Why the Yankees and Mets Don't Get What They Pay For

This weekend, as Mets and Yankees reprised their biannual rivalry, the familiar summer smell of sizzling hot dogs and grilled hamburgers was trumped by the cloying stench of mutual desperation. After 40 games and more than $347 million in payroll, the Mets and Yankees entered the series a combined 40-42. Worse still, they saw their respective divisions led by the Florida Marlins and Tampa Bay Devil Rays, two teams whose payrolls rank last and next to last in Major League Baseball.

So what’s the problem?

As always, there’s no shortage of excuses for failure in New York. Joba Chamberlain should be in the starting rotation. The Mets have no leadership. Joe Girardi is in over his head. Willie Randolph doesn’t know how to use the bullpen. The Mets never got over the 2007 collapse. The Yankees have too many injuries.

The truth, of course, is much plainer: The Mets and Yankees just aren’t very good. Ironically, of all the proposed explanations for their inauspicious starts, this is cited least. That so few fans seem ready or able to acknowledge the reality is largely a function of the payroll and the expectations it necessarily creates. The fans reason that teams spending so much money must be better than 40-42. so the fact that the Mets and Yankees aren’t remains a source of upset and disbelief. Predictably, in their haste to discover the problem, the fans point fingers in every direction. Meanwhile, the real problem can be reduced to a single word: “value.”

What is value, and why does it matter?

“Value” is the relationship between salary and performance; it’s the extent by which a player’s on-field performance exceeds or falls short of his pay grade. For example, if a team gets 10 wins from a pitcher making $3,000,000, the player has positive value. If it gets 10 wins from a pitcher making $8 million a year, the player has close to even value. If it gets 10 wins from a pitcher making $13 million a year, the player has negative value. Given the combination of their staggering salaries and poor performance, it’s clear enough that the Mets and Yankees have negative value. But why? The reason has less to do with the exploits of players and managers than with the big-market mentality with which the two teams are now synonymous.

Although both teams have been staunch big-market clubs for many seasons, recent years have seen them steer even further away from developing younger players, choosing instead to fill holes largely by using their financial clout to buy “stars” from other teams. This quick-fix ideology has created a two-fold problem.

First, buying talent at market rates all but forecloses the possibility of creating value because the team has to pay top dollar for whatever it gets. In the best circumstance, the high-priced acquisitions will play up to their salary, thereby producing “even” value. But because free agents are usually older and signing at the peak of their ability, their new contracts often prove to be a negative long-term value. And as value turns negative, teams find themselves having to spend exponentially more raw dollars just to maintain the same level of performance from season to season.

Second, in order to make room for the high-priced imports, young players are passed over or dismissed. The problem is that young players present the only real opportunity to create value. The salary structure in baseball is such that a rookie must accrue several years of Major League service time before he’s eligible for salary arbitration or free agency. Thus, a quality young prospect gives his team a value bonanza: Champagne performance at beer-bottle prices. This, in turn, allows his team to concentrate its financial resources over a smaller number of holes, thereby increasing the quality of players at the other positions.

By way of example, if a team has two positions to fill and $15 million to spend, it has two choices: to buy both players at prevailing market rates or to develop one or both from within the organization. If both players are bought, the team will have an average of $7.5 million to spend on each player. Given that free agents are known commodities with established track records, the likelihood of a free-agent “find” is small. At best, the team can hope to get what it pays for, and at an average of $7.5 million, that will likely be two average players or one above-average player and one mediocre one. Now suppose instead that the team is able to fill one of the two open positions from within the organization by promoting a high-quality prospect who makes $500,000 a year. Suddenly, the resources available for the other position jump from $7.5 million in the first example to $14.5 million in the second. The result: instead of getting two average players for $15 million, the team gets two excellent players for the same price

Significantly, when the Mets and Yankees were successful with the big-market philosophy in the past, it was because they achieved a functional balance between the high-priced mercenaries and young, inexpensive upstarts. Consider the two best New York teams of the past 25 years: the 1998 Yankees and the 1986 Mets. Certainly, both were big-market clubs with their fair share of high-priced mercenaries. The 1998 Yankees had David Cone, David Wells, Chuck Knoblauch, Tino Martinez, Tim Raines, and Orlando Hernandez. But for all the money spent on those players, the team’s core was composed largely of cheap, homegrown talent. Derek Jeter and Mariano Rivera each made $750,000. Jorge Posada made $250,000. Andy Petite made $3,800,000. Even Bernie Williams made a reasonable $8,300,000. In the case of the 1986 Mets, they had high-priced stars including Keith Hernandez, Gary Carter, and George Foster, but the core of the team was again composed of young, cheap, highly effective players including Dwight Gooden, Darryl Strawberry, Lenny Dykstra and Ron Darling. In short, both teams were able to maximize value by saving money via young players and then using the savings to acquire impact players who could—and did—put them over the top.

Too little of that exists now, and the Mets and Yankees are beginning to suffer the consequences. Take, for example, three of the four highest-paid Mets: Carlos Beltran ($18.6 million); Carlos Delgado ($16 million); and Pedro Martinez ($11.5 million). Together, they account for approximately one-third of the Mets’ entire payroll. Meanwhile, Beltran is on pace for 12 homers; Delgado is batting seventh; and Pedro has thrown three innings through the middle of May. How did the Mets wind up getting so little performance for so much money? Simple: They bought all three players on the open market at peak rates. In the case of Martinez and Beltran, they were signed as free agents. In the case of Delgado, he was traded to the Mets precisely because they were one of a scant few teams willing and able to pay out the remainder of his titanic contract. Predictably, age and apathy have taken their toll, and not a single one of them is performing at or near the levels most expected when they were signed.

Now consider the two highest-paid Yankees: Alex Rodriguez and Jason Giambi. After Rodriguez opted out of his league-leading $250 million contract in search of yet more money, he found no takers willing to pay even what he had previously been making. Rather than take advantage of their enormous negotiating leverage, the Yankees rewarded his selfishness with a new contract worth more than $275 million. Now 32, Rodriguez is on the disabled list. As for Giambi, he’ll make a staggering $23.4 million this year. Oh, and he’s hitting .191.

The same themes prevail on both clubs: more money, more me-first mercenaries, less value. Unfortunately, neither Fred Wilpon nor Hank Steinbrenner appears to understand that no team, not even the mighty Yankees or Mets, has enough money to outspend declining players on a negative-value trend. No team ever could. And the fact that the Mets and Yankees are staring up at the Marlins and Devil Rays is proof.