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December 06, 2006

Market, Drew, Impact On A-Rod's Call

We know that the remainder of Alex Rodriguez' current contract looks like this:

2007: $27 million - $7 million paid by Texas
2008: $27 million - $8 million paid by Texas
2009: $27 million - $7 million paid by Texas
2010: $27 million - $6 million paid by Texas

But, we also know that A-Rod’s team must increase the salaries for 2009 and 2010 by the higher of $5 million or $1 million greater than the average annual value of the non-pitcher with highest annual average value.

However, after the 2007, 2008 or 2009 season, A-Rod can void the remainder on his contract as well.

When I see the money that players like Alfonso Soriano, Carlos Lee, Gary Matthews Jr., Julio Lugo and Juan Pierre got this winter as Free Agents - and the money that Aramis Ramirez and J.D. Drew got this winter after taking the option to void their contracts - I have to wonder, what would Alex Rodriguez get in the open market after 2007?

Could A-Rod get a deal for ~$118 million over 5 years? It seems like he could, no? Would he trade $91 million over 3 years (with his current contract) for that - in order to get more years?

Think about this for a minute. Say Alex has an MVP type year for the Yankees in 2007. Would not that be great for him - to hit the open market, with the money being thrown around now, with two "MVP-type" seasons in the last three years under his belt? On the flip side, say that Alex has a terrible time next season in the Bronx. Would not the option to void come in handy - to get away from the Yankees and go to a team that he would choose? And, based on the money out there now, he would not have to move to the poor house to make that happen.

One way or another, it seems like there is something for A-Rod to gain by opting out of his contract in 2007. Yes, he would lose on the short-term (to an extent) to gain on the long-term. But, as a player, you have to consider that you could get hurt in 2008, 2009, or 2010 - and then those three years could be your last pay-days.

Personally, I would rather have someone give me $4.75 a day for the next 5 days than have someone give me $6 a day for the next 3 days. And, for A-Rod, this is what it might come down to - in terms of a decision.

If the open market was not as crazy as it has been this winter, I could not see Alex voiding his contract. $30 million a year for three years is sweet. But, knowing what we know now, I have to wonder about it.

This coming season could be Alex Rodriguez' "walk year" in the Bronx. I hope he puts up huge numbers in the process - because the Yankees will benefit from it.

Posted by Steve Lombardi at December 6, 2006 10:45 AM

Comments

What I get from what you just wrote is that, the new job you just got is only paying you $4.75 for five days and your old job was giving you $6 for three days of work.

You have undervalued your skills quite a bit. I think this Christmas/Kwanzaa/Hanukkah, all readers of WasWatching, should send a few bucks over to Steve. Our generosity could probably get "poor" Steve a can of baked beans, if we are really good with our generosity then he could probably get pork flavored baked beans.

Posted by: Garcia [TypeKey Profile Page] at December 6, 2006 11:34 AM

If Arod is going to opt out of this deal, and from what you stated it seems more likely than not that he will opt out, than Cashman had better trade Arod right now and get at the least a starting third baseman and a starting pitcher. You cannot, and I mean absolutely cannot, allow Arod to leave without getting compensation for him. And the history with Scott Boras having Drew opt out means that we can be sure Arod will opt out too with no regard for the Yankees and he most certainly not resign with us. If we dont get something for him this season, the we will be screwed because we will have lost our best tradable asset that could have gained us young players.

I say we ask for Crede and Garcia or Buerhle from the White Sox. That is probably the best that could happen. In a dream world, I would like to see us get a package of Chavez and Harden or Haren from Oakland but they would never take on Arod's salary unless we agreed to pay the entire contract....which we should be willing to do but you can be certain we wont.

Posted by: Chewbacca [TypeKey Profile Page] at December 6, 2006 11:35 AM

Mmmm...pork flavored baked beans.

Posted by: Steve Lombardi [TypeKey Profile Page] at December 6, 2006 11:45 AM

"Personally, I would rather have someone give me $4.75 a day for the next 5 days than have someone give me $6 a day for the next 3 days. And, for A-Rod, this is what it might come down to - in terms of a decision."

