By John Gruber
Atoms: We are not selling shoes this time…
My friend and fellow Yankees fan Khoi Vinh has written an interesting piece regarding the Yankees and their league-leading payroll:
For almost a decade, the Yankees have consistently maintained the highest payroll in Major League Baseball while failing to bring home a World Series title, and during that time the grousing took the form of ridicule. What Yankees fans heard then was: “See? You Yankees can’t buy championships, even with all of your money.” What we hear today is: “See? You Yankees just buy championships with all of your money.”
This is not a coherent line of argument, but then again it would be naïve to look for any motivation here other than envy, because the logic at work is so suspect. It’s pretty safe to say that a good number of those who hate the Yankees because of their payroll are unabashed capitalists, too; they’d be very unlikely to begrudge the fact that the highest valued, best performing organization in any given market also led that market. That’s not just capitalism, it’s the way capitalism is practiced in America.
This “the Yankees spend too much on payroll” argument reminds me of my quip two years ago about Mark Cuban “loving” his MacBook but not wanting to be mistaken for an “Apple fanboy”. I wrote:
There’s a whole class of recent switchers who define “Apple fanboy” as “anyone who’s been an enthusiastic Mac user since before I switched to the Mac”.
Same with baseball. A team that “spends unfairly on payroll” is any team that spends more than your favorite team.
This line of criticism has always struck me as futile and misguided. What exactly should the Yankees do with the profits the team generates, if not spend it on ballplayer salaries? Keep it in the Steinbrenner family pockets? Yankees fans don’t feel guilty about the Yankees payroll. It’s not like the team is run at a loss. It’s a business, and their business is winning baseball games. Winning leads to profits from ticket sales, TV, and merchandise; profits are used to sign all-star-caliber talent; and the talent leads to winning.
Isn’t that the formula every team tries to follow? Actually, no. Many baseball team owners spend far less of their teams’ revenue on player salaries than teams like the Yankees. Khoi writes:
Anecdotally at least, I knew that their single-minded dedication to winning championships year after year no matter the cost stands in contrast to the perpetual inefficiencies I’ve heard about at other clubs, where owners routinely pocket revenues from the so-called “luxury tax” that they receive from free-spending teams like the Yankees, rather than re-investing the money in talent.
So I dug around a bit online and compiled some figures, dumped them into Excel and found that, relative to the value of their franchise, the Yankees actually invest a fairly high percentage of their revenues directly in their payroll. Of the US$375 million in revenue that the club generated in 2008, in 2009 they dedicated US$201 million of it to talent, making for a 54% investment rate. That ranks them fourth amongst all major league teams.
He includes a table showing the numbers for all 30 MLB teams. The numbers range from the Detroit Tigers, who spent 62 percent of their revenue on payroll, to the San Diego Padres, who spent a pathetic 25 percent.
Keep in mind, too, that when George Steinbrenner bought the Yankees from CBS in 1973 (for just $10 million!), the Yankees were a last-place team, and had been a losing team for nearly a decade. There was and never has been anything automatic about the Yankees’ success. It has been earned season after season, and as the 1980s showed, the path was not smooth.
The goal is not merely to be good, but to be the best, to win the World Series, every year, with no excuses when they fall short. To try to be great, not hope to get lucky. Every team owner says they want to win. What I love about the Yankees and respect about the Steinbrenners is that they mean it, and act accordingly.