To put things in perspective, at a modest 3% annual growth, the Yankees $206 million payroll in 2005 becomes $350 million in 2023 so I don't really see an issue with the size of the payrolls today. The question is how the rest of the league compares.
The Yankees had a $206 million payroll in 2005 which was 315% of MLB median.
In 2022, the Dodgers had a $286 million payroll which was about 210% of the MLB median. In 2022, 21 out of 30 teams had payrolls over $100 million.
So it seems the gap is closing between the top payrolls and the rest of the league. You just need enough quality to get into the playoffs, which have been expanded twice (?) in that time. Once you're in the playoffs, you don't need to be the best overall team to win. In the NBA, the high seed has an 80% probability of winning a 7 game series on average. In hockey it would take a 51 game series for the higher seed to have an 80% chance of winning and in baseball it is I think a 73 game series. Anything can happen in the playoffs. I'm going by memory so I may be off on some of the numbers but baseball has repeatedly shown you don't need to be a top spender. It hasn't done much for the yankees mets or even the LA who only won in a pandemic shortened season.
Going back to 2000, the median payroll was $56 million compared to the Yankees $92 million so things were a lot more even back then but that's the time when the Yankees accelerated their spending. I think things are headed back in that direction despite exlamations of the media who only look at the absolute size of the payrolls and not how they've changed over time.