You Were Once Awesome, Here’s a New Contract

On my way home last night, I was listening to Mark Mellusis (sp?) on WFAN.  He brought up the day’s major baseball news, that Buster Olney had reported, that the Yankees, in a shift of management philosophy would begin to negotiate with A-Rod in season.

His argument against it?  That it might piss off Mariano Rivera and Jorge Posada, who were told in spring training to wait until after the season to negotiate their new contracts.

One of the things he mentioned in support of that argument is that, essentially, Who the Hell is A-Rod; Posada and Mo “have the rings” and Mo’s the “best closer ever.”  I can’t argue with the facts (mostly); Posada and Mo are the proud owners of four rings each that symblolize their participation in World Championship teams in 1996, 1998, 1999 and 2000.  And as subjective a statement like “Mo’s the best closer ever” is, I agree with it, so that’s fine.

What bothers me is the application.  So the f— what?  It is an especially bad business model to give someone a new contract to reward past performance.  Even worse if that “performance” is that they won a championship seven years ago.  Can we stop with the using of “rings” as the ultimate judge of a person’s abilties?  And that seven years ago.  Wait, I think that needs bold.  Seven years ago!!  That’s better.  How long do we have to keep old guys around because they once won something?  You give a contract anticipating (or trying as best you can) the contributions that person will give you, and the value of those contributions.  Sure, there are certain instances where you can have exceptions to that (Clemens, for instance, is being paid more for who he is than what he can actually do, and there were extenuating circumstances at play), but essentially, paying a guy for what he’s done is going to get you in trouble.

And that’s the difference between A-Rod and Posada and Rivera.  Let’s put aside for a second that boo-freaking-hoo for Posada, who’s coming off a contract that paid him $11million/year for the last 5 years.  It’s not like he suddenly deserves his first big contract.  Same for Rivera.  So maybe shut the hell up about that.  But Rivera, who was (was) the greatest closer in baseball history, isn’t anymore!!  He’s not the same pitcher he once was.  It’s obvious to everybody.  You don’t play baseball based on names.  It’s not like (certainly not, as much as I wish it were) Joe Torre can trot out to the umpires at the beginning of the ninth inning and say “we’re pitching Rivera” and the unpire calls the game.  He still has to pitch.  And his cutter doesn’t cut as much anymore, his location is spotty and his fastball doesn’t have that same giddy-up it used to.  At 453 years old (ok, 37) he’s not the same guy.  Giving him a huge deal would be a mistake.  Because he won’t be the same guy after the contact either.  I’m not saying he’s done.  And I understand that he may cost more just because he’s earned it (meaning, he won’t sign for what he’s worth, he just won’t) but I also think it’s reasonable, considering that he’s had some elbow trouble in the past, to make him show that he can still do it during the last year of his contract.

Same for Posada, who’s 35, which might as well be 45 in catcher years.  The charts for catcher’s stats after age 35 look like Wile E. Coyote after he realizes that the cliff ended a few feet back.  Giving Posada, as good a season as he’s having now, a long term extension (especially before he had this season) is going to be a disastrous move.  How many more years does he have at a high level behind the plate (not to mention, he was never a good defensive catcher, and those skills, especially, will degrade).  His future, like Mike Piazza’s, is as DH.  The problem is two-fold.  The Yankees don’t have anyone to replace him (and the free-agent/trade market is practically non-existent for a top-level catcher) and the Yankees, with Johnny Damon and Hideki Matsui and Jason Giambi don’t have the roster flexibility for another DH.  Posada at DH might be the smartest move, to save his legs and keep his switch hitting bat in the lineup.  But not as a catcher.  And not long-term.

