Ever since Moneyball was published in 2003, the baseball world has been in hot pursuit of the next great market inefficiency. Whether it was Billy Beane’s mining for high on-base percentage, the Rays’ dedication to the “extra 2%”, or, more recently, the Royals’ embrace of contact hitters in a swing-and-miss era, the last decade has seen momentary success heralded as a new paradigm for winning.
In order to play catch up with the likes of the Royals and crosstown Mets, Brian Cashman has reportedly been considering all options. According to teams who have had early talks with the GM, Cashman has been aggressive and creative. The irony, of course, is Cashman doesn’t really need a big imagination to turn the Yankees into World Series favorites. He just needs a good short-term memory.
Market inefficiencies are difficult to exploit because baseball is a copycat industry. As soon as one team strikes gold, another is right behind ready to stake a claim. However, amid the cascade of short-lived formulas, one model has been a true foundation of sustained success: the Almighty Yankee Dollar. For the better part of the last century, including most of the past 20 years, the Yankees have flexed their financial muscle. However, more recently, the team has decided to devalue its currency. Instead of “winning at all costs”, the franchise’s new strategy prioritized profit margin over winning percentage. Well, three year later, the Yankees have certainly fattened their wallets, but winning games has proven much more difficult in a cost cutting environment.
Only Hal Steinbrenner knows whether the Yankees will be once again willing to leverage the advantage of their oversized wallet, but if so, this year’s free agent market presents several compelling opportunities to remedy the team’s deficiencies. So, guided by the old franchise philosophy of money being no object, below is a championship blueprint the Yankees can use to once again lord over the baseball world.
Step 1. Sign David Price
Forget about the likes of Jeff Samardzija and Wei-Yin Chen, who each have had issues with performance and durability. The Yankees’ rotation already has plenty of question marks heading into 2016. Although Masahiro Tanaka, Michael Pineda, Nathan Eovaldi and Luis Severino have a lot of potential, they also collectively represent great risk. What the Yankees need more than anything is an ace to anchor a rotation full of instability. In that regard, pinstripes couldn’t fit another starter better than David Price.
Top Ten Pitchers, ERA+ (minimum 1,000 IP), Since 2009
Source: Baseball-reference.com
Price’s career performance speaks for itself. Since becoming a full time starter in 2009, the lefty’s ERA+ ranks eighth among all pitchers with at least 1,000 innings. Interestingly, two pitchers ahead of him on that list, Johnny Cueto and Zack Greinke, are also free agents, but Price seems particularly well suited to the Bronx. Being a lefty at Yankee Stadium is an obvious bonus. Another plus is Price’s considerable experience pitching in the A.L. East. His status as a hired gun also suggests he’ll be able to make a smooth transition, while his affable personality bodes well for how he would adapt to increased media scrutiny.
What are the drawbacks? Because of his stature, Price is likely to command a seven-year deal, which some consider to be too lengthy for a pitcher. However, it’s worth noting the Yankees currently have one of the youngest rotations in the game, so, the wisdom of Price’s years could be an added benefit, not a detriment. Overall, although the risk of injury and gradual decline are always prominent for pitchers entering their age-30 season, Price’s potential to provide immediate over-sized value easily mitigates the back-end risk.
Roster Impact
The addition of Price would make CC Sabathia a sixth starter/long man, and likely turn Ivan Nova into trade bait. It would also cement Adam Warren’s role as a reliever (at least until an inevitable injury), strengthening the bullpen as a result.
Step 2. Sign Jason Heyward (alternative: sign Justin Upton)
At age-25, many major leaguers are just getting their feet on the ground, but Jason Heyward has already established himself as a well above average hitter with elite defensive skills. Based on those credentials alone, the right fielder will be a highly coveted free agent, but when you add the potential for improvement promised by his youth, the value proposition becomes even greater.
As a lefty swinger at Yankee Stadium, Heyward’s power potential would be accentuated in pinstripes. His speed and strong relative rates of contact would also fit in with the recent interest in playing a more action-oriented style of offense. However, in order to take Heyward from the very good player he is to the superstar he could become, some projection is involved. If the Yankees are unwilling to take that leap of faith, or simply prefer a right handed bat with more power, Justin Upton wouldn’t be a bad consolation prize. Either way, the Yankees would be getting a relative young outfielder with both established production and potential.
