Keuchel and the Official End of the Yankees 2018 Offseason

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Dallas Keuchel signing a one year deal with the Braves closes the door on the 2018 player offseason. The remaining free agents of note are now off the board. One could make the case that the Yankees had a very successful winter with the acquisition of James Paxton, Adam Ottavino, DJLM and Zack Britton. An equally strong case can be made that the inability to sign Dallas Keuchel highlights the fundamental flaw in the Yankees 2018 offseason strategy. 

Offseason Acquisitions

Hal, Cashman and company made it clear on multiple occasions during the winter that bolstering the rotation was priority number one. The first move they made was to bring back future hall of famer CC Sabathia for his final season. Despite not representing an upgrade from last year’s rotation, you could do much worse than having Sabathia as your fifth starter.

The first big move to strengthen the starting corps was the trade for James Paxton. By trading top pitching prospect Justus Sheffield, the Yanks were making a win now move that brought the team much closer to achieving their stated goal of improving upon 2018’s rotation. With top pitching free agent Patrick Corbin available and reportedly very interested in signing with the Yankees, it made sense for the two sides to come to an agreement. 

It made so much sense that Patrick Corbin signed with the Washington Nationals to a deal the Yankees could have matched. The team was so focused on upgrading the rotation that they signed 36 year old J.A. Happ to a three year deal including an option despite clear downward trends in his performance.  Despite pitching well in Toronto his last time out, inconsistency is probably the best (or nicest) way to describe Happ’s season up to this point.

Now, the rotation has performed pretty well as Bobby goes into detail here. But there are two pretty significant issues the rotation is facing that signing a healthy Keuchel would have addressed. The rotation, featuring only one true upgrade from last year, lacks both depth and in game length. 

Starting Rotation Depth Concerns

The available and viable starting rotation options are limited. This is obviously the case because of injuries to Luis Severino, Jonathan Loaisiga, Jordan Montgomery and now Domingo Germán, but this was an issue coming into the season. Assuming full health of the projected rotation, the 40 man roster depth options were Germán, Luis Cessa, Loaisiga, and Chance Adams. These options, outside of Germán, don’t inspire much confidence for a contending team.

The timing of Germán’s hip flexor injury couldn’t have been worse. The rotation already features multiple health risks and Domingo’s unexpected injury compounds this issue. Combine this with an innings limit that he is facing whenever he returns, the Yankees have at least one spot in the rotation that will still need to be filled later in the season. The problem is they don’t have a suitable replacement. It feels a little premature to say Luis Severino will be the one to take the spot. Increasing the depth, and more importantly the quality of the depth, should have driven the Yankees to make stronger acquisitions both during the winter and in season especially considering the onslaught of injuries this year.

The Rotation Doesn’t Stick Around Long

Length is a significant issue for the rotation. As Bobby notes in his post:

Of the current division leaders and 1st Wild Card spot teams, only two teams get fewer innings out of their starters than the Yanks.

There is a major emphasis on bullpen usage and third time through the order stats, but for a team that made it clear that rotation upgrades are in order this stat is pretty disappointing. They’re essentially giving the same length as the last couple of years. Dallas Keuchel, when healthy, has pitched over 200 innings in multiple seasons. Above to slightly above average production over 200 innings is incredibly valuable. It also creates opportunities to give the bullpen more rest, which is always a good thing.

We’re Living In A New World

There was a lot of time and energy spent on the team not signing Bryce Harper and Manny Machado. The more significant issue is the team simply did not do enough to improve the rotation despite multiple quality options being available. It’s mind boggling that this was the very publicly stated goal of the winter and then the Yankees simply refused to achieve it. The easy explanation is the team is being cheap, but is this the core reason for these decisions?

The question “are the Yankees cheap or smart?” sits at the center of many conversations amongst the fans nowadays. As their player acquisition model continues to change, the organization’s dependence on their analytics department grows greater by the day. Of course, analytics provides an opportunity to assign specific financial values to a player that almost always skews to the benefit of ownership. Beyond that, the analytics department has seemingly created a rigid profile of player skills that the team will pursue let alone sign. It is increasingly clear this profile is valuing different players than the ones fans believe the team should acquire. Dallas Keuchel is the latest example of the analytics team winning the discussion of whether or not it’s the right move to sign a specific guy regardless of need and what the market was willing to pay.

