The New York Yankees have enjoyed their 27th World Series championship for about a month now, so let’s look back on how they did it.
Spending more on payroll in 2009 than the gross domestic product of more than a dozen countries worldwide will give you a fighting chance in most Octobers.
Did the Yankees break the rules or do anything unethical? No.
Are they playing on an uneven playing field that prevents other teams from acquiring the type of talent that the Yankees can accumulate? Yes.
During the American League Championship Series, Torii Hunter joked, "Their payroll is what, $10 billion?" Obviously, Hunter was exaggerating, but was his point valid? Kinda.
A team with that payroll should have the kind of fire power that mows down opponents, just like the 2009 New York Yankees did.
But why is one team doing something different than everyone else and getting much better results? Money.
First of all, New York City has an urban population of more than 21.8 million people, largest in the country. Los Angeles is the second largest city with urban population of 17.8 million people, almost 20% less than New York’s.
Chicago has an urban population of 9.7 million, Washington, D.C. has an urban population of 8.1 million, and San Francisco has an urban population of 7.2 million people, both well below half of what New York populates.
These simple statistics show that New York can accommodate more than two teams with such a large population. In fact, NYC had three teams in the 1950’s, when the urban population was much smaller.
So why is the largest city in the country allowed to continue with the same number of teams that the second, third, and fifth largest cities have?
It is because the Yankees and Mets would vote against any attempt of a franchise to relocate to the New York City area. That would greatly cut in on their gate revenue and, more importantly, their cable TV revenue.
The cable TV revenue is where the Yankees get the cash to buy the best three free agents on the market and build a team designed to dominate.
Their YES Network provides the Yankees with access to 7.5 million homes in metro NYC and is owned by Yankees owner George Steinbrenner.
In addition to what they receive from the YES Network, the Yankees bring in $375 million (according to Forbes Magazine), 70 percent more than the second highest revenue team (Mets).
Very simply put, they have more money to spend than anyone else. So why not invest it into productive employees?
There is no problem spending what you have. There is no problem with trying to win, just like 29 other teams are trying to do. The problem is that the Yankees have always had more money to build their dynasty.
The topic hasn’t come up since 2000, the last time the Yankees won the World Series. Management is to blame for foolishly wasting the team’s resources and not winning the championship every year since despite having the highest payroll every season in that time.
In fact, the Yankees have had the highest payroll in baseball 17 of the last 25 seasons, but only have five World Series titles and two more pennants to show for it.
There is a prevailing baseball economic theory that the law of diminishing returns kicks in around $145 million. That theory says that the more money spent on salary past $145 million will have less effect on the success of the franchise.
But that didn’t stop the Yankees from spending almost $207 million on this year’s squad. Even if they don’t get the full impact of Mark Teixeira, compared to him signing elsewhere, he’s still a force in the Yankees lineup and a quality glove on defense.
This "spend it all to win it all" mentality is nothing new in the Bronx. From 1921 through 1964, the Yankees won 20 World Series championships and nine more American League pennants.
The Yankees were able to dominate because they were able to buy the best players from economically struggling franchises, starting with their purchase of Babe Ruth in 1920.
Since there was no amateur draft at the time, amateur players always signed for the biggest contract, which was always the Yankees. It was this reason that Major League Baseball introduced the amateur draft and not coincidentally, the Yankees struggled for the next decade.
When free agency was brought into practice in 1975, the Yankees were back in business, winning the pennant in 1976 and the World Series in 1977 and 1978 with newly acquired free agent Reggie Jackson.
Should the Yankees be able to spend as much as they want? A salary cap would prevent their endless spending, and likely dominating.
So why do other teams not spend as much? Only seven teams receive $200 million in revenue compared to the almost $400 million the Yankees generate, making competitive balance impossible.
But there’s also the problem of the luxury tax, where teams who spend over a designated amount are taxed on the spending overage (40% for all money spent over $162 million = $17.88 million tax bill for the World Champs).
That money is distributed amongst the lowest revenue teams in the league with the intent that they will spend it on players who will help them be competitive.
Unfortunately, many of the owners pocket the cash and make a bigger profit while they continue to field pitiful teams or ones that are only competitive for a short period of time.
To stop this from happening, Major League Baseball should impose a salary floor. Since a salary cap isn’t realistic when the teams with the 11 highest revenues generate more combined revenue than the teams with the 19 lowest revenues.
So putting a minimum of how much a team can spend on salary would help level the playing field.
With fewer quality players available, the Yankees would have less of an ability to get everyone they want. By creating that shortage of quality talent, the playing field levels a bit.
The luxury tax attempts to do the same thing, but it only works if the Yankees and other big spenders actually care about the tax they will pay.
Since the Yankees simply consider it a cost of doing business, it doesn’t really matter as long as the end result is a shiny trophy in late October.
Until the lower-tier teams are forced to spend money on quality players and field quality teams built to compete, the Yankees will be allowed to continue on with their current dynasty.