A-Rod is different.  Whatever people say about his post-season performance, the man is a once in a lifetime talent.  When his career is over, he may end up as the greatest player ever, definitely in the Ruth, Mays, etc. conversation.  And he’s 31.  Still in his prime.  This is not someone that you have to worry about a degradation in stats.  He’s going to be the all-time home run king, and he’s in the middle of his outstanding career.  So if you’re going to break your ow rules, the one person you would do it for is the greatest player ever in his prime.  Yes, that makes perfect sense to me.  Especially given the realities of his contract situation, and that if the Yankees extend him and not let him even get to the point of opting-out, they can continue to get money from Texas (like $64million or something) to pay his contract.  So yes, A-Rod’s a special situation.  Why’s that hard to understand?

If Rivera, Posada, et al don’t understand that, and get offended and insulted, then maybe they aren’t the “classy” “professionals” we once thought they were.


13 responses to “You Were Once Awesome, Here’s a New Contract

  1. Speaking of past performance, the Mets dropped Julio Franco today. I just got this email from the Mets marketing department:

    Dear Mets Fan,

    General Manager Omar Minaya has come through on his promise. By replacing Julio Franco with Ricky Henderson, Omar has accomplished his goal of making this team younger, ensuring that the Mets are competitive not only this year, but for years to come. Remember, full season ticket holders will have first priority when the new CitiField opens in 2009, so don’t delay!

    The New York Mets Season Ticket Office

  2. A few comments:
    (1) You can spell Wile E. Coyote but not Marc Malusis? (I bet you looked up the former. I’ll admit to looking up the latter.)

    (2) I think the point with Posada and Mo is that while they might not be as good as they once were, the Yankees DO want to resign them, for obvious reasons. They also don’t want to slight them – negotiating with A-Rod midseason when they told Posada and Rivera that they could not negotiate their new contracts, as a matter of course, midseason, can be seen as a personal affront. Surely the Yankees don’t want to do that to players who (a) they want to keep happy for the rest of this season, and (b) that they hope to resign after the season.

    (3) Now, if you’re suggesting that the Yankees cut ties with Posada, then that’s a different “kettle of fish,” as Mike Francesa (notice the correct spelling) likes to say. But even if the Yanks don’t give him a “long-term” deal, which they probably shouldn’t, they most likely will extend his contract by at least two years.

    (4) The best argument I’ve heard so far in favor of negotiating with A-Rod midseason is actually pretty logical. Right now, the Rangers pay a large chunk of A-Rod’s salary. If the Yankees extend him now, the Rangers keep paying that part of his contract through their 10-year obligation. But, if A-Rod opts out, the contract is void – the Rangers’ obligation terminates. The Yankees would have to go from paying him $15 million per year to $25-$30 million per year, and that likely would be too high a price, even for the Yankees. On the other hand, if they extend his contract, they will continue to pay the $15 million per year through the end of the Rangers’ 10-year obligation, and will only have to pay the full $25-$30 million for each subsequent year that they give him after that.

    Anyway, the point is, if the season ends and A-Rod doesn’t have a new contract, he is virtually guaranteed to opt-out and test the free-agent waters. That effectively will end his tenure with the Yankees, because he’d be out of their budget (adding $15 million per year for a player they already had). So their only hope of keeping him is to negotiate midseason. Hence the need for an exception to the no-midseason-negotiations rule.

    (5) I just said that that’s the best argument I’ve heard so far. But I don’t totally agree with it. I know that everyone (including, as of today, A-Rod’s agent) thinks that A-Rod might get up to $30 million a year on the open market. I really don’t think so. I mean – HEL-LO – has everyone already forgotten the many ways in which the signing of A-Rod at $25 million was seen as a colossal mistake? And that was when he was *entering* the prime of his career (as opposed to this offseason, when, at age 31-32, he’s halfway through it). So I really don’t think he’ll get $30 million on the open market. I don’t even think he’ll get $25 million. So, in a way, the Yankees would just be bidding against themselves.

  3. OK, on the spelling, I didn’t look anything up. I know how Wile E. Coyote is spelled. One of those things I just know (and so do most people, I think). Moose is different. I’ve only ever heard his name, and I didn’t bother to look it up.

