Return Of The Evil Empire


The Evil Empire is back with the New York Yankees signing Japanese pitching sensation Masahiro Tanaka to a seven-year, $155 million deal this week. The contract, like Clayton Kershaw’s recent Dodgers’ extension, includes an opt-out clause that allows Tanaka to test free agency in four years. The Yankees will also pay the $20 million posting fee to Tanaka’s former NPB club, the Rakuten Golden Eagles, upping their total (potential) investment to $175 million.

For an organization that was supposedly under continued efforts to tighten the purse strings – at least enough to get their payroll under the $189 million luxury tax threshold for a single season – the Yankees have gone on a wild spending spree, gobbling up top free agents both foreign and domestic. reports that the Yankees have spent $471 million this offseason on free agents, led by hefty contracts handed out to Tanaka, Jacoby Ellsbury, Brian McCann, and Carlos Beltran. Even with Robinson Cano parting for Seattle and Alex Rodriguez’s $25 million salary off the books, for 2014, anyway, the Yankees have had no problem blowing past the luxury tax threshold this offseason, unless, of course, they plan on dumping payroll at some point, which seems unlikely.

The Yankees missed the playoffs last year for just the second time since 1995. Following the only other year they missed the postseason in that stretch, 2008, the Yankees spent $441 million in free agency.

That 2008-’09 spending outburst, highlighted by the additions of Mark Teixeira, C.C. Sabathia and A.J. Burnett, helped propel New York to 103 wins and a World Series championship in 2009. It isn’t a stretch to surmise that last year’s disappointing 85-win squad* may have caused the Yankees’ brass to reconsider their new fiscally responsible ways — with hopes, of course, of a 2009 repeat.

*In the first game of a three-game set at Fenway Park in July, the Yankees’ lineup featured Vernon Wells, Zoilo Almonte, Lyle Overbay, Brent Lillibridge, Eduardo Nunez, and Chris Stewart. Hardly Murderers’ Row.

The Yankees’ attendance in their newly built Bronx cathedral peaked in 2010, one year after it opened and one year after a championship, at 46,491 per game. New York’s attendance dropped to 43,733 a game in 2012, perhaps due to the wearing off of the new stadium “honeymoon effect” and three consecutive seasons without a World Series berth. Last year, the Yankees’ attendance dipped more sharply, falling to 40,489 – still fourth best in MLB, but certainly not trending in the direction the Yankees were hoping, just five years after opening their new digs.

It isn’t just the per-game attendance that hurt the Yankees’ ledger last year; they also lost out on postseason ticket revenue and saw a sharp decline in ratings* on the YES Network.

According to Brian Costa of the Wall Street Journal (subscription required), New York’s proceeds from ticket sales and suite licenses fell from $353 million in 2012 to $295 million last year, most of that a result of missing the playoffs:

People with knowledge of the team’s finances said the drop-off from 2012 is almost entirely a result of the fact that they missed the playoffs for the first time since 2008.

Had the Yankees failed to reach the playoffs in 2012, their ticket and suite revenues would have been closer to $300 million rather than $353 million, the people said. Similarly, in 2010 and 2011, postseason games accounted for $59 million and $58 million of all such revenues, respectively.

*The Yankees’ TV ratings also fell dramatically last year, down 31.2 percent from 2012.

The prospect of the Yankees seriously competing for a playoff spot in a deep American League East — not to mention, with perennial contenders like Detroit, Oakland and Texas scattered throughout the rest of the AL — while simultaneously trying to balance the 2014 budget were dim.


The Yankees major-league roster is extremely old and there’s little immediate payoff expected from the minor-league pipeline. Instead of risking another October-less fall in the Bronx at the mercy of the luxury tax, the Yankees have essentially thrown up their hands and gone all in, both to stay competitive and to keep their finely tuned empire from imploding.

Enter Tanaka. Possibly the final piece to the Yankees’ offseason puzzle, we profiled him in December.

In that article, I predicted that he would sign a six-year deal worth just under $100 million. Yes, I severely underestimated the perfect setting under which Tanaka entered Major League Baseball; the capped $20 million posting fee, the recent success of Japanese pitchers like Yu Darvish, and a cash-infused MLB marketplace created the perfect storm for a big Tanaka payday.

Tanaka could easily become New York’s best pitcher in 2014, he has that kind of stuff and that kind of potential, and the Yankees rotation, prior to the signing, was a relative weak spot.

C.C. Sabathia is looking better, but declining statistics and velocity make it unclear whether he can reclaim ace status. Huroki Kuroda has been effective for the larger part of his six-year big-league career, and he was the Yankees’ best pitcher last year, but he’ll be 39 in February. Ivan Nova was excellent last year, but he’s closer to a league-average pitcher in his career and can’t be relied upon to replicate his ’13 performance. Andy Pettitte has finally retired and Phil Hughes has left for Minnesota via free agency. The back of the Yanks’ rotation will likely be filled out by some combination of Michal Pineda, Adam Warren, and David Phelps – whichever one can stay healthy and somewhat effective.

On the other hand, like any pitcher, Tanaka could be a complete bust.

Unlike the proven major-league starter, Tanaka’s forecast poses additional tough-to-answer questions. How will he adapt to a new culture, a new city, and a new style of play?

How much has his NPB workload — he threw 186.3 innings as an 18-year-old and averaged nearly eight innings per start last year — wore down his relatively young arm?

How will his stuff — and his numbers — translate into the majors?

Major-league clubs make investments in foreign players understanding, generally, that these questions are to some degree unanswerable. Organizations do their due diligence with scouting and advanced statistics and injury projection, but they can’t completely eliminate the big error bars that come with a forecast on someone like Tanaka.

Generally, though, teams save some money by investing in foreign talent, even the high-profile kind, with these questions likely at the forefront of the negotiations.

When the Rangers won the bidding war for Yu Darvish just two offseason’s ago, they signed him to a relatively team-friendly six-year, $56 million deal. Of course, that doesn’t include the $51.7 million posting fee that raised their total investment to $107.7 million. Still, that number wasn’t outlandish for Darvish at the time, and it looks particularly good now as Darvish has quickly developed into an ace in Texas while Tanaka has commanded a total investment of $175 million.

The Yankees may have taken the brunt of an overly bullish free agent market with the Tanaka deal, but in the end they had little choice but to pull the trigger. While they could have settled for a less-heralded stateside starter like Matt Garza, Ervin Santana, or Bronson Arroyo, the domestic free agent pitching crop lacks both the mainstream appeal and the upside that Tanaka offers.

Without Tanaka, the Yankees projected as a mid-80s win team, a borderline contender that likely would end up on the wrong side of the playoff push. The costly (and risky) Tanaka signing appears to be the final blow to New York’s luxury cap pursuit, but if it’s also the deal that pushes them back into the postseason the Yankees will be happy to pay $22 million a year to their latest Japanese import.

Cover photo by Kurt Snibbe, ESPN

Dustin Palmateer

Dustin Palmateer

Dustin Palmateer

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