This is a lot like winning the lottery. You always take less money now than a bit more money later for 2 reasons. 1) Inflation and 2) Rate of return on you investments. A guy like A-Rod could make a lot more money by taking the $6 over 3 years than the $4.75 over 5 years...

Either way, unless the Yankees win the World Series next year, I don't see A-Rod opting out of his contract. How is he NOT labled a quitter and a money-grubbing loser if he does that?

Posted by: Mike [TypeKey Profile Page] at December 6, 2006 11:52 AM

How is he NOT labled a quitter and a money-grubbing loser if he does that?
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Good point. But I have your answer.

Short answer: Plain and simple, he screwed the Yankees. YAY for everyone but the Yankees and their true fans.

Long Answer: Even though he does not need to, he will turn it around against the Yankees (despite his comments to Sheffield about a week ago, b/c that will be forgotten) and say that the Yankees treated him as if we no longer wanted him and who do you think the New York media and Peter Gammons and every other Yankees hater is going to side with. :-)

Alex Rodriguez, by opting out of a deal w/ the Yankees, will go from perhaps the most hated man in baseball, to one of the most beloved men in baseball, just for screwing the Yankees and leaving them with no compensation.

Posted by: Chewbacca [TypeKey Profile Page] at December 6, 2006 12:18 PM

If ARod walks after 2007, so be it. With the money not spent on him, Cashman can go find other players on the free agent market. I can't tell you who will hit the market next winter but I'm pretty sure Vlad is among those on the list, and others will be as well.

Chewy, "unless we agreed to pay the entire contract....which we should be willing to do but you can be certain we wont" that makes no sense. Why would the Yankees want to pay $20M for someone not on the team. Does Bill Gates, who has more money that Steinbrenner, pay for programmers and developers who work for Google? You can't run a business that way. Seriously, no offense, but you're not making any sense with your recent rants about why the Yanks shouldn't care about what they spend. Spending does not necessarily equate winning, or have you not been watching the Yanks since 2002?

Posted by: MJ [TypeKey Profile Page] at December 6, 2006 01:07 PM

How about, as a sign of good faith, he tears up his current contract and gives the Yanks a little bit of a discount for the following three years?

Maybe some of the pressure of living up to that gi-normous salary would be lifted, perhaps?

Posted by: Pete [TypeKey Profile Page] at December 6, 2006 01:40 PM

Pete - the MLBPA would object to that.

Posted by: Steve Lombardi [TypeKey Profile Page] at December 6, 2006 02:04 PM

Pete: There's no need for that; he has been producing. And the union wouldn't go for it; that's why Rodriguez is a Yankee and not a Red Sox

Posted by: Raf [TypeKey Profile Page] at December 6, 2006 02:07 PM

I have been trying to articulate my belief that the Yankees are unique for some time now and I just cant seem to get it right so that people will understand but I think I have figured it out so here goes:

The Yankees are a unique entity in the USA in comparison to all other businesses and sports francises and here is why.

1. The Yankees goal is to win a World Series every year and therefore that separates them from any business outside the realm of sports. All of those other businesses' sole goal is to try to maximize their profits and make as much money as possible. Therefore any comparison between the Yankees and other businesses that dont have an overarching goal other than to make money have no relevance.

2. That leaves the Yanks to be compared to other sports franchises. However, they differ from franchises in every other league in the US because every other league has some restraint on player acquisition. In the NFL and NHL, it is a hard salary cap which prevents a team from going above a specified payroll no matter whether that wants to or not. And the NBA has a soft cap which allows a team to go over the specified salary number but once they do, they are kept from signing free agents unless another team helps them out. Therefore, the Yankees are different from sports franchises in other sports now.

3. The Yankees are also unique within Major League Baseball. No other team has the special circumstances that accompany the Yankees. One, they have the only owner willing to spend 200 million dollars a year on payroll for the past 5 seasons just to win. Secondly as the winningest franchise in sports history, the Yanks provide a perennial winner attractive to most free agents. Third, they draw the most fans, enjoy the largest market and draw the largest television ratings of all MLB teams giving them the largest source of revenue available.
Now, with an advantage in how much money the team has available to spend, an advantage in an owner willing to spend more money than any other owner has every spent, and an advantage in offering the best opportunity to win, the Yankees have several legs up on the competition.

