The Captain's Blog

Hal Steinbrenner made the rounds yesterday. Unlike his father, who was a daily presence during the regular season, the younger Boss has had a much lower profile, so his tour of local media gave scribes and talk show hosts the chance to ask a lot of unanswered questions. Unfortunately, they all settled for the party line.

Is Hal Steinbrenner loosening the tie on the Yankees’ brand?(Photo by Rob Tringali)

Although there are many issues floating about the Yankees universe, including the Alex Rodriguez saga and Joe Girardi negotiations, the one of utmost importance to the future of the team is Steinbrenner’s desire to lower payroll below the luxury cap threshold. In each interview, Steinbrenner referred to this plan as a “goal”, but one that wouldn’t prohibit the organization from fielding a championship caliber team. This stock answer was repeated throughout the day, but never once was it challenged.

The most obvious follow-up to Steinbrenner’s declaration would have been to ask whether he believed the organization’s decision making last winter impacted their lackluster performance in 2013? If, for example, the team’s willingness to say goodbye to Nick Swisher and Russell Martin was motivated more by future financial considerations than an assessment of their playing ability (and there is every reason to believe it was), then Steinbrenner’s commitment rings hollow. After all, if the Yankees were willing to sacrifice 2013 at the altar of fiscal restraint, why should the team’s fans believe they won’t do the same this winter? Besides, “a championship caliber team” is subjective. Does that mean the Yankees will build a roster with just enough to contend, or one that is so stacked it makes them a prohibitive favorite? Who knows, under the new regime, this year’s team may qualify as a legitimate contender, in which case, the Yankees’ mandate to field a winner has been reduced to lip service.

The media also had the opportunity to ask Steinbrenner why the team needs to cut payroll. The monetary incentives provided by the new CBA (see here and here) explain why the Yankees want to cut costs, but that doesn’t explain why the franchise isn’t content with business as usual, especially when business has been booming. Or has it? Is there some latent financial pressure forcing the Yankees to examine costs (secondary ticket markets, perhaps)? If not, and winning really is the priority, why would the Yankees even consider trimming payroll? After all, the new CBA contains all carrots and no sticks (except regarding expenditures on amateurs). In fact, because the luxury tax threshold is rising to $189 million in 2014, the Yankees would save money even if they maintained the status quo. So, what, other than increasing profit, is compelling the Yankees to make such a drastic change to their business philosophy?

Putting aside authenticity and motivation, the biggest flaw in Steinbrenner’s “wait-and-see” approach to his $189 million plan is the team does not have the flexibility to accomplish the “goal” without careful planning. Unless Alex Rodriguez’ entire 2014 salary is wiped off the books, there’s practically no way they’ll be able to trim enough salary without continuing to gut the team. Needless to say, all of these variables, with all of their consequences, require a thorough plan backed by a commitment to its execution. If the Yankees decide to go forward with their austerity plan, they can’t afford a willy-nilly approach, and that’s exactly what Steinbrenner has been communicating.

Yankees 2014 Financial Obligations

Note: Click here for explanation of contract assumptions. Soriano’s AAV is $17 million, but the Cubs are paying $13 million in 2014. Well’s AAV is $18 million, but payments from the Blue Jays and Angels offset the entire amount.
Source: Cots Contracts for salaries, MLBTR for base arbitration estimates.

There’s no good baseball reason for the Yankees to trim payroll. Over the last two decades, the franchise has enjoyed unparalleled success on the field and in the board room. With the brand having never been stronger, it’s hard to imagine why Steinbrenner would want to risk compromising it by diminishing the organization’s championship mystique. That’s why his commitment to fielding a winner seems dubious. Actions speak louder than words, and so far, the Yankees seem like a team that is now being governed with an eye toward the bottom line first and then the A.L. East standings. If so, the future of plan $189 million probably rests more on the Yankees’ ability to maintain revenues than win championships. Steinbrenner is a self-avowed finance geek, so you can bet he is considering all the scenarios. Can the team weather a down period without losing substantial revenue from declining attendance and plummeting ratings? Or, will the lost income more than offset the potential savings derived from a lower payroll? The answers to those questions, and not the competitiveness of the team’s roster, could ultimately decide the Yankees’ direction.

Hal Steinbrenner has every right to put profit above glory. Yankee fans might not like it, but they can vote with their pocketbook. In the meantime, it would be nice if the owner would be more forthcoming, and definitive, about how the team intends to operate in the future. Of course, you can’t really blame Steinbrenner for keeping things close to the vest. If no one even bothers to ask him the hard questions, he might as well keep the unpopular answers to himself.