Roster Impact
The Yankees’ 40-man roster currently has a glut of outfielders. So, in order to sign Heyward, Brian Cashman would like to have to clear some room. The most obvious solution would be to trade Carlos Beltran, who, despite still possessing a potent bat, proved to be a major liability in the field. Unfortunately, to trade him, the Yankees would likely have to eat Beltran’s contract, and it wouldn’t make sense to pay him millions to drive in runs for another team. Similarly, Jacoby Ellsbury’s onerous contract make him an unmovable piece, which leaves Brett Gardner as the odd man out.
Step 4. Trade Brett Gardner (for Craig Kimbrel?)
The Yankees can take two approaches with trading Gardner. If the desire is to strengthen the roster, the San Diego Padres, who suffered through a year with horrific outfield defense, seem to be an ideal suitor. Adding the speedy Gardner to the spacious Petco outfield might be worth more to the Padres than the similarly priced Craig Kimbrel coming out of the bullpen. If so, this cost neutral deal (over the first two years) would bolster both teams, and, from the Yankees perspective, give them the ultimate shutdown bullpen.
Cashman could also seek to save some money by shopping Gardner for prospects. According to reports, the Yankees have already touched base with the Mariners in this regard. Although this wouldn’t improve the team in 2016, it would strengthen the farm for future trades and free up money and roster space for a more long-term, impact solution like Heyward or Upton.
Roster Impact
An added benefit to trading Gardner is it would turn Beltran into a place holder for the eventual promotion of Aaron Judge. Also, the Yankees would be trading high. Although Gardner has had two consecutive productive seasons, there have been signs of slippage, including back-to-back late year swoons. Instead of waiting for more evidence of decline, the Yankees would be better off selling high on the team’s most tenured player.
Step 5. Sign Ben Zobrist
The Bronx Bombers have had a very hard time replacing Robinson Cano. Over the last two years, the team’s production at 2B has ranked near the bottom in the major leagues, which makes it convenient that this year’s free agent class features one of the best offensive players at the position. Ben Zobrist would represent an incalculable improvement over the Yankees’ current 2B situation, but, just as importantly, his flexibility would be a big benefit on a team with aging position players, many of whom have platoon splits. Of course, by the time Zobrist’s deal concludes, he’ll be pushing 40, but that concern, which led to Cano’s departure, is a mistake the Yankees shouldn’t repeat again.
Top-10 Player and Bottom-10 Team Production at 2B, 2014-2015
Source: Fangraphs.com
Roster Impact
As the primary 2B, Ben Zobrist would simply slot in for Stephen Drew. However, his role would really be much greater. Chase Headley had a solid year in 2015, but at times, fatigue seemed to have a negative impact on his performance. With Zobrist in the fold, the Yankees could turn Headley into a 120-game 3B, and, by extension, open up about 40 games at 2B for the development of Rob Refsnyder (or Dustin Ackley). Zobrist could also play some short stop if the Yankees need to hit for Didi Gregorius, or slide into the outfield when Beltran needs a late game replacement. Although 2B would be his main role, Zobrist’s flexibility could have a positive derivative impact throughout the roster.
Step 6. Sign Darren O’Day (if Kimbrel is not acquired)
With Dellin Betances and Andrew Miller, the Yankees have the end of the game locked down, but last year, the middle innings were more of an adventure. The Yankees could tamper some of that excitement by signing Darren O’Day as a right handed complement to Justin Wilson.
O’Day’s career has been marked by dominance and consistency. And, with each passing year, he has gotten better. Because he isn’t a closer and doesn’t throw 95mph, O’Day will probably come at a cheaper price than comparable relieves, but there’s no discounting the impact he would have on the Yankees’ bullpen.
Roster Impact
O’Day would join Wilson as a lefty/right middle relief tandem. He would also ease some of the burden on Betances and Miller, allowing Joe Girardi to more effectively manage their workloads. And, although adding O’Day would further marginalize Warren, it would also allow the Yankees to transition him to the rotation, if needed, without weakening the bullpen.
