires small market teams to have a very high percentage of success. Just like it’s impossible for a batter to get a hit every time up, it’s unfair to ask small market teams to hit a homer with every value signing. A payroll disparity of $170 million dollars between the richest and poorest teams just can’t continue. There are generations of fans in Cincinnati, Pittsburgh, Oakland, and Miami that forever will be turned off by the sport and won’t pay to be the Washington Generals for New York, Boston, Chicago, and Los Angeles. Eventually attendance will suffer, and with that, revenue on other MLB centric items. I always say the owners are sitting on a limitless oil field, but testing those limits is dangerous territory. Any business that assumes its customers will always be there is doomed to fail – even baseball. 

It’s time for both sides to address the “800 pound gorilla” in the room. If they don’t, then they leave it up to the owners to fix the problem. Historically that leads to backdoor deals, labor unrest, and general incompetence. Bud Selig should make this his legacy, not some silly Global Series.

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Mike Silva has hosted sports shows on 107.1 FM Champions ESPN Radio Long Island ,1240 AM WGBB , Blog Talk Radio and live from Mickey Mantle’s Restaurant. He’s also built and maintained two popular social media hubs: New York Baseball Digest and Sports Media Watchdog. Mike has broken national and local stories, as well as been mentioned on the YES Network, SNY.tv, WFAN, Sports Illustrated, ESPN, NY Daily News, New York Magazine, Journal News and the NY Post. Contact Mike professionally at mikesilvamedia.com

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4 Responses to Is the Yanks Budget Coming from MLB?

  1. Okay

    The Yankees payroll at the end of the season was close to $230M. There is no conspiracy here. Adding another $5.5M would have been a lot given the incentives that were paid, etc.

  2. dale

    why should anyone care what the yankees spend? they pay more in rev sharing and the players make more. its capitalism. they built their brand. they can do what they want with their revenue. they invest in the team and franchise. lil better than the steinbrenner fam pocketing billions

  3. Rich

    “I don’t think I have ever heard of the Yankees reneging on a deal over money”

    I’m not sure why you use the word “reneging” but the Yanks alledgedly passed on Beltran since George had used the money for Sheffield.

    “league that mandates “slots” for draft picks so I don’t believe its farfetched they are suggesting “budgets” for teams based on their revenue”

    And here’s another example you give that’s incorrect. When was the last year the Yanks didn’t go over slot during a draft year?

    Give us some possible proof of your theory and maybe you could change my mind but I don’t see anything here other than throwing spaghetti against the wall.

  4. Mike Silva

    Rich

    I was speculating, we never will know if MLB mandated something or not. The league doesn’t even admit publicly about slotting for draft picks.

    Behavior seems to indicate there is pressure from the league to curb Yankees spending.

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