Special Weekend Edition…

Yes, I know today is Sunday. No, I am not considering routine weekend editions of these rants. The reason for writing today is simple:

    I will be away for about a week and will have limited access to a computer and the Internet so there will be quietude coming out of Curmudgeon Central.

There are a couple of things I want to discuss now as opposed to later; hence this unusual “Weekend Edition”. There is a story in the Connecticut Post saying that Bobby Valentine is going to be the Athletic Director at Sacred Heart University (Fairfield, CT) and other reports say that the formal announcement/introduction of Valentine in that job will happen on Tuesday of this week. Unless I have missed something significant in Bobby Valentine’s curriculum vitae, this would be his first association with collegiate athletics. When you combine that factor with his ability on occasion to ruffle the feathers of those around him, it makes you think that for the first time in a long time it just might be reasonable to keep an eye on the athletic department at Sacred Heart University.

As the Nation stumbles toward “sequestration” and budget cutting at the end of the upcoming week, there is also a sense of austerity in a private sector enterprise where such a sense has not existed for a long time. The New York Yankees have a “payroll plan” in place with the intended goal of getting the Yankees under the luxury tax level by 2014. That luxury tax level is projected to be $189M for total team payroll. For every dollar that the Yankees are over the limit in 2014, they would owe an additional 50 cents to a MLB tax fund, which is then divided up among owners of small market/low payroll teams. Theoretically, that payment is supposed to level the playing field and allow the low payroll teams to spend a bit more on players to compete with the big spenders. How much of that luxury tax payment to those teams goes to additional payroll and how much just stays in the pockets of those owners is not particularly transparent.

In any event, the Yankees face a significant challenge here; their payroll on Opening Day in 2012 was $209.8M. Consider these current contract figures:

    A-Rod will make $28M in 2013 and $25M in $2014
    Mark Teixeira will make $22.5M in 2013 and $22.5M in 2014
    CC Sabathia will make $23M in 2013 and $23M in 2014
    Derek Jeter will make $17M in 2013 and $8M in 2014 (player option in 14)
    Ichiro will make $13M in 2013 and $13M in 2014.
    Curtis Granderson will make $13M in 2013 and then is a free agent
    Hiroki Kuroda will make $15M in 2013 and then is a free agent
    Andy Pettite will make $12M in 2013 and is then a free agent
    Kevin Youkilis will make $12M in 2013 and is then a free agent

Let me do the math for you here. These 9 players will make $152.5M in 2013. (A minor issue, but the Yankees are also obligated to pay AJ Burnett $8M this year so if you would prefer to do so you can call their sunk costs for expensive players $160.5M for 2013.) For 2014, the Yankees are obligated to pay $91.5M and will need to replace or re-sign those free agents and possibly replace a retiring Mariano Rivera.

Add to all this, the name of Robinson Cano. The Yankees exercised their final club option to retain Cano’s services for this year and will pay him $15M. Notice that the club’s fixed costs for 10 players in 2013 now comes to $175.5M. Getting under the $189M level by the end of this year is probably impossible and getting under it next year might not be as easy as that $91.5M figure looks.

The Yankees exercised their club option for Cano after they could not reach a long-term agreement with Cano and Scott Boras last Fall. Glancing at the 3 players who will make in excess of $20M on the Yankees next season, it is reasonable to project that Scott Boras will want the Yankees to come up with an offer that is in that same ballpark for his client. Even if the Yankees somehow get a sweetheart deal out of this and only have to pay Cano $20M next year, that brings the Yankees sunk costs for 2014 to $111.5M; that only pays for 5 players and there will be plenty of positions on the team that will need to be filled. Unless the Yankees have multiple minor league prospects ready to move up to the parent team and play at the MLB level starting in 2014, the “payroll plan” target of $189M looks as if it will be difficult to obtain.

I have to believe that part of the motivation for developing the “payroll plan” in the first place is the amount by which stadium revenue has fallen short of projections. When the “new Yankee Stadium” opened, the prices were astronomical; some seats were in the $1500 to $2500 per game range. The thinking must have been that there are the Yankees and this is New York City so of course the seats will be full or close to full every night. The Yankees’ attendance in 2012 dropped almost 1400 fans per game as compared to 2011. (That represents about 113,000 fewer fannies in seats in 2012 as compared to 2011.) Every game telecast from Yankees Stadium shows plenty of empty seats particularly in the lower level where the high priced seats are located. Even in the playoffs last year, the NY Yankees did not sell out the house; watching games on television revealed more than a few empty seats behind home plate and in the seats behind each of the on-deck circles where camera shots were frequent.

What I find interesting is that Yankees’ team president, Randy Levine, seems to blame ticket re-sellers such as StubHub for some of the empty seats in the Stadium. It would seem as if his argument is that once you buy a ticket to a Yankees game, you either go to the park or eat the ticket so that some future potential game attendee would have to go to the Yankees to buy an additional seat. That would be wonderful in an idealized world; that is not the world of 2013.

I believe that the Yankees have a problem with their revenue stream from the live gate and they are going to have to find a way to change that dynamic in order to fill the seats in a way that increases revenues. At the moment, the cost to go to a Yankees game is bordering on outrageous – factoring in things like parking and concessions and the like – and the Yankees need to find a way to make that cost to the fans merely luxurious.

Finally, Mike Bianchi of the Orlando Sentinel offered some predictions for the Daytona 500, which will happen later today:

“Three other Daytona predictions: (1) There will be at least 5,000 fans named ‘Earl’ attending the race. (2) A fight will break out in the infield between two fans arguing over which is the better car – the black Trans Am from ‘Smokey and the Bandit’ or The General Lee from ‘The Dukes of Hazzard’? (3) Somebody in the infield will lose a tooth trying to open a bottle of beer.”

But don’t get me wrong, I love sports………

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