Here is where it gets interesting. Say there is a free agent Pitcher named Smith.

Smith can choose between Team A and Team B. Team A offers the chance to win but Team B offers more money. My contention is that the Yankees ought to be to offer both. That is not to say that there arent other factors in determining what teams players choose to sign with but my belief is that the Yankees should NEVER be outbid by another team. If the Yankees really wanted a player, like say Ted Lilly and he gets offered 4 years 40 million dollars to play for the Cubs, we have the ability to offer 4 years 48 mil to him. That extra money isnt going to make a difference to the Yanks and if Lilly was offered more money in a place with a better chance to win, that would at least give us a higher percentage of signing him.

And the most important reason for us to be willing to spend more money that everyone else, is that because of our previous expenditures, we are funding other team's attempts to beat us with the luxury tax. Notice that every other team in the American League has improve in the past 5 years. The Blue Jays, A's, Angels, White Sox, Twins, Tigers, and of the course the Red Sox have all increased payroll to keep up with us. Cashman says that he wants to get cheaper and younger but what he doesnt realize is that every other team is adding payroll making it that much more difficult for us to be able to offer them the unique ability of getting the best money for the best chance to win. As it stands, since 2002, we are the only to team to make the playoffs every year. That is important to note because $200 mil was just the cover charge to get into the dance, once you get in, it is all up to luck really. But soon, 200 mil wont be enough to make the playoffs any more. And you cant win the World Series if you dont make the playoffs. That is why while although conventional thinking is that lowering payroll would help the Yankees develop younger players, the fact is that isnt good enough for the Yankees. They have to be able to compete every year to win a World Series and that means making the playoffs every year. And that means maintaining their advantage and the only way for them to do that is to continue spend money, more money than everyone else. And considering all the negatives that comes with playing in NY, like media scrutiny, decreased production, and bad luck, not using the money as the biggest advantage is criminal.

I guess the best way of looking at the Yankees is by using this as an example, The Yankees are the richest man in the world and every free agent they want to acquire is like the Hope Diamond or whatever. The fact is, if the richest man in the world wants something, he can outbid anyone for it. And although that doesnt guarantee him acquiring what he wants, it does give him an advantage that no other person has.

Posted by: Chewbacca [TypeKey Profile Page] at December 6, 2006 03:15 PM

Steve,
Can't forget about inflation my friend. I'd take the money now in a heartbeat. Two years from now 21 million isn't going to be worth the same.

But then who's to say it wont be 30 million by then. F'n baseball players

Posted by: Jules Winnfield [TypeKey Profile Page] at December 6, 2006 04:07 PM

1. It's the goal of every team. That's why they make moves every offseason, and during the season as well.

2. MLB has the "luxury tax" in lieu of a cap.

3. Not every player is chasing dollars.

"Notice that every other team in the American League has improve in the past 5 years. The Blue Jays, A's, Angels, White Sox, Twins, Tigers, and of the course the Red Sox have all increased payroll to keep up with us." - You may want to run the numbers on that, because from what I can see, they don't add up.

Posted by: Raf [TypeKey Profile Page] at December 6, 2006 04:11 PM

1. First of all, my point in bringing up the trying to win a World Series was to show that the Yankees are different from non sports businesses. And secondly, many teams do not have the goal of winning the World Series. For instance, the Pirates and the Royals take the luxury tax/revenue sharing checks and just cash them. It was one of the problems of the last collective bargaining agreement (CBA) that it didnt include a salary floor to prevent teams from doing that.


2. The luxury tax only restricts spending, it doesnt restrict the signing of players. As I stated in my previous post, all the other leagues "restrict player acquisition" and by this I mean that you are not allowed to sign any players if you are over a hard cap and you are not allowed to sign free agents if you are over a soft cap without doing a sign and trade with another team and giving up players. Major League Baseball even with a luxury tax has no current way of restraining a team from signing as many players as they want as long as that team is willing to pay the luxury tax.

3. Finally, I specifically said in my last post "that is not to say that there arent other factors in determining what teams players choose to sign with" which means I addressed the point that not every player is chasing dollars. My point is that even if a player isnt chasing dollars, we should be willing to offer at least what any other team is offering a free agent that we covet and more likely offer more just to show that player that we really want him. But the fact remains that if you offer more money than everyone else, you increase the likelihood of signing that player. Even if you dont have a 100% guarantee, you have a better chance than if you offered less than or equal to the other team.


