Will economic fallout of COVID-19 pandemic hinder Yankees' attempts to upgrade in offseason?
Yankees managing general partner Hal Steinbrenner watches during the sixth inning in the first game of a doubleheader against the Orioles on Sept. 11 at Yankee Stadium. Credit: AP/Adam Hunger
Hal Steinbrenner is heading into what has to be considered his most difficult winter since he took control of his dad’s beloved team in 2008.
On one hand, the Yankees have not won a championship in 11 years, their longest title drought in more than three decades, and this season was ended by the tiny-market Rays, a team with a quarter of the Bronx’s payroll.
On the other, Steinbrenner’s baseball business was hit with historic revenue losses because of the coronavirus, more than $400 million based on past figures, with no guarantee of any gate-related income in 2021 either.
What wins out here? Judging by the economic impact of COVID-19, it’s highly doubtful that Steinbrenner would again try to spend his way out of this World Series slump. That’s what Hal attempted to do last winter in giving Gerrit Cole a record nine-year, $324-million contract, a deal many believed won the AL pennant that same day while the payroll ballooned over $250 million.
Ten months later, it didn’t even nudge he Yankees past the Division Series, and Steinbrenner failed to get a single paying customer through the turnstiles. Don’t get the wrong idea here. No one is setting up a GoFundMe page for Hal. But it would be foolish to think the Yankees’ offseason strategy will be executed in a vacuum, independent of baseball’s market crash this summer.
Steinbrenner didn’t come right out and admit as much during Tuesday’s appearance on ESPN’s "The Michael Kay Show," but there were a few not-so-subtle hints. With the Yankees’ foaming-at-the-mouth fan base already demanding upgrades for ’21, Hal is smart enough to realize this is not the time to be poking that hive by crying poverty. When asked about this year’s ocean of red ink affecting next years’ payroll, he chose to punt. For now.
"We'll see," Steinbrenner said. "I mean, it depends what kind of money is going be required to be spent based on what we look at and decide needs change. But there's no doubt we sustained significant losses this year -- more so than any other team in baseball. It's been a crazy year, but we're just going to have to see what we really feel we need. And what that's going to cost and we'll go from there. The way we do every year."
The Yankees’ process may be similar this time around, only with Zoom conferences instead of the Tampa summits, but it’s hard to believe Steinbrenner is going into this offseason with the same mindset of a year ago. Based on the 60-game schedule, the Yankees did save money on their 2020 payroll, which shrunk to roughly $113 million. But that didn’t cover the cost of an empty stadium.
Newsday reported that the Yankees pulled in $336.2 million from ticket/luxury suite revenue in 2019, with a season average of $323.4 million since the new building opening in 2009. But that doesn’t factor in concessions, ballpark advertising and TV-radio contracts, additional income that pushes those numbers well north of $400 million.
No one has any idea yet where this year’s free-agent market is headed. MLB teams across the board took huge losses without any gate-related revenue this season, and with no assurances of a vaccine arriving before the middle of 2021, clubs could be chasing that money deep into next season as well. It’s possible that some better-off teams could see a good investment opportunity in a buyers’ market and take advantage with a few bold moves as others shy away.
As for the Yankees, their first priority has to be bringing back DJ LeMahieu -- who sincerely wants to stay but should get up to $100 million -- then seeing if Mashiro Tanaka would return on a team-friendly deal. After that, Steinbrenner could instruct GM Brian Cashman to be more cost-effective and explore the trade route for upgrades, so it wouldn’t be surprising if the Yankees chose to sit out the bidding for top free agents like J.T.Realmuto and Trevor Bauer.
Thinking back to last December, at that Cole introduction, Steinbrenner believed that he had bought the last piece necessary to win No. 28. Initially, he didn’t plan on going to $324 million to do it, but when asked again Tuesday, Steinbrenner said that Cole’s impact this year "was as advertised."
Certainly didn’t sound like any buyer’s remorse from Steinbrenner on that deal. But you have to wonder how all that would have went down in this fragile COVID-19 era, especially after the Yankees were eliminated by the analytics-ruled Rays, and money again failed to buy a championship for the Bronx.
"They’ve used the revenue sharing money well throughout the years, and their draft picks and everything else," Steinbrenner said. "And we are where we are. Did I think we should have beat them, did I feel that we were better than them? Yes, but it didn't end up that way."
Now we’ll see just how much Steinbrenner is willing to do -- financially or otherwise -- to remedy that.
