If the Yankees are expecting reinforcements from the farm, they’d better stock up on Miracle-Gro. At least that seems to be the consensus of the most respected talent evaluators in the baseball media.

Keith Law is the latest prospect guru to offer a less than sanguine view of the Yankees’ prospect pipeline. Coming on the heels of equally pessimistic reports by Baseball Prospectus and MLB.com, which respectively listed one and two Yankees’ prospects among the game’s top 100, Law’s organizational ranking places the Bronx Bombers at 20th, a steep drop from the last three seasons when the team’s minor leagues ranked within the top-10. Law attributes the Yankees’ drop off in his ranking to a combination of injuries and poor performance among the franchise’s best prospects, albeit one mitigated by a strong 2013 draft class.

Keith Laws’ Yearly Organizational Rankings for AL East, 2009-2014

Source: ESPN.com Continue Reading »

The Yankees are collecting stars from the land of the rising sun.

Masahiro Tanaka is joining a Yankees team already replete with Japanese star power.

Masahiro Tanaka is joining a Yankees team already replete with Japanese star power.

Several recent teams have featured three Japanese born players. Some have even had four. However, in terms of star power, none can match the 2014 Yankees, who have assembled the greatest collection of Japanese ballplayers on this side of the Pacific Ocean.

As one of the most heralded players in Nippon Professional Baseball (NPB), Masahiro Tanaka’s presence alone would be enough to make the Yankees one of the most relevant teams in Japan. However, the talented right hander will be joining two elite countrymen in the Bronx. In Ichiro Suzuki and Hiroki Kuroda, the Bronx Bombers already feature the Japanese hitter and pitcher who have had the most success in the major leagues, so, although Tanaka will likely take center stage, he won’t be the only focus of baseball fans in Japan.

Teams with Three or More Japanese Born Players
Japanese teammates

Source: baseball-reference.com

Merchandising and international media rights are shared equally among all major league teams, but the Yankees are likely to enjoy other residual benefits from having most favored status in Japan (except, perhaps, when Yu Darvish is pitching for the Texas Rangers). Between tourism and New York’s sizeable Japanese population, the Yankees could see an uptick in attendance, especially with 40% of their games being started by a Japanese pitcher. The team should also be able to sell increased television advertising and in-stadium signage to Japanese companies seeking to capitalize on the team’s exposure back in their home country. An increase in general brand equity is another potential benefit, not to mention the continued cultivation of a positive reputation among players who may be posted in the future. However, based on past performance and reputation, the biggest impact should be noticed in the standings, and that’s what usually matters most to Yankees fans, no matter where in the world they reside.

Does signing Tanaka really answer all questions about the Yankees' financial commitment? (Photo: Getty Images)

Does signing Tanaka really answer all questions about the Yankees’ financial commitment? (Photo: Getty Images)

The Yankees’ plan to slash payroll below the $189 million luxury tax threshold was destined to fail at inception. As early as last April, the Yankees were already back tracking toward the inevitable, even though many in the media remained fixated by the smokescreen that was left behind. However, with the signing of Masahiro Tanaka to a massive seven year, $155 million deal (not including the $20 million posting fee owed to the Tohoku Rakuten Golden Eagles), Plan $189 million, which had been on life support for so long, is now officially dead. But, what does that mean about the future of the Yankees’ financial commitment, both in 2014 and beyond?

Earlier in the week, I suggested that the Yankees’ luxury tax scheme was a financial smokescreen designed to distract fans and media alike from the franchise’s more subtle belt tightening. By defining expectations down, the Yankees put themselves in a position to be lauded for surpassing the $189 million threshold even though that limit was well below the team’s payroll structure over the last decade-plus. I also expected the organization to take a victory lap and say “I told you so” to those who doubted their financial commitment. It’s only been hours since the deal was announced, but it seems like the organization has already run a marathon. “I told you so” is right.

