Yankees got their money's worth
The New York Yankees logged a $201.4 million payroll and this season, they got what they paid for.
NEW YORK (CNNMoney.com) -- The New York Yankees, who became World Series champs for the 27th time Wednesday night, logged the highest payroll in baseball for the 2009 season. This time, they definitely got what they paid for.
It wasn't just the $201.4 million payroll that led to the Yankees' successful season. It was how they spent that money -- investing in the right players, not just the most expensive ones.
"One of the oldest truisms in business is that you have to spend money to make money, and the Yankees have clearly been successful in that this season," said Marc Ganis, a sports marketing consultant with SportsCorp Ltd. "But it's all predicated on the success of the team on the field -- if they didn't win, it would be money poorly spent."
The Yankees stocked this year's team with championship material players like CC Sabathia, A.J. Burnett and Mark Teixeira, and still managed to trim their payroll by about $8 million this season.
That wasn't always the Yankee way.
The Bronx Bombers have had the highest payroll among all Major League teams since 1999, but they had no championship rings to show for it from 2001 to 2008. The team even embarrassingly missed the playoffs in the 2008 season despite strutting the highest payroll in baseball history.
During that eight-season stretch, the Yankees shelled out about $1.7 billion for their players' salaries, including $148 million in luxury taxes that the team had to pay for sporting such a high payroll.
This season, the Yankees got a lot more bang for their buck ... in more ways than one.
Adding up the dollars and cents. Applying a Society of Baseball Research metric, the Yankees were actually more efficient with their payroll this past season than were the hapless cross-town Mets, Cleveland Indians and basement-dwelling Washington Nationals.
The World Champs were only slightly less thrifty with their salaries than the Chicago Cubs, Houston Astros, and Kansas City Royals, all of whom missed the playoffs.
By those calculations, the Yankees paid $3.2 million per "marginal victory." That's nearly twice as efficient as the Mets, who only won 70 games despite their $149 million payroll and paid $5.8 million per marginal victory.
In addition, a rough estimate of the team's revenue in 2009 shows the Yankees cashed in on their success more than any other team. Multiply the number of people coming to games by the average ticket price ($73),and the Yankees took in about $270 million this season, or $69 million more than they shelled out for their payroll.
In 2008, the Yankees took in just $146.4 million from ticket sales, $63 million less than their payroll.
The Yankees' 2009 revenue figure doesn't even include additional playoff ticket sales they raked in, but most of that bonus playoff income will be offset by the hefty luxury tax that the team will have to pay this year.
Only five teams took in more revenue from ticket sales than they paid for their overall payrolls, and the Yankees' $69 million in earnings was by far the highest net income of any team. The nearest competitor was the rival Boston Red Sox who took in $32 million more than the cost of their payroll.
Banking on the players. The team's business strategies paid off more than just financially this season. The Yankees' focus on top-of-the rotation pitching helped catapult them into the championship this year, said industry consultant Vince Gennaro.
Starters Sabathia, Burnett and Andy Pettite, set-up man Phil Hughes and closer Mariano Rivera pitched 52% of the Yankees' innings during the regular season, but pitched 81% of the postseason innings and made 100% of the playoff starts.
Last year, the Yankees got the highest amount of innings from Pettite -- their third starter in 2009.
The Yankees also got a big upgrade at first-base by signing Mark Teixeira, who not only out-performed last year's starting first-baseman Jason Giambi at the plate, but Teixeira also provided gold-glove caliber defense.
But the Yankees' new acquisitions also combined for something more than just improved skills. They played with a kind of exuberance that made them fun to watch and easy to like, even for non-Yankees fans.
"This team's identity was about never giving up," said Ganis. "When you watch their walk-off celebrations, they look like giddy junior high schoolers out there."
(Payroll efficiency was created by the Doug Pappas of SABR. It is calculated by adding a team's payroll that was above the minimum allowable payroll, and dividing that by the number of victories over 49 wins -- a number of games Pappas figured a team of scrubs could win.)