The Yankees need Robinson Cano. Such an obvious statement should go without saying, but there has been growing sentiment among fans and media that suggests otherwise. According to this line of thinking, either Cano is not worth his rumored contract demands and/or the Yankees can not afford him. Does such an argument hold up to scrutiny? Let’s first break it down.
- Cano is being greedy. He isn’t worth the money, or at least he won’t be by the end of his contract.
- The Yankees can’t afford Cano. The team needs to dip below the $189 million luxury tax threshold, so there’s no way they can fit another big contract into that structure.
- Besides, the Yankees have shot themselves in the foot countless times with long-term deals, so they should not make the same mistake again.
- Cano will be missed, but the free agent market is strong, so the Yankees can replace him with several players, making them a more well-rounded team.
Sounds reasonable, right? Now, it’s time for a closer look
1) Cano is being greedy. He isn’t worth the money, or at least he won’t be by the end of his contract.
New York Times’ columnist Tyler Kepner recently wrote “It makes you question what really matters to him,” when discussing Cano’s contract demands and new agent affiliation. “He is Jay Z’s first baseball client, and nobody knows what the whiff of true celebrity will do to Cano’s priorities.” Not only does such a statement cast Cano’s motives in a negative light, but it also implies that the second baseman is selling flash over substance. However, according to fangraphs’ WAR-based valuations (which, admittedly, are very rough), Cano has been worth $114 million over the last four regular seasons. Based on that calculation, Cano’s rumored demand of a $30 million salary isn’t outlandish.
Robinson Cano’s Estimated Value vs. Salary, 2005 to 2013
Source: Fangraphs (value) and baseball-reference.com (salary)
But, what about the end of the deal? If the Yankees signed Cano to a 10-year contract, could he possibly maintain his value over that period? The likely answer is no. However, that shouldn’t be the barometer used to measure free agent contracts. After all, no one seems concerned by the over $100 million surplus the Yankees have enjoyed during Cano’s first nine seasons. Nor should they be. The major league baseball CBA is structured so that players are underpaid at the beginning of their career and then overpaid at the end. That doesn’t mean teams should indiscriminately pay players for past production, but neither should they be scared away by the free agent premiums built into the system, especially when it comes to retaining a homegrown player from whom the organization has extracted a benefit. So, if Cano does sign a new $300 million deal and underperforms by $100 million, why should the Yankees, and their fans, be worried about coming out even?
2) The Yankees can’t afford Cano. The team needs to dip below the $189 million luxury tax threshold, so there’s no way they can fit another big contract into that structure.
This argument is relevant only in the context of Yankees’ artificial financial restraints. But, why do the Yankees need to avoid the luxury tax? Unfortunately, very few people seem to be asking that question.
The Yankees are doing very well financially, at least according to independent estimates from Forbes and Bloomberg. Also, last year, S&P painted a rosy picture of the Yankees’ financial strength, upgrading the debt rating of the team’s holding company and adjusting its outlook from stable to positive. These two assessments came before the Yankees agreed to a multi-billion dollar contract extension with YES that will see the value of the team’s television rights rise from $85 million presently to approximately $350 million by the end of the contract in 2042. Business has been good for the Yankees, so it doesn’t appear as if the team’s emphasis on cost control is being driven by financial distress.
Yankees’ Payroll as a Percentage of Team Revenue
Source: Cots Contracts (opening day payroll) and Forbes (estimated revenue) Continue Reading »