New York Yankees: Kiss the Luxury Tax Plan Good-Bye
With the New York Yankees signing Brian McCann, Jacoby Ellsbury and Kelly Johnson and still needing to bring Robinson Cano back as well as fill out their rotation many people are wondering if the Yankees can do that and still stay under the luxury tax.
Ah yes, the $189 million luxury tax threshold. The plan that cost the Yankees the 2013 season all because price tags were more important than production. The plan that prevented the Yankees from making an offer to Russell Martin, from replacing Alex Rodriguez, Mark Teixeira and Derek Jeter when they suffered serious injuries. The same plan that forced the Yankees to use players like Alberto Gonzalez, Luis Cruz, Reid Brignac and seemingly every low-budget shortstop or third baseman in between.
Certainly, the Yankees did have a plan. They would save a ton of money and then be able to splurge again in the free agent market. However, as the saying goes, the best laid plans of mice and men often go awry. The Yankees plan of getting under the luxury tax might have gone off the rails.
So, what could possibly cause the Yankees to abandon their plan to get under the luxury tax threshold, assuming of course they are doing that? Well, how about a drop in ticket sales? The Yankees lost $58 million in ticket sales in 2013 from 2012. The Yankees brought in $295 million from ticket and luxury suite sales in 2013. In 2012, they made $353 million from those sales in 2012 and made $377 million in 2011 and $384 million in 2010. For those keeping score at home, that is an $89 million difference between 2010 and 2013. That isn’t even considering concession and merchandise sales or lost money on insurance payments on empty seats.
The Yankees averaged just 40,488 in attendance last season, a 7.4 percent drop from 2012 and 12.9 percent drop from 2010. It was the Yankees’ lowest mark in the new stadium and the lowest mark since 2000 when they averaged just 38,193 per game.
Ticket sales weren’t the only thing that took a hit last season. The average Yankees’ telecast on the YES Network drew 244,000 viewers. They averaged 355,000 viewers at home in 2012. That is a 31.2 percent drop and could cost the Yankees tens upon tens of millions of dollars in advertising revenue.
The Yankees also inked an estimated $15 million per year deal with WFAN, a subsidiary of CBS Radio, to broadcast Yankees’ games on radio. The deal lasts for 10 years, giving the Yankees $150 million in added revenue just for broadcasting their games on radio.
The Yankees have the money to go over the $189 million luxury tax threshold. They can afford to take the hit. What they can’t afford is continued dips in ratings and attendance. The final tally could total in the hundreds of millions of dollars when you add everything up.
The Yankees are trying not to let that happen. They really can’t afford to let it happen. The Yankees need to bring people out to the ballpark, they need them to purchase expensive beers, hot dogs and hats. They need people to want to rush home and flip the game on. The Yankees don’t make their money by pinching pennies on payroll. They never have and they never will. This is the New York Yankees. They don’t penny-pinch, they set the standard.