If the Yankees are lucky enough to sign Tanaka, it will be the crowning achievement of their off season. The move will give the team’s brass an opportunity to crow about their commitment to winning and willingness to spend well in excess of the $189 million luxury tax threshold.” – Captain’s Blog, January 20, 2014

“We’re going to do what we’ve got to do to win. Anybody that questioned our commitment to winning is going to have to question themselves.” – Hank Steinbrenner, quoted by AP, January 22, 2014

“I have been saying for well over a year now that it makes sense to meet [the $189 million threshold], but not at the expense of a championship-caliber team.” Hal Steinbrenner, quoted by NY Post, January 22, 2014

“Hal Steinbrenner decided winning games trumped saving money, and authorized his baseball people to forget the Yankees’ $189 million goal for the 2014.” Joel Sherman,  NY Post, January 22, 2014

“The addition of Tanaka validated Steinbrenner’s comments because Tanaka’s deal, which averages $22.1 million a season, will catapult the Yankees over that threshold.” Jack Curry, YES Network, January 22, 2014 Continue Reading »

The Yankees have gone all-in on Masahiro Tanaka, but, so too have several other teams. As a result, the Bronx Bombers’ off season plan hangs in the balance ahead of the looming Thursday deadline. Regardless of Tanaka’s decision, however, it’s hard not to wonder whether the Yankees’ aggressive play isn’t part of a bigger bluff.

Even if the Yankees sign Tanaka, they'll have question to answer about their payroll.

Even if the Yankees sign Tanaka, they’ll have to answer about their payroll.

If the Yankees are lucky enough to sign Tanaka, it will be the crowning achievement of their off season. The move will give the team’s brass an opportunity to crow about their commitment to winning and willingness to spend well in excess of the $189 million luxury tax threshold. All talk of the suddenly frugal Yankees will be put to rest, and the fans, now buoyed by the team’s renewed financial commitment, will start pouring through the turnstiles and turning on the YES Network. It’s such a perfect plan, there has to be a catch.

If Tanaka signs in the Bronx for the $20 million salary he is reportedly seeking, the Yankees’ payroll would balloon to about $205 million. Judging by intent, this seems to validate Hal Steinbrenner’s insistence that financial restrictions would not prevent the Yankees from fielding a championship caliber team. However, that’s only true if you regard the $189 million luxury tax threshold as the new barometer of team spending.

Since the start of their recent dynasty, the Yankees have usually been baseball’s biggest spender. But, that’s only half the story. Over that span, the Yankees have also been the sport’s biggest revenue generator. So, even though the team’s payroll has remained high on a nominal basis, it has actually declined in relative terms, including based on inflation as well as a percentage of league payroll and team revenue.

Yankees’ Payroll/Luxury Tax as a Percentage of Team Revenue

nyypayrollluxttaxrateNote: Revenue is net of revenue sharing and stadium debt service.
Source: Cots Contracts (payroll), bizofbaseball.com (luxury tax) and Forbes (revenue) Continue Reading »

Clayton Kershaw has 215 million more reasons to smile.

Clayton Kershaw has 215 million more reasons to smile.

Move over Alex Rodriguez. Clayton Kershaw is now the highest paid player in baseball history. At an average annual value of $30.7 million, the lefty’s seven year, $215 million contract extension (with an opt out after year five) has trumped the annuitized value of Rodriguez’ current deal. Although this probably isn’t the best week to be mentioned in the same breath as Arod, Kershaw has no reason to be ashamed. Unlike some other mind boggling contracts, his record setting salary is actually easy to justify.

Top-10 MLB Contract AAVs
aav list

Note: Roger Clemens’ $28 million salary was paid on a pro rated basis and amounted to $17.4 million.
Source: Cots Contracts

Kershaw’s contract has already been greeted by a lot of hyperbole. His $30.7 million salary has been expressed in everything from pitches to heart beats, but lost in the clever illustrations is a fact that has no hint of exaggeration: the Dodgers’ lefty is not only the best pitcher in baseball, but at his age, there haven’t been many better throughout history.

