The Yankees Need a New Approach, Not New Free Agents

This will be a difficult and possibly strange off-season for the New York Yankees. The lawsuit between their star, aging and scandal-ridden third baseman Alex Rodriguez and Major League Baseball has drawn the most attention, but there is more. The Yankees, after missing the playoffs in 2013, have been rumored to be pursuing more or less all of the top free agents. Of course, the best free agent on the market this off-season is the Yankees own Robinson Cano. Losing Cano, one of the game's best hitters, would hurt the Yankees, but signing him to a huge multi-year contract, is also not without risk.

Thus far, however, the Yankees off-season has been relatively quiet. The only significant moves they have made is to resign a pair of shortstops. Derek Jeter was signed to a restructured one year extension and Brendan Ryan was retained in case Jeter can no longer play. With prominent aging stars like Rodriguez and Jeter, as well as Mark Teixeira and CC Sabathia, the Yankees will struggle to field a team that is competitive and healthy next year, but their biggest problems have to do with more than just age.

The Yankees appear to be looking for the right combination of free agents and international stars that can vault them back into contention. Maybe it is Masahiro Tanaka, Carlos Beltran and Brian McCann, or maybe Jacoby Ellsbury, Josh Johnson and Cano. Obviously, losing Cano would be a big blow, but in general the Yankees are trying to answer the wrong question. The team does not need new free agents, it needs a new approach. The Yankee strategy of drafting poorly, developing pitchers even less competently, building around older but still useful players who few other teams want to pay and some smart free agent signings is no longer working.

It is not news to most baseball fans that the game has changed in recent years. Teams are signing good young players to long term contracts, effectively buying out their free agent years. Scouting and drafting has improved such that high draft picks are more valuable than ever. The Yankees have not adapted well to do this. After starting off strongly, the Yankees stumbled and missed the playoffs this year. It is hard to believe they are only about fifteen months removed from the ALCS, but the Yankees look, and feel, like a very different team now.

The Yankees now have a distinct combinations of comparative strengths and weaknesses. On the down side, they have few prospects who are close to being ready to contribute at a major league level, few good young players under team control and several older and less productive, but still well paid players. The Yankees, as is well known, have one enormous structural advantage, their deep financial resources. Opportunities to use this resource are changing, and in some senses, shrinking. There are fewer top level free agents available; and teams seeking to rid themselves of salary during the season are demanding prospects of the kind the Yankees do not have in exchange. Moreover, the latest round of playoff expansion means fewer teams view themselves as out of contention halfway through the season.

The best way the Yankees can use their comparative advantage is by signing their core of good young players to medium to long term deals. However, at this moment, the Yankees have very few players who fit that description. The Yankees have also used their money well by making qualifying offers to Hiroki Kuroda, Curtis Granderson and Cano. This will ensure that they receive a draft pick should any of these player sign with another team. The Yankees were able to make these offers because paying these players the required $14.1 million next year would not have been a financial hardship.

Few teams can contend for years, let alone win a championship without a strong core of homegrown talent. At the moment, the Yankees do not have the talent and because replacing it through free agency is tougher than ever, face a tough quandary. However, once their farm system again begins to produce talent, the Yankees, even under this new system will be better position to keep that talent than any other teams. The Yankees will not be able to build their next championship team through free agency, but they will still be able to leverage their huge financial advantage. They will just need to do it differently.

The Yankees have been slow adapters to the new ways of doing business in the big leagues. It is not clear whether they are ready or able to adapt yet, as over the next few months they may go out and saddle themselves with more contracts for players in the decline phase of their careers. Embracing a new approach means conceding a season or two, which is what they did last year anyway, but once they make this shift, Yankee money will again be as powerful a weapon as it has been for decades.