Wednesday, December 12, 2012

Is The Austerity Budget Really Worth It?

Although Burch was ahead of me in hating the austerity budget for 2014, I've come to also hate the budget as it seems to be keeping the team from making moves that could better their chances of winning now.

Having lived in the 80s, and seeing some poor baseball played by the Yankees, you'd think I'd be okay with sacrificing a year or two in order to set the team up for better things down the road. But I've come to really like the taste of winning year in and year out, so I'm not happy about the idea of feasting on lesser fare for even one season. It doesn't help that the Yankees are one of the richest teams in the sports world, and saving a few bucks shouldn't be all that important. Nor does it help that I'm a very impatient person, so sitting back and waiting for something to happen while a team like the Dodgers goes nuts annoys me.

Waiting for my meal to arrive at Olive Garden infuriates me.

So what would the team really be saving should they get under the Luxury Tax threshold in 2014? To start, let's say the Yankees made some moves that cost them more money. Now, I'm not here to defend the players I have them signing, or anything like that. I'm merely bringing up the acquisition of some players to make a point. So here is the full roster, meaning not just the active roster but the full 40-man, that I'm proposing for 2014. Keep in mind that the numbers represent the average annual value of the player's contract.

C - Mike Napoli $13 million (signed for 3 years and $39 million after 2012 season)
1B - Mark Teixeira $22.5m (under contract)
2B - Robinson Cano $23m (re-signs for 7 years $161 million after 2013 season)
3B - Mark Reynolds $8m (signed for 3 years and $24 million after 2013 season)
SS - Derek Jeter $14m (exercises player option)
LF - Tyler Austin $600,000 (pre-arbitration)
CF - Brett Gardner $4.5m (signed in his 3rd year of arbitration)
RF - Hamilton 25 (signs 3 year $75m)
DH - Alex Rodriguez $27.5m (under contract)

Bench - Chris Dickerson $2m (1st year arbitration eligible)
Bench - Eduardo Nunez $650,000 (pre-arbitration)
Bench - ??? $600,000 (young player in pre-arbitration years)
Bench - ??? $600,000 (young player in pre-arbitration years)

Starting Pitcher 1 - CC Sabathia $24.4m
Starting Pitcher 2 - Tim Lincecum $23m (signed for 7 years and $161 million after 2013 season)
Starting Pitcher 3 - Michael Pineda $4m (1st year arbitration eligible)
Starting Pitcher 4 - Phil Hughes $9m (signed for 3 years and $27 million after 2013 season)
Starting Pitcher 5 - Ivan Nova $2.5m (1st year arbitration eligible)

Closer - Rafael Soriano $12m (signed for 3 years and $36 million after 2012 season)
Set-Up Man - David Robertson  $3.5m (3rd year arbitration eligible)
Relief Pitcher - Joba Chamberlain $3m (signed for 2 years and $6 million after 2013 season)
Relief Pitcher - Boone Logan $3m (signed for 2 years and $6 million after 2013 season)
Relief Pitcher - ??? $600,000 (young player in pre-arbitration years)
Relief Pitcher - ??? $600,000 (young player in pre-arbitration years)
Relief Pitcher - ??? $600,000 (young player in pre-arbitration years)

The last 15 players on the 40-man roster will be making the league minimum of $500,000, which would total $7.5 million.

Total Payroll: $228.15 million

"The chances the Yankees sign Tim Lincecum are slim to none."
"Shut up, nerd!"

The Luxury Tax threshold for 2014 is $189 million, and a team that was over the threshold for 3 or more previous seasons (which would be the Yankees) will be taxed at a rate of 50% for each dollar over that threshold. That would mean the Yankees would owe the league $19.575 million.

I decided to look at ticket sales for the playoffs, since I had some solid numbers to work with in that area. I found that in 2012 ticket prices for the American League Divisional Series and the American League Championship Series averaged $131 each. I also read that World Series tickets for Yankee Stadium averaged $196 each. Now, seeing as how Yankee Stadium has a capacity of 50,291, I think it's safe to say they could sell 50,000 tickets per playoff game. Even if we assume the Yankees played the minimum number of homes games in route to a World Series victory, we'd be talking about a total of six home games... four in the ALDS and ALCS, and two more in the World Series. That would be 200,000 tickets at $131 each, and another 100,000 tickets sold at $196 a piece, which makes the total gate for the playoffs $45.8 million.

Make $45.8 million or save $19.575 million?

Yeah, this shouldn't be a hard choice.

The team would remain at a tax rate of 50% for the following season, and any other season after that they were over the Luxury Tax threshold, therefore it would cost them a few more bucks than if they got under the threshold in 2014, thus resetting their tax rate to 17.5%. But you can see by the playoff ticket sales alone that the Luxury Tax bill shouldn't keep them from fielding the best team possible year in and year out. I mean, the possible money to be made far exceeds the money they'd save.

I'm sure those that are pushing for the austerity budget have looked at these numbers already, so I can only assume that they believe they have a legit shot at winning it all anyway. Personally, I'm not so sure. Let's hear what you think.

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