We can complain about it all day, but this approach is not going to change. It may be time for us to finally adjust to this new paradigm despite its obvious flaws and frustrations. In truth, the team is experiencing success with it, which only validates the strategy. The true measure will obviously be the playoffs. The Yankees are betting on their player development and analytics staff to win them a title. These next few years will determine the big payoff of that bet.

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16 Comments

  1. I'm Not the Droids You're Looking For

    The Corbin thing still makes me nuts. Ugh.

    • Randy

      SAME. I just do not understand that decision.

      • I do, Happ was over a hundred mil cheaper and only a two year commitment (if they don’t exercise the option).

        Hal really has little incentive to spend even as much as he has as long as revenue and profits are increasing.

        George understood this as a profitable business, but he loved the spotlight and the accolades that come with winning. Hal really seems focused on just the business.

        Keep in mind too that there are four Steinbrenner’s now with their own families and goals.

        • Randy

          Sure. I think the default is always going to be they’re going to go with the cheaper option if they believe players are somewhat comparable. It just feels like there are exceptions to the rule and right now they’re not playing with exceptions. I think that mentality goes beyond them being perceived as cheap.

          • Agreed.

            I think part of this is Hal’s flex…I think he’s basically been saying to the agents and players, “this is what we are willing to give you, if you want more, go somewhere else”.

            As Axisa tweeted a few days ago, there were more teams in on Tulo than Haper, Machado or Corbin.

            The owners really don’t bid against each other like they once did.

          • Randy

            Yup and he’s totally fine with them moving on. He knows the options are super limited.

  2. Coolerking101

    “Dallas Keuchel is the latest example of the analytics team winning the discussion of whether or not it’s the right move to sign a specific guy regardless of need and what the market was willing to pay.”

    I don’t think we have any way of knowing this is the case. For all we know, Hal simply said “sorry Cash, I gave you a budget, you’ve hit that number. I’m not going over it. Now hand me a cigar so I can light it with this $100 bill.”

    • Randy

      Sure we do if we’re to believe the reporting. They set a price and don’t budge from it. That price is largely influenced by how the analytics team has evaluated the player. The Yankees aren’t the only ones doing this. And the team has wiggle room to add. They wouldn’t have offered Keuchel a deal if Hal was more concerned with his $100 bill cigars than improving the team.

  3. Just to clear up some confusion, a deal like the YES Network repurchase doesn’t involve Hal writing a big check. He puts together a consortium of investors and names himself MP or lead investor or whatever.

    Here is what Oznanian wrote on Forbes:

    “The Yankees will be the lead investors after the current deal closes in about 120 days. The partners with the Yankees are Amazon and Sinclair Broadcast Group, and investors include RedBird Capital, Blackstone, Mubadala Investment Co., Ontario Teachers’ Pension Plan and the Michael Dell fund.”

    https://www.forbes.com/sites/mikeozanian/2019/03/08/new-york-yankees-buy-back-yes-network-for-3-47-billion/#609aa326483c

    So, in short, a bunch of investors kick in a piece to come up with some, most or all of the purchase price. Hal may actually get a piece just for his participation, i.e. no money put in by him. This consortium could also take on some debt to come up with a piece of the purchase price.

    For example, When George bought the Yanks for $8.7 mil in 1973, he actually only put up $168,000 in cash (I’ve seen other numbers, but whatever).

    https://www.businessinsider.com/george-steinbrenners-purchase-of-new-york-yankees-paid-off-2015-3

    My point, Hal’s sale and repurchase of the network was done for one reason, it would make him more money. To use this as an excuse to continue to hold payroll at 2005 levels is incorrect.

    • Randy

      Thank you for clearing that up. I was thinking it wouldn’t really impact payroll, but I also don’t know how these deals work so didn’t want to say anything definitive.

      • Sure Randy, my pleasure. We really don’t know much about the structure of the deal because they don’t want us to and they have no obligation to report it.

