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| Wednesday, December 12 Updated: December 13, 10:47 PM ET YES network allows Yankees to spend even more By Darren Rovell ESPN.com |
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BOSTON -- In 1998, the year the Yankees won the first of three consecutive World Series titles, the Bronx Bombers ended the season with a payroll of $65.7 million, highest in the major leagues. Five seasons later, the team could start the 2002 season with a payroll approaching $150 million (more than doubling their payroll of 1998), according to the estimates of ESPN.com.
It may seem like the same old story for those that compete against the Yankees. For yet another season, Yankees boss George Steinbrenner is busy writing more checks to pay off the best talent available. After all, Steinbrenner will spend more for the 2002 season on the four free agents he signed within the past week -- Jason Giambi, Steve Karsay, Rondell White and Sterling Hitchcock -- than Twins owner Carl Pohlad committed for his entire 2001 team. But it's not the same old story. The Yankees' domination of the payroll charts and free agent markets will not only likely continue, but could grow even more pronounced in upcoming years if baseball doesn't change its revenue-sharing plans. While the Yankees opened the 2001 season with a payroll of $109.8 million, just a notch above Boston's $109.6 million and Los Angeles' 109 million, as they soar past $130 million in 2002 it's unlikely the Red Sox or Dodgers -- or any other team -- will come close to that total this year. "The Yankees are playing in a different league," said John Hart, general manager of the Texas Rangers. "I'm not trying to be critical of the decisions they make, but the fact is that they have larger revenues than every other team and that will continue to be the case." Those revenues should grow substantially over the next couple of years. The Yankees earned more than double ($98 million) the major-league average in gate revenue last season, but it's a new television deal that has the capacity to grow the Yankees' revenues quicker than raising ticket prices can. For the 2001 season, the Yankees made $56.75 million in local broadcasting revenue, according to the numbers released by Major League Baseball last Thursday for its hearings in front of the House Judiciary Committee. That's 2.5 times more than the major-league average for local broadcasting revenues. Over the last 13 years with the Madison Square Garden Network, the Yankees averaged $41.7 million in local broadcasting rights fees. But with YankeeNets, the conglomerate that manages the Yankees, New Jersey Nets and New Jersey Devils, starting up its own cable channel next season, Yankees Entertainment and Sports (YES, a joint venture between YankeeNets and the investment bank Goldman Sachs), the team figures to earn at least $52 million in 2002. More importantly, that figure should be much higher in future years.
"Having control of their own regional sports channel in the northeast will probably double their current (television) local revenues in the foreseeable future," said Neal Pilson, former president of CBS Sports. "When you are in charge of your own programming, you have the advantage of benefiting from the entire bottom line, rather than just the rights fee." Despite the current rough economic environment, baseball's own economic problems, and a slow start in its sales pitches, YES has sold 70 percent of its advertising for its 130 games, according to Bloomberg. "I don't know how much they'll make off the new TV deal, but I do know one thing: The more they get, the more they are going to spend," said Tommy Lasorda, now a senior vice president for the Dodgers. "With the income that they will have coming in, they are simply more capable of buying players than any other team out there." Since 1998, Yankee players have averaged annual earnings of 84 percent more than the major-league average salary. In 1998, the average Yankee salary was $2.2 million -- 57 percent higher than the major-league average of $1.4 million. In 2001, the average Yankee earned $3.9 million, 85 percent higher than the league average of $2.1 million. While spending large amounts of money doesn't necessarily translate into winning -- please refer to the the Baltimore Orioles -- it has for the Yankees. "It's one thing to have the money, but it's another thing to do something with it," said Toronto Blue Jays general manager J.P. Ricciardi. "They've taken that money and won with it." With YES, Ricciardi says Yankees television revenues will be "off the charts." "For most teams, it will be like the NCAA tournament," said Ricciardi, whose team will likely have a payroll between $75 million and $80 million for the upcoming season. "The Yankees are the No. 1 seed and all the others are like Hampton, seeded 16th. But it makes the game that much more fun because we know that if we play them 18 times and are better than .500 against them, we know we've come out ahead of the big boys." Ricciardi knows that feeling. Before recently joining the Blue Jays, he was assistant general manager with the A's. Over the last three years the Yankees and the A's won the same number of games -- 280. While the A's didn't win any titles, they won as many games and spent approximately $230 million less in player salaries than the Yankees did over that three-year period. "I don't want to say that they operate in a vacuum because what they do effects all of us," said Tigers GM Randy Smith. "But there's obviously the Yankees and then everyone else as far as spending goes. Once the game starts though, there are 27 outs and you do what you can to beat them." Darren Rovell covers sports business for ESPN.com. He can be reached at darren.rovell@espn.com.
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