I used to have two criteria for a recession – layoffs at google and pro sports cutting payroll across the board. It now appears both have come true, so who needs Greenspan? It’s a recession!
Hopefully we’re getting ready to turn the corner, but when Steinbrenner feels the need to cut payroll, that can’t be good. From USA Today:
Ten of the 14 teams are cutting their 25-man-roster budget by at least $10 million.
“That is an amazing number,” Chicago White Sox chairman Jerry Reinsdorf says. “This isn’t just the baseball economy. But the owners who subsidized losses for their team with their businesses don’t have businesses as profitable anymore.”
The average salary saw a modest 4% increase, to $3.26 million. But even the New York Yankees and Boston Red Sox have cut payrolls, based on documents obtained by USA TODAY from the Major League Baseball Players Association, clubs and MLB’s central office. The Yankees still lead with a $201.4 million payroll, but despite committing $423.5 million on three new free agents, their payroll is down $8 million. The Red Sox lowered theirs by $12 million to $121.7 million, dropping them behind the Yankees, New York Mets ($149.3 million) and Chicago Cubs ($134.8 million).
The Cubs, whose payroll is the largest in franchise history, are spending $16.5 million more. The Philadelphia Phillies, the 2008 World Series champions, are the only other big-market team to increase their payrolls by more than $3 million.
In contrast, the San Diego Padres slashed their payroll by nearly $20 million. They have baseball’s second-lowest payroll at $43.8 million, higher than only the Florida Marlins.”That’s terrible,” Padres starter Chris Young says. “We’re in the fifth year of a new ballpark, we’re a midmarket team and we’re next-to-last. You would like to see payrolls reflect the way the game has grown the last five to seven years, not have teams cut back.”
When’s the last time you saw the average salary climb in Major League Baseball in a way that was similar to most company’s merit budget? Never? Back when astroturf felt like cement? When Pittsburgh was a power team?
Ugh.
I can’t say that I have a lot of sympathy for these guys. Both of my hometown teams (Yanks and Mets) got new taxpayer funded stadiums this year. Both raised their already expensive seat prices. Both haven’t won a championship recently enough to justify their payrolls.
This illustrates the danger of paying top dollar for “top talent” at the expense of the team. Individual talent enhances team success but doesn’t guarantee it. In the end your brand suffers in the eyes of the customers you depend on.
Let’s see if this leads to better decisions and hopefully better teams.