But, Can They Afford It?
Just like that, the Yankees are the team to beat. It’s easy spending someone else’s money! That statement will probably be used by many to dismiss this blueprint, but such an argument is divorced from the team’s financial reality. The Yankees constant cost cutting campaign has done a good job conditioning fans and media alike to reflexively reject free agency as the accumulation of “bad contracts”, but a deeper analysis tells a different story. In a nutshell, the Yankees can afford to spend a lot more money; they have just chosen not to.
2016 Financial Breakdown of Blueprint
Note: All contract values for free agents are estimates.
Source: Cot contracts (for non-free agent projections)
If the Yankees follow the blueprint above, and the estimated salaries for each player are accurate, the team would add between $68 million and $77 million in incremental player costs (including luxury tax) in 2016. That sounds like a mind boggling increase, but when compared to revenue projections, the percentage isn’t out of line with the recent past (aside from the last two years of aggressive cost cutting) and much lower than the period before 2009. Also, it should be noted, that after 2016, $58 million will come off the books with the departures of Sabathia (unless his 2017 option vests, in which case that savings will be delayed a year), Mark Teixeira, and Beltran. With Greg Bird and Judge likely replacements for the latter, and Sabathia’s role marginalized, the Yankees would effectively see that amount subtracted from payroll without the need to replace lost production. In other words, the Yankees surge in spending this year would be significantly offset by savings next year, bringing the team’s relative payroll back down to the lower levels of the last two years (to see how this compares to other teams, click here).
Yankees’ Payroll/Luxury Tax as a Percentage of Team Revenue, 2001 to 2017E
Note: For 2001 to 2014, revenue is based on Forbes projections and net of revenue sharing and stadium debt service. Payroll is based on final figures for each year released by MLB, and may not necessarily equal the amount upon which the luxury tax is based.
Note: For 2015 to 2017, revenue is based on 7% growth, which matches CAGR from 2003 to 2014. Payroll of $215mn for 2015 is based on estimated figures from several sources. Payroll of $292mn for 2016 is the net blueprint above added to 2015. Payroll of $235mn in 2017 is based on $57mn savings over 2016 described in the text.
Source: bizofbaseball.com and MLB releases published by AP (final payroll), MLB releases published by AP (luxury tax) and Forbes (revenue)
You can debate whether the Yankees should spend a lot this winter, but there’s no question about whether they can afford to make a big splash in this year’s free agent pool. With an escalating 30-year TV rights agreement, a strong corporate season ticket base cemented by Yankee Stadium’s luxurious amenities, and a share of MLB’s growing pie, the Bronx Bombers can look forward to steady revenue growth in a protected market with a stadium subsidized by favorable tax status. In the past, the Yankees have used these advantages to build a winning team, and this year’s free agent class will give them a chance to do so once again. So, let other teams chase fads and market inefficiencies; the Bronx Bombers have the Yankee Dollar, and that’s one formula that never goes out of style.
The Yankees should flex financial muscle for J Zimmermann and flex managerial muscle for S Strasburg!!!
Signing a 30+ pitcher and a 32+ second basemen is the wrong way to go.
Getting out from the long term contracts of Tex, CC, Arod is the key, getting younger is the key, they are moving in the right direction. Throw Headley and Beltran into that mix of players they should move if possible. Ellsbury unfortunately is essentially unmovable.
You just want to repeat the mistakes that put them where they are, with limited flexibility. Why would Padres want to trade the Kimbrel money for more money.
No to all of your idea.
You must have missed all the games the Yankees won over the last two decades while they were accumulating ” bad contracts”. If you look up the 2009 World Series, for example, you’ll notice that Tex, CC, and Arod played a pretty important role. And, if you examined their entire career in pinstripes, it would become evident that their contracts were very fair (see here: http://tinyurl.com/py6jnlq).
As mentioned, the Yankees have done a great job convincing fans that spending money has been a negative, when, in reality, it has been the reason the team has been so successful. Unfortunately, many simply ignore the financial reality and buy into the narrative. You’ve done nothing to refute the Yankees’ ability to spend, completely ignored the team’s past success until they started cutting payroll, and offered no analysis to support the claim that all long term deals are onerous. That’s not surprising because those who argue that the Yankees “need to get younger” seldom support that point of view.
