Is Johnny Damon overpaid? That is the question.
Well, from an average player perspective, yes he is. He is not one of the best players in baseball. But, from a baseball economics perspective, you can make an argument that he is not.
Let's use round numbers and say that the Yankee payroll is $200 million (it's probably more). If that is the case, Damon's salary is 6.5% of the payroll, hardly egregious. For perspective, that is the same as the following (using estimates of payroll):
$125 million payroll (e.g., Boston): 8.125 million
$100 million (e.g., LA Dodgers): 6.5
$60 million (e.g., Oakland): 3.9
So, basically if you are the Red Sox GM and you had 8.125 million to spend on him, would you do it? Yes. As a matter of fact, they actually offered a higher percentage of their team salary than the Yankees did! It's just the advantage the Yankees have in revenue. For reference, Esteban Loaiza's contract with Oakland will cost them more than 10% of their total payroll. Could that end up costing them Barry Zito?
In another thread, Damon was compared to Mark Kotsay, who is not as good of a player. There's not a HUGE difference, but all things being equal, most would select Damon to be on their team. In 2005, Kotsay made $6.5 million (from USA Today) and Oakland had a $55.4 million dollar payroll. So, he made 11.7% of Oakland's payroll, nearly twice as much as Damon's percentage. Who's more valuable to his team payroll-wise? I understand that Kotsay would have more trade value based on total salary, but if you intend to keep Damon, who cares about that? Damon's salary does not preclude the Yankees from making any further moves to strengthen their team. Kotsay's might.
Want examples of overpaid?
Jermaine Dye (Oakland, 2004): 11.67/59.4 = 19.6% (265/329/464). Bad contract.
Mike Sweeney (KC, 2005): 11/36.9 = 29.8% (300/347/517). Best player on the team, but is this the way to balance a small payroll?
Preston Wilson (Col, 2005): 12.5/48.1 = 26% (258/322/491 @Col). Numbers a little off because he was traded, but you get the idea.
I could go on, but I think it's simplistic to say that Damon is the most overpaid or even one of the most. It should all be taken in context. Mike Lowell is taking more of Boston's payroll than Damon is from the Yankees. There are different rules for the Yankees and everyone else. They have more money and they are willing to (over)spend it to fill their own needs.
Is that really fair? No, I don't think it is fair. If they could implement a salary cap in baseball, I would be all for it. But, it is reality that the Yankees have at least 3 times as much money to spend as the A's do. Any time a Yankee salary is examined, I find it to be comical because they don't care about spending it. The small and medium market teams need to worry. To some extent, even Boston and the Mets need to, although in my opinion, that is completely overblown.
In the end, I don't believe he is overpaid in the context of being a Yankee.