        Plus, most people find this stuff boring.

        The investors listed like Redbird and Blackstone, etc. may actually be lending Hal’s partnership money or have the option to make the debt convertible to equity. Could be different classes of equity with different voting rights.

        Bottom line, the YES Network was such a valuable property that high quality investment groups were tripping over themselves to be a part of this deal.

  4. James

    Have to wonder if the repurchase of YES is the cause for the yankees strict spending this past offseason. It’s annoying, don’t get me wrong, but I’m sure they needed/need a lot of capital to repurchase the rights (even with Amazon, SInclair and Dell’s help).

    Obviously, as a fan I don’t care about Hal and how much money he has – I’d much rather have an owner who will win at all costs, not an owner who’s philosophy has shifted from “win at all” to “eh competitive is good enough for me $$$$.”

    Just A thought

    • Randy

      I don’t know enough about the YES deal to know if it impacted them on the payroll side. I would lean towards it not factoring in.

      • James

        Tough to argue one way or the other – but there is likely a reason they sold 80% for the 3.5/4 billion dollars in the last 8 years (cash out on some big $), but for them to then have to jump back in and repurchase probably added some stress to the budget/financial planning. Again, all postulating because we don’t have any true insight to the their finances, outside of revenues.

        The cynical fan in me thinks they were never even on Keuchel – just showing enough interest to convey to the fanbase that “hey, we tried!” Similar to a Manny or Corbin.

        Coming up short on impact talent is becoming a tired act though – especially when the league stinks and this is supposed to be a win now team. But maybe they get stroman and shut me the heck up, I’d prefer that!

        • James, they didn’t have to jump back in. They could have let someone else buy it, then hold them hostage for the broadcast rights.

          The reason Hal bought this was simply because he could make more. It should show us all how lucrative these RSN’s are.

          You don’t structure a deal like this and have it affect the operating capital of the team. My bet is, Hal actually put in very little money, that’s what all the other partners and investors are for.

          The team and the RSN are two independent entities and both highly profitable – it would be unthinkable that the investors in YES would be there if the numbers didn’t support their financial objectives.

          • James

            Macaroni100 – before I respond – thanks for the thoughtful response, and I think ultimately we’re all on the same page, that there really should’t be an excuse to miss out on a guy like Keuchel for $1.5M given the presumed finances of this team. It would also be disappointing as a fan if my musing was correct – as it would indicate that Hal truly emphasizes business proceedings over winning a WS (and as a fan, I understand the business side, but still want balance and a WS win!).

            From what I understood, you’re right, they didn’t have to jump back in – however the option to repurchase the rights (as a result of Fox’s sale) was at a discounted rate compared to true FMV (which was put into protect the YES Brand if Fox was bought). Plus, as you mentioned, Hal had the bargaining chip of being able to hold any private investor “hostage” for streaming rights. So the option to purchase at a discount (with the presumed opportunity to later divest and make even more money) was too good to pass up. I wasn’t trying to convey that they were forced back in, but from a business perspective it would’ve been the wrong play based on the market for these RSN’s (as you mentioned).

            I would disagree that The Steinbrenner Trust or Hal didn’t have to come up with any capital (even if it was in the form of debt – which would imply future cash needs) to be included in the consortium – but like you said, we won’t ever know. You could be right though – as the original rights were sold to increase capital, that they may have gone the route you described an issued themselves preferred shares to ensure their interests are first and foremost – I’d bet that some capital had to be spent, whether or not it has significant implications on payroll is beyond us.

            I would also think that YES and NYY are S corp’s (or NYY is the ultimate as an S corp, with Yes structured as an LLC below it), and the tax liability ultimately passes to the Steinbrenners – so while they are separate, they are interrelated ultimately in their financial goals. To give an unrelated example would be the Baltimore Orioles. While the Orioles team has an operating budget independent of Angelos and MASN, Angelos impending death tax (morbid, but ya gotta plan!) and the MASN dispute have implications and impacts on what the O’s organization can spend.

            And lastly, I would disagree that this stuff is boring – but maybe you and I aren’t most people!

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