Finally, the Padres might be willing to trade Gardner for Kimbrel because center fielders are generally more valuable than closers. If you use fWAR, for example, Gardner’s tally was 50% higher, making his equal salary a relative bargain.
I would argue that their success 10 years ago is fairly irrelevant, as the game is much different today than it was then. Players tend to age more quickly these days, plus more teams are using extensions to keep top talent from hitting the market during prime years. It’s a combination that makes financial might more difficult to flex. (Not impossible, but more difficult.)
The Yankees aren’t convincing people of anything. People (including Brian Cashman) have watched the game change, and watched smart teams (including the Yankees) change their strategy as the game has changed. If your hypothesis is that everyone else is dumb and you are smart… you probably need to re-evaluate your hypothesis. There are a lot of smart people out there, and they just might be able to teach you something.
I agree that getting younger is not an end in itself. However, it is a means to an end. Getting younger while getting better allows a team far greater flexibility in the short and long term. There is just no doubt that the optimal way to build a team is largely through good, young cost controlled players. Adding veterans as needed, sure. It is not 2002 anymore, though. Look around MLB at the best run and most successful clubs. They are not out buying every free agent who hits the market.
You seem to be unwilling to accept that people aren’t all going to agree with you, especially when you espouse was is a pretty radical point of view. I don’t think anyone disagrees that the Yankees could spend more money or that there are benefits to buying talent. I think you need to spend a little time actually understanding the counter-argument. No one doubts that the Yankees could spend more. That doesn’t mean they just throw nine figures at every top free agent out there.
I agree with much of what you said in the first paragraph, but it’s not germane to the plan above because this year’s free agent class is very strong. On the contrary, your argument supports mine because upcoming FA classes are weak for the very reasons you cite. In other words, if the Yankees are going to spend money (which they have), this is the year to do it.
My “hypothesis” has nothing to do with superior intelligence…it’s much too simple for that. When the Yankees spend, they win. There’s really nothing revolutionary about that statement. On the contrary, those scouring to attribute winning to market inefficiency-based formulas are the ones trying to re-invent the wheel.
The plan above illustrates two basic points: (1) the Yankees’ have capacity to spend more on payroll, as evidenced by declining level of player costs vs. revenue; and (2) the players available this year are deserving of investment because of their own unique abilities and the relative weaknesses on the Yankees’ roster. Do you not believe the Yankees have the money to sign the players above? Do you not believe they would make the team much better? If the answer is Yes to both, then why isn’t this a plan the team is pursuing?
The answer to the question above is profit margin. Hal Steinbrenner wants to win, but only as a means to sustain sufficient fan interest, not as an end. The new priority is profit margin, so whether that comes from the top line or the bottom line is all the same.
Who are the best and most successful run clubs now? How many of them have recently undergone long periods of futility? Is that the path the Yankees should take? What people who make that point fail to realize is these other teams DO NOT have the resources of the Yankees and ARE NOT trying to win EVERY year. It’s silly to compare the Yankees to other teams that have much different circumstances. The Yankees should be compared to THEMSELVES, and the data shows the team is significantly under-investing.
I can accept people disagreeing, but what I ask for are rebuttals based on facts, not gut reactions like “bad contracts are killing the Yankees” or “the team needs to get younger”. These are banalities that sound more like talking points from the team’s accountants than sound analysis. As for my idea being radical, well, that made me chuckle. “My plan” is simply what the Yankees have done for most of their 115 years. The recent departure from it is what’s radical.
The satisfaction that some of you Yankee fans now get from 1 world series title in 15 years is hysterical.
You are lost.
BUY BUY BUY.
Stop trying to prove having older players locked in past prime is a good plan.
Who could be satisfied watching great players on teams that win 95-plus games and make the post season every year? How awful.
Get back to us when have something resembling a fact to support your argument.
Personally, I’d rather root for a team that out competes everyone than one that outspends everyone…
Revenue is a key driver of profitability. It’s not just as simple as cut cost, fatten your pockets. The Yankees goal isn’t just to slash payroll, it’s to find value.
