Recent piece from Khoi Vinh puts the amount of money that the New York Yankees spend on payroll into perspective. Short version: The Yankees spend a lot of money on payroll but compared to their revenues they spend less than some other teams when compared to their revenues. Read the long version though, it is worth it.
This makes sense from a business perspective. The New York Yankees run an incredibly successful business. They are profitable, spend the majority of their money on their employees, and continue to succeed at their business model (winning baseball games). Every company should run this way so I’m not sure how anyone can fault them.
Side note from someone who isn’t a fan of major league baseball: I still think teams should have salary caps. Call me a moron but I don’t think any one individual needs hundreds of millions of dollars. I’m ignorant to how much each individual player makes but I’m sure they deserve the money just that they don’t really need the money. If every player made, say, 5 million dollars per year – where would the league be? Every player would be wealthy if they handled their money well, the teams would bank tons of money for other things (how about keeping cost down for more people to enjoy baseball), and there would be no belly-aching about how much money one team spends on personell over another.
The above will never happen, no one would ever give money up, and you’d have an instant player strike if MLB even hinted at doing something like that. But it is fun to think about.
/via John Gruber.