Also I am not sure what you want me to check on the teams I mentioned. Clearly, the Tigers, White Sox, and Red Sox have improved greatly because they hadnt made or won a World Series in a long time and they at least made it once in the last 5 years. Also the Twins improved greatly from the time when they were supposed to be contracted and the Angels hadnt been in playoffs before 2002 since 1986. The A's are possibly the only team that have perhaps slighly declined or stayed the same since 2001 when they won 100 games and 2000 when they won 91 games. If you are referring to the payroll the Angels, Red Sox, Twins, White Sox, and the Tigers all have had their team record in payroll within the last 3 years, and I am not certain about the A's.

Posted by: Chewbacca [TypeKey Profile Page] at December 6, 2006 06:26 PM

If you are referring to the payroll the Angels, Red Sox, Twins, White Sox, and the Tigers all have had their team record in payroll within the last 3 years, and I am not certain about the A's.
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I was referring more to a combination of win levels, payroll and place in the standings; most of the teams you've mentioned were contending or have made the playoffs, and payroll has stayed somewhat consistent.

Anyway, WRT payroll, the Yanks have had team records in payroll themselves, and haven't done much.

Using your criteria, these teams have won the series @ a fraction of the cost that the Yanks have done it. Either these teams are smart, or the Yanks are stupid.

Posted by: Raf [TypeKey Profile Page] at December 7, 2006 09:21 AM

"the Yanks have had team records in payroll themselves, and haven't done much................................

The Yanks have made the playoffs every year and had a very good chance of winning the World Series in three of those years. You can buy your team a playoff spot, but you cannot just buy a World Series because once the playoffs begin, it is a crapshoot.
Chewy said *That is important to note because $200 mil was just the cover charge to get into the dance, once you get in, it is all up to luck really. But soon, 200 mil wont be enough to make the playoffs any more. And you cant win the World Series if you dont make the playoffs.* IMHO, it is a little more than luck. It think experience, injuries, slumps, etc. have a grave effect on the outcome of a postseason.

Posted by: DonnieDosTresBaseball [TypeKey Profile Page] at December 7, 2006 10:37 AM

The Yanks have made the playoffs every year and had a very good chance of winning the World Series in three of those years. You can buy your team a playoff spot, but you cannot just buy a World Series because once the playoffs begin, it is a crapshoot.
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I should've clarified my comments (which due to time & blog constraints I really cannot).

It seems Chewy thinks that wildly spending $$ is the way the Yanks will win another series. (Chewy, feel free to correct me if I'm wrong) I believe $$ is a resource, but you have to spend it wisely. I don't see the point in throwing a suitcase of $$ at a free agent, when you have in-house solutions, as well as inexpensive alternatives. I'm happy the Yanks didn't get Lilly, they can do better, if not get comparable results with they guys they already have.

I also agree that the playoffs are a crapshoot, and have said so many times over. It's not often that the team with the best record wins the series.

Not many teams have a $200m payroll. Teams have made the playoffs this year with payroll significantly less than that. I think it's going to be a while before a majority of the teams in MLB have a $200M payroll.

Posted by: Raf [TypeKey Profile Page] at December 7, 2006 11:20 AM

"my belief is that the Yankees should NEVER be outbid by another team."

I simply could not DISAGREE with you more.
1) This is what got us where we are.. concerning long/big/inflexible contracts
2) With the Luxury tax, we pay 40% more for the same player
3) You are talking such huge sums, that if a player would rather play in Baltimore for $100M then NY for $95M, LET HIM GO. We don't need to attract any more RJs of the world. (see Carlos Beltran)
4) You assume there is no bottom to the Yankees pocketbook.
5) Our money will have a greater payback being invested in the farm and international players

RJ did NOT want to be a Yankee. Doesn't like NY, doesn't care about Yankee tradition or history. He came here for 3 reasons: Money, to pad his personal stats and to win.

We don't need that. We have much to much to offer.

Posted by: singledd [TypeKey Profile Page] at February 5, 2007 09:40 AM