At age 25, Kershaw isn’t much older than many highly touted prospects, but his accomplishments dwarf those of most highly respected veterans. Since 2009, his ERA+ of 155 is easily the best in the game, outdistancing fellow greats like Justin Verlander, Felix Hernandez and Cliff Lee. However, what makes Kershaw’s performance truly remarkable is his youth. In order to find a pitcher demonstrably more successful so early in his career, you have to hark back to the dead ball era and examine the exploits of Walter Johnson. Continue Reading »

Arod's uniform in 2014 could be a suit.

Arod could be wearing a suit, instead of a baseball uniform, in 2014.

Arbitrator Frederic Horowitz has decided to reduce Alex Rodriguez’ suspension to 162 games, which, make no mistake about it, is a victory for Major League Baseball. So, after months of drama more suitable to daytime TV, it’s finally case closed! Or, is it? As much as MLB and its weary fans would like to put the Arod/Biogensis situation behind it, today’s arbitration ruling raises just as many questions as were answered, some of which are outlined below.

1) Can Arod sue to have the suspension overturned?

Yes. In fact, according to a statement released by the former MVP, the wheels are already in motion for a legal challenge to the ban. However, a more relevant question is how realistic are his chances of receiving judicial relief? Craig Calcaterra does a good job explaining why Arod faces an uphill battle in having the courts overturn a collectively bargained arbitration decision, but, then again, that analysis assumes the courts will view this particular situation as typical. Considering all the nuances, as well as the various claims made by Arod that seem to fall outside the purview of the CBA, a long drawn out legal battle could be in the offing. Should that occur, it’s possible that Arod will be granted injunctive relief from his suspension. If so, Rodriguez just might be the Yankees’ third baseman on Opening Day.

2) How does the suspension impact the Yankees’ 2014 payroll?

There has been a lot of speculation about how Arod’s suspension will impact the Yankees’ attempt to dip below the $189 million luxury tax threshold. However, as this breakdown reveals, even with a significant AAV savings, the Yankees really have no chance of trimming their payroll below the limit. Assuming Arod’s suspension is upheld, the Yankees will enjoy approximately $24 million in AAV savings ($27.5 million minus approximately $3.2 million that will still be owed), but still find themselves precariously close to the $189 million plateau. In other words, although the Yankees will not have to pay Arod, they will have to pay the luxury tax.

3) How long is the suspension really?

The official word is Alex Rodriguez has been suspended for 162 games. However, there has also been an indication that the playoffs will be included as well. If true, this would represent another unprecedented punitive action taken against Rodriquez. Every other PED-related suspension has so far not included the post season, so by making an exception in Arod’s case, MLB is effectively lengthening the terms of the ban. Is this an action directly based on the arbitrator’s decision, or is it simply being implemented at the discretion of the commissioner’s office? Regardless, Rodriquez may have grounds for another appeal separate from his legal challenge, but if the latter is true, it would only re-enforce the perception that MLB has abandoned fairness in its attempt to punish Arod.

There’s another wrinkle to consider. What happens if the Yankees play more than 162 games in the 2014 season? Because tiebreakers are considered part of the regular season (i.e., game #163), would it fall under the umbrella of a 162-game ban, even if it includes the post season? Even though it’s unlikely that the Yankees would want a stale Rodriguez to participate in a tie-breaker, the possibility remains, especially considering that such a game would be played with 40-man rosters. Continue Reading »

Despite being given at least a temporary reprieve from nearly $24 million worth of Alex Rodriquez’ 2014 AAV, the Yankees still have very little hope of compiling a payroll below the luxury tax threshold of $189 million. Below is a snapshot of the team’s current payroll with basic assumptions made for four arbitration-eligible players.

Yankees 2014 Financial Obligations (Best Case Analysis)
Yankees payroll

Note: See here for explanation of contract assumptions. Alfonso Soriano’s AAV is offset by payments made by the Cubs. Money owed to Arod is for off days. Doesn’t not include potential bonuses.
Source: Cots Contracts for salaries, MLBTR for base arbitration estimates.

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