This is what “Moneyball” is really about: looking for value. The idea is not necessarily to systematically exploit one single trait that is undervalued by the market (though, if you can… great). It’s to generally look for talent that is undervalued for any number of reasons. The original Moneyball concept came about at a time when there was a gigantic market inefficiency in MLB, so Beane (and a few others) could exploit the ignorance of the larger market. It was an inflection point in the market, and some were out ahead of the curve. A similar opportunity may exist today or in the future… but generally speaking in a somewhat efficient market where all parties have similar information, you have to look for individual assets that are undervalued. You might find that two guys are undervalued for polar opposite reasons, for example, and get both. (It’s hard to argue that low K% is a current market inefficiency just because of the Royals when 3 of the top 5 teams in K% had losing records and the Mets made the WS despite being in the bottom half of the league in K%.)
One huge (artificially imposed) market inefficiency is salary control on inexperienced players. This is especially true in the post-PEDs era, when player decline seems to generally occur much earlier and much steeper than it did, say, 10-15 years ago and more teams can/do lock up their stars through their 20s. Buying the late-30s of a juiced-up Clemens or Sheffield, say, was a smart way for the Yankees to leverage their financial advantage. You knew with pretty high certainty what you were getting year after year. Buying even the early-to mid-30s of MLB stars recently has been a dicey proposition. This is all to say… MLB has changed significantly in recent years, and developing your own talent / trading for cost-controlled youngsters is just much more attractive relative to signing veteran free agents compared with 10-15 years ago.
Your plan (or something close) might make the Yankees significantly better for 2016 and maybe a bit beyond, but I think it might be at odds with maximizing winning going forward for the foreseeable future (say, 6-10 years). As much as I’d love seeing Price and Zobrist on the Yankees in 2016… it’s likely I’m going to hate seeing them on the Yankees at a combined $45+ million in, say, 2018, 2019.
Signing all three of these guys, to me, is questionable value with a lot of medium-to-long-term risk.
That’s fair. If you prefer watching a team that doesn’t use all if it’s resources, I can’t argue with that. I enjoy watching great players, regardless of how they are acquired, not a skilled GM capable of building a roster by doing more work than his counterparts.
Regardless of our personal preferences, however, the Yankees are the one that charges premium prices and maintains the charade of trying to be the best every year. If that’s no longer true, Hal should stop living off the the past, when success was the team mission, and simply admit that the Yankees are now content to be “competitive”. If enough fans agree with you, I am sure the team will have no problem filling its expensive seats with those who want to watch how well Brian Cashman can find hidden value.
My plan, or any plan that involves the Yankees using all of their resources at reasonable levels, doesn’t compromise long-term success. In fact, it’s the only way to sustain it. As you pointed out, cost control is the price of free agency, and it’s the reason why contracts “look bad” at the end, but a more sophisticated analysis should be able to realize that value over the term of the deal, not at the end, is what determines a good signing. The Yankees have proven that over the last 20 years. It’s why if they continue to spend at reasonable levels, they can continue to have very good teams (new money acquires players who compensate for expiring contracts). After all, Tex, CC, Arod, and Beltran are all coming off the books in the next one to two years, and Price, Zobrist, Heyward, et al. will still be very effective in the interim. In fact, they’ll likely over produce their AAV, which is the point of spending every year…it creates a staggered roster.
If you’re a fan who enjoys watching only home grown talent and think how well a GM deals with market inefficiencies is entertaining, then the Yankees refusal to spend is a good thing (just don’t complain when the team doesn’t win a playoff game for periods as long the Mets and Royals). However, it’s fact that the Yankees HAVE the money to spend, so fans who enjoy watching great players and teams, should ask one simple question: why aren’t they spending it?
The Yankees have a lot of money and continue to increase revenue every year. They can spend A LOT more and still maintain investment levels that are modest compared to other teams. However, they choose not to, and that’s not part of a grand plan for a new dynasty. It’s based on profit motives, and Hal Steinbrenner has repeated as much over the past 3-4 years. Regardless of where you stand on the Yankees spending, no fan should tolerate an organization that pays lip service to winning but then doesn’t practice what it preaches.