Via Brian Costa –
When the Yankees announced their $85 million signing of catcher Brian McCann earlier this week, owner Hal Steinbrenner cited the team’s “singular and unwavering desire” to play deep into October. That desire likely will be mentioned again when the Yankees announce their seven-year, $153 million deal with ex-Red Sox outfielder Jacoby Ellsbury in the coming days.
But a look at the Yankees’ finances reveals that a lust for trophies isn’t the only thing fueling this free-agent splurge. When the Yankees fail to make the playoffs, as they did in 2013, their revenues plummet.
Proceeds from ticket sales and stadium suite licenses alone totaled $295 million through Sept. 30 this year, according to public records reviewed by The Wall Street Journal. That is down from $353 million in 2012, $377 million in 2011 and $384 million in 2010, the records show.
The figures appeared on financial statements the Yankees are required to file with the city to demonstrate their ability to make payments on the bonds used in the construction of Yankee Stadium. Attendance represents just one of the Yankees’ revenue streams, but it highlights the enormity of the financial incentives for the team to make 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.
In other words, a Yankees team that wins 93 games and makes the playoffs brings in about 15% more ticket and suite revenue than a Yankees team that wins 88 games and misses the playoffs. And that is to say nothing of the boost in merchandise and concession sales and next-year ticket sales.
“What this clearly shows is that the Yankees’ whole financial equation is built around winning,” said Vince Gennaro, author of “Diamond Dollars: The Economics of Winning in Baseball” and a consultant to major-league teams. “If you take that away, they become mere mortals from a financial standpoint.”
And, what happens if the Yankees win <88 games for two years in a row?