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The Price of a World Series Championship

August 1, 2011 by Lazy Man 9 Comments

It’s being reported today that the New York Yankees have signed free-agent first baseman Mark Teixeira. For much of the last few weeks, their rival (and my favorite team) the Boston Red Sox were rumored to be a front runner in negotiations. It all changed in a matter of a couple of hours when the Yankees made a run and got their man.

The latest signing got me thinking, what is the price of a World Series Championship? With this signing, the Yankees have committed to spending $423.5 million in the last month: $161 million for pitcher CC Sabathia over 7 years, $82.5 million for pitcher A.J. Burnett over 5 years, and $180 million for Teixeira over 8 years. The aforementioned ESPN article notes that the New York Yankees now have the four highest-paid players in Major League Baseball: Alex Rodriguez, Derek Jeter, Sabathia, and Teixeira.

This past season the Yankees paid a high price (resulting in a $26.9 million tax luxury tax) which resulted in them not making the playoffs for the first time in more than a decade. The absurdity of the situation has columnists suggesting that they sign Manny Ramirez who may command $25 million a year.

Some quick thoughts:

  • The Economy is against the Yankees – The Yankees just spent a lot of money for a new stadium. Ticket prices are through the roof. On one hand, the Yankees are giving the fans a product truly worth watching. On the other, the average fan may be priced out the stadium. In this economy, I would expect people think twice about spending more to go a baseball game. Likewise, corporations are looking everywhere to cut expenses. I imagine at the top of that list you’d find the raised ticket prices for Yankee games. Plus, we know that Lehman isn’t going to be buying any tickets for it’s clients.
  • Big Budgets Don’t Equal Success – I think the Tampa Bay Devil Rays last year showed that it’s possible to compete on a lower budget. Then again we already knew that a big budget doesn’t necessarily make a successful final product. It sure helps improve the odds, but there’s a reason why I own Clerks on DVD and not Waterworld or Pearl Harbor.
  • Do You Believe in Karma? – As a Red Sox fan, I have mixed feelings about this. I remember when the Red Sox were positioned to get Alex Rodriguez only to have the deal fall through and the Yankees pick him up (despite having their franchise shortstop in Derek Jeter). The year was 2004 and the Red Sox went on to win the World Series. The Teixeira signing almost directly parallels that one. I’m never one to put a lot of value in karma, but it make me wonder.
  • Am I in Denial? – It’s quite possible that Red Sox would be worse off with Teixeira. If the Red Sox got Teixeria they would have looked to move Kevin Youkilis to third base and trade Mike Lowell. Lowell has been a very good player for the Red Sox. I don’t think the Red Sox mind their chances with him at third base. In a couple of years when he’s 36, the Red Sox may look to replace him by moving Youkilis to third base and bringing up a star prospect such as Lars Anderson to play first base. So while a bird in the hand (Teixeria) is better than a bird in the bush (Lars Anderson), it may turn out that the Red Sox get 90% of value of Teixeria for 10% of the price (rookie contracts are cheap). That’s a business decision that’s hard to argue with.
  • How Many People Would Take This Offer? – Though it’s ridiculous to think about, and I’m never one to be violent, but with the Tonya Hardings in the world, I have to bring it up. I wouldn’t be surprised to learn there was a bounty put out there on Yankee players. I’m going to start the conspiracy theory even before it happens. If something were to “happen” to one of the Yankees players this year during a hard slide, I wonder if the instigator would be praised in some circles as The Man Who Saved Baseball. This is the same world where you can join the Bernard Pollard fan club because he injured Tom Brady. That was in a sport where at least each team has the same resources – the Yankees have shown that’s not the case.

Filed Under: News Tagged With: alex rodriguez, boston red sox, cc sabathia, luxury tax, mark teixeira, new york yankees, world series championship

Reflections on Red Sox – Yankees (and some weekend links)

July 5, 2008 by Lazy Man 2 Comments

This weekend the Boston Red Sox and the New York Yankees are getting together for another of their classic matches. (Having lived 8 miles west of Boston for 95% of my life, I fall heavily in that Red Sox fan club.) Though the Tampa Bay Devils (they choose to drop the Devil name, I choose to drop Rays) will probably take a playoff spot this year, it still feels like old times with the rivalry between Boston and New York as strong as ever.

Fans (including myself) often take the rivalry too seriously. You go to a game where the opposing team’s uniform and you are setting yourself for a rough day. It shouldn’t be that way, but it is. This ugliness taints what should be a good-natured rivalry.

There are pockets of good coming from the rivalry though:

  • Earlier this year a Red Sox fan buried a Red Sox shirt in the new Yankee Stadium. When word got out the Yankees dug it up…. and promptly put gave it to the Red Sox to auction of for their official charity. The Jimmy Fund is now more than $175K richer… enough to make a difference in more than a few lives.
  • Perhaps not quite as touching the Red Sox made a similar move last month. The Hartford Courant reports, “Last month, the Red Sox scored points in West Haven when they brought a group of seventh-graders from Carrigan Middle School to Boston for a tour of Fenway Park. This came two months after the Carrigan students were denied a tour of Yankee Stadium because their bus arrived two hours late.” I’m sure the Yankees had a clear logistical reason for the issue, but it struck me as a good thing to do (even if it is a little self-serving of the Red Sox).

I’m sure most baseball fans have had enough Red Sox-Yankees talk for a lifetime. That being the case, let’s get to the personal finance links. From inside The Money Writers:

  • You’re not the only one feeling the bite of gas prices. Gas credit cards and normal credit cards, Money Smart Life explains, charge the merchant a higher percentage as the purchase total goes up.
  • Million Dollar Journey asks what is the longterm cost of higher management expense ratios (MER’s) ?
  • My Dollar Plan’s readers provide 7 ways to payoff credit card debt. These tips are smart, helpful, and useful. Check them out.
  • Digerati Life presents 7 ways to handle unexpected expenses and financial emergencies this week for those little emotional and financial burdens that pop up out of nowhere.
  • It’s that time again. Mid-year financial checkup – review your goals and progress over at Generation X Finance.
  • Does your portfolio have Chinese ADRs? The Sun’s Financial Diary provides an excellent list of performance quotes in Chinese ADRs monthly update for June 2008 .
  • Brip Blap explores this week on the question will the government raid Roth IRAs?

And from outside The Money Writers:

  • Blueprint for Financial Prosperity tells us don’t let fear make decisions . Sometimes it’s not about the gut.
  • Free Money Finance goes into how the government lies about inflation this week. What do you think?
  • In the meantime, Mighty Bargain Hunter reminds us that inflation and rising prices aren’t the same thing.

Filed Under: Links Tagged With: boston red sox, new yankee stadium, new york yankees, rivalry, tampa bay

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