Yankees the Only High Rollers in Vegas

Mark KriegelCorrespondent IDecember 12, 2008

If you're like me, which is to say suddenly middle-aged, you have grown up with the idea that sports are exempt from the normal economic calculus. Wall Street might have had its ups and downs. Same for the manufacturing sector and Silicon Valley. But the inexorable course of the sports business has been ever higher.

Pick your measure: salary, attendance, television revenue. Up. Up. And up. It's been that way for as long as anybody can remember.

Until now.

The NFL, the most successful league in the history of the world, is laying off 150 people. General Motors, among others, has pulled out of the Super Bowl. Arena football is on the verge of collapse. The Chicago Cubs, who have been on the market for more than a year, can't find a buyer. At least 16 major league clubs, according to USA Today, are freezing or decreasing the price of season tickets. And it's just beginning.

But nowhere are the symptoms of depression more evident than in Las Vegas. Vegas is the capital of the sports world. It is non-aligned; it roots only for your action.

December was once regarded as a tough month in town. But not for years. "The dynamic has changed so much," said Tony Sinisi, odds director for the Las Vegas Sports Consultants, the much-respected oddsmakers who supply betting lines for the casinos. "There was no such thing as a down period ... People in town felt it was recession proof. But they no longer feel that way."

I saw for myself last week before De La Hoya-Pacquiao. Friday nights before a mega-fight usually mean packed casinos, a mass shabbos for high rollers and hangers on, lemmings in flashy clothes. But last Friday was, well, a little lonely at the MGM, which was hosting the fight.

The high-end stores—retailers of necessities such as chinchilla hoodies, items that had been de rigueur since the Tyson era—had been empty all week. But now, the slot machine aisles were easy to navigate, and the hookers fewer and more desperate.

It took my party just a couple of minutes to get from the MGM to Mandalay Bay, where Pacquiao was staying. A night before a big fight, that should be 20 minutes in traffic. Mandalay Bay itself was a ghost town.

This past week, Vegas played host to baseball's winter meetings. For all the talk that preceded major league baseball's annual convention, high-priced free agents went just a little more quickly than chinchilla hoodies. In anticipation of the meetings, Sinisi released an "alert," warning customers (read: casinos) to "limit your exposure with baseball futures."

He had never done that before. Then again, he had never set odds in this kind of economy. "The gap between the haves and have-nots is getting wider," he said.

Actually, there's New York and Boston and everybody else. "A lot of bottom feeders," he said. "Look at San Diego. It's like a fire sale. These are tough times." What's true of Vegas might be truer of baseball. "We're all getting slapped in the face right now."

Only two deals of note went down during the meetings. Francisco Rodriguez, a closer with merely great stats and an ambition for a contract worth $15 million per, had to settle for a three-year, $37 million deal from the Mets, a team that couldn't have been more desperate for a closer. Then there was CC Sabathia.

In these times, the contract the Yankees reached with Sabathia isn't merely an anomaly—it's a staggering one.

The bidding for Sabathia opened with the Brewers' five-year, $100 million offer. It was Sabathia's only known offer except for the Yankees, who came in at six years, $140 million. After a couple of weeks, the Yankees threatened to rescind the offer. It never happened, of course.

Instead, they had Derek Jeter talk to Sabathia. Then they enlisted the services of Reggie Jackson, who played his last game for the Yankees when Sabathia was a year old. When none of that worked, they added another $21 mil to the pot, bringing them $61 million over the next highest offer.

I submit that no team, ever, in any sport, outbid its closest competition by $61 million.

Especially in the current economic climate, it seems madness. With cases from Ed Whitson to Randy Johnson in evidence, the Yankees should know that you can't bribe someone to pitch well in the Bronx. All the money in the world won't make a guy a big-market, big-game pitcher.

For all his regular-season success, Sabathia has an 8.61 ERA in the old Yankee Stadium. He's 1-3 with a 9.47 ERA in his last four postseason starts.

If the acquisition of Sabathia is reason to question the Yankees' judgment, it also makes them more hateable than ever.

A few days ago, Sinisi had the Yankees at 9-to-1 to win the 2009 World Series. After signing Sabathia, they're even with the Red Sox at 6.5-to-1. If they sign A.J. Burnett, they'll drop to 5- or even 4-to-1.

"If they add two frontline starters, you've got to make them the favorite," said Sinisi.

Some casinos weren't even waiting. The MGM already had the Yankees at 4-to-1.

Hateable perhaps. But not irrational. For all that they would pay Sabathia and Burnett and perhaps Derek Lowe, the Yankees have already cut their payroll by about $80 million, just by allowing the contracts of Jason Giambi, Carl Pavano, Bobby Abreu, Andy Pettitte, and Mike Mussina to expire.

Major League Baseball also allows teams to deduct many of their new stadium costs from the revenue sharing pie. For a team like the Yankees, with a $1.8 billion monument to excess opening next year, that's worth untold millions.

Finally, like so many unsympathetic, if absurdly profitable, companies, the Yankees got all their government subsidies (including $70 million toward a new parking structure, $65 million for roadwork and design, $91 million for a new railroad station, and about $313 million in tax breaks alone) before the recession.

Now that's hateable. But it's also good business.

The Yankees have been comped more than any high roller. And at those prices, how could they not spend the money on Sabathia?

So, you see, there's a difference between the Yankees and the people who wager on them. The Yankees didn't go all the way to Vegas to make a sucker's bet.

This article originally published on FOXSports.com.

Read more of Mark's columns here.