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Lupica article on Yanks -Mets payroll misconceptions


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Time for the big

spenders to settle up

It isn't maddening enough for George Steinbrenner, in this era that has become chronically maddening for King George, that he has spent a billion dollars over the past five seasons, in payroll and luxury taxes, on Yankee teams that could not win him another World Series. Now we learn that in a season when the Yankees drew more than four million fans to Yankee Stadium, Steinbrenner's team - the team, not the TV network - lost at least $50 million and maybe even as much as $85 million.

This doesn't mean Steinbrenner and his general manager, Brian Cashman, have decided to stop throwing money around. Or that we have to throw the old man a benefit. That will never happen with the YES Network acting as the equivalent of George Steinbrenner's wing man. The Yankees might start spending like drunks this week just to show everybody how flush they are.

But no matter what kind of money Steinbrenner has in his TV pockets, his baseball team, one whose value has been estimated at a billion dollars, can't make money on its own, even drawing the way it does. It is as crazy as the Yankee payroll has become over the past five years.

Steinbrenner probably thinks it is as crazy as a system where his team makes money for everybody except himself. He should have his guys out there saying, "See, Selig is killing us."

The Yankees can deny this story if they want. It's a good story. If they're not losing money on the baseball team, we'll be happy to have them go over the books with us tomorrow morning.

But the current Yankee finances tell you all you need to know about how the business of baseball has changed under commissioner Bud Selig over the past several years, and why the Yankees quietly seem to be changing the way they do business.

"Of course the network and the team as a combined entity made money (in 2005)," one baseball analyst said on Friday. "But even if the value of the team isn't a billion dollars, if it's $800 million, wouldn't you think something like that should generate more than a 10% profit?"

It does not.

The baseball team generated around $337 million in revenue in the 2005 season. It still couldn't cover the team's operating costs, payroll, revenue sharing, luxury taxes.

Now the Yankees are showing restraint this winter, at least so far, in the free-agent market. Cashman says it's not because of penny-pinching, it's because this is a bad market for Yankee needs. Again: This could all change at the winter meetings this week. Maybe Steinbrenner will read about being in the red with his baseball team and order Cashman to go made a trade for big-ticket Ken Griffey Jr. of the Reds. Or pay Johnny Damon whatever he wants.

For now, the Yankees' committed payroll for next season is somewhere between $150 million and $160 million. But as one American League general manager said last week, "(Cashman) couldn't get to $200 million for next season even if he tried."

Of course the Yankees still want to win, and right now. Of course they are still set up to be a contender next season. Still have a team of high-priced All-Stars or former All-Stars. Still will be at least $50 million clear of the field with their 2006 payroll.

But in a sport where all teams but one - Steinbrenner's - have effectively gotten in line with the virtual salary cap Selig has put in place, Steinbrenner's team didn't come close to making a profit in a season when it shattered its own attendance record.

You hear this in New York these days: The Mets now spend like the Yankees!

Really? On what planet?

The Mets, according to MLB, currently have around $110 million in committed salaries for next season. Yeah, they spend the way the Yankees did in the 2005 season if between now and Opening Day, Omar Minaya spends another $100 million.

We have known forever that Steinbrenner is willing to spend whatever he thinks it takes to win. He also knows the modern rules of the business he has chosen. This isn't the NFL, where all teams share equally in network TV money and there is a salary cap written into the rules, and big-market teams and small-market teams are playing on a level field. Selig was determined to find a way to move revenue around in baseball the way the NFL moves around network money, as a way of ensuring competitive balance.

It's not a perfect plan or even close, not in a world where the Royals and Pirates and Devil Rays have no chance, and even a team like the Marlins, two years removed from its second World Series, is holding another fire sale. It will always be considered wildly imperfect in New York, where the Yankees pay more in revenue sharing and luxury tax (approximately $110 million) than the world champion White Sox spent on baseball players. But, in the words of our current political leaders, it is what it is.

And Brian Cashman seems to understand that there has to be a way for the Yankees to continue to compete at the highest levels of his sport without continuing to expand the highest payroll in all of world history.

For now.

Understand: Even if the Yankees cut payroll by $30 million, they're still spending more trying to win than anybody in professional sports. Steinbrenner isn't going anywhere, he still has his network, still has the most famous brand name in sports, still has a team good enough to win the World Series in 2006, even without a big move.

Listen, if there were an A-Rod out there this winter and Steinbrenner wanted him, Cashman would probably need the Marines to hold the owner back.

Billion spent over five years. No World Series won. Two hundred million and change on the '05 Yankees. Out in the first round. Four million in attendance, at least $50 million in the hole. There has always been the economy for the rest of baseball, and the Yankee economy. Yankee money and everybody else's. Maybe that is finally about to change. Steinbrenner still has the deepest pockets. But guess what? He doesn't just want that new stadium because he loves his fans. It doesn't matter which pocket it's coming out of, nobody wants to lose money like this.

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The logic of this article is so faulty it's a wonder some editor didn't spike it. But the Daily News allows this douchebag to write what ever he wants without allowing it to be fact-checked, apparently.

You that you are more likley to see Mike Lupica and his sissy kids on the Food Network than physically at a ballpark.

The Yankees are still making tons of money.More than anyone. As noted in other thread, the YES network arrangement allows the Yanks to hide revenues by -legally-underreporting the payment made directly to the franchise, even though the two entities are really one.The Sawx, Braves and now the Mets all do the same thing.

In fact, to avoid revenue sharing it's entirely plausbile that-legally and within the rules- the Yankees have a book loss precisely to avoid paying the luxury tax. There's no business nor person in America that reports a penny more of income than they absolutewly must.But Lupica reads a balance sheet bottom line, nothing else and doesn't look beyond that. To look at the Yankees reporting without looking at YES is literally looking at the tip of the iceberg.

They are allowed to put revenue sharing in large part toward the new stadium rather than pay it all out.They signed Farnsworth; they will likley sign another reliever or 2(possibly Julian Tavarez and or Bob Wickman; they will sign Mike Myers, who after this Thursday to avoid giving up a compensatory pick).In fact, many FAs aren't being signed until Friday due to this. They will by trade likely get a Jason Michaels to split CF with Crosby.

There's no great crisis in the Bronx other than Mike Lupica inventing all this nonsense. The man hates Steinbrenner because nobody assocaiated with the Yankees kowtows nor caters to this gay midget Sawx fan.

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Lupica really has no clue. His figures are off, and he does not understand the concept of revenue generation, what is required to be reported to MLB, what expenses are reported, etc.

How he keeps his job, I don't know. But he sure needs new sources, so at least he will make some sense when he writes.

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