    Here’s why I think you’re wrong about A-Rod getting 30mil or close to it. Because the answer to your semi-rhetorical question, has everyone already forgotten the many ways in which the signing of A-Rod at $25 million was seen as a colossal mistake is a resounding YES. Everyone has forgotten. He’ll get $30 million because that’s what’s being talked about. These things have a tendency to sort of follow the news. Look at Ichiro (he is NOT worth $20 mil/season), and if you don’t think Ichiro’s deal has Boras licking his chops, you’re nuts. If Ichiro can get now, the same per year that Manny got in 2000, then A-Rod can get now more than he got in 2000. Maybe it’s inflation, maybe it’s the tail wagging the dog (rumor creates fact), but the fact that $30 mil/season is being talked about in the media means that someone (Yankees? Dodgers? Angels?) will eventually get there. Even more so if the Yankees want to get in front of the pack, an advantage they have because they’re the only team it wouldn’t be tampering for, and they will be forced to overpay to keep him off the market. Even so, that’s worth it for them. Imagine they offer a 5-year extension for $150 million. It’s still less than they’d have to pay if it was an 8 year $240 million new contract, and they were negotiating against three other deep-pocket teams (I can think of 3 off the top of my head that have the resources and would be interested: Angels, Dodgers and Red Sox).

    Not to mention that with the kickers in his contract, he’s going to be earning over $30mil/season if he doesn’t opt out, the only way he opts out is if he gets more.

  4. You may very well be right. I guess I just assume that teams will act in a logical manner, but I should have learned my lesson by now.

    Alright, time to have some fun with Math. For the record, A-Rod will be 32 later this month.

    A-Rod is due to earn $27 million in ’08, ’09, and ’10.

    Leaving out deferred compensation and how much exactly Texas is paying each year, the Yankees are paying about $16 million per year. Savings: $11 million per year for the next three years.

    A-Rod’s current deal calls for $81 million for the next three years. Yanks on the hook for $48 million. Savings, $33 million.

    If A-Rod leaves the Yankees and explores the free agent market, he would want to achieve two objectives: (1) increase his annual salary, and (2) increase the total amount of guaranteed money – i.e., extend his contract. A five-year deal at $27 million per year would probably make it worthwhile to opt out of his current deal.

    For the purposes of the extension negotiations, the Yankees are bidding from a position of weakness: Because the Rangers currently pay $11 million of his annual salary, A-Rod can insist that they put that money to good use on the later part of the deal.

    Let’s assume that, in order for the Rangers to remain obligated under the current contract, the current deal would have to remain untouched. Let’s also assume that A-Rod can earn a five-year, $30 million/per year contract if he explores free agency. That would mean that by extending his contract with the Yankees, he would be foregoing $9 million ($3 million per year). Well, he’s obviously not going to just forego that money – the Yanks would have to tack it on to the end of the deal. So that would make the contract look like this, at an absolute minimum, assuming that A-Rod asks for nothing more than the basics:

    Instead of $30 million per year for five years, the Yanks would pay:

    ’08: $27
    ’09: $27
    ’10: $27
    ’11: $35
    ’12: $35

    But wait there’s more!

    Never one to miss an opportunity to stick the screws to an owner, Boras would be all too happy to point out to Yankee management that they are currently saving $33 million in the next three years thanks to contributions by Texas – and if they want the privilege of exclusivity with A-Rod, they are going to have to pump some of that money back in A-Rod’s direction. What would be a fair number? $15 million out of $33 million?

    But that’s not all. Why stop at extending his contract a mere two years? It should be at least a three-year extension – maybe four, but we’ll play it conservative.

    Final outcome:

    Year – Salary – Age (Birthdate: 7/27/1975)
    ’08 — $27 ($16) – 32/33
    ’09 — $27 ($16) – 33/34
    ’10 — $27 ($16) – 34/35
    ’11 – $40 – 35/36
    ’12 — $40 – 36/37
    ’13 — $40 – 37/38

  5. Put that another way: at 6 years, $168 million, it would actually be a discount from what other teams would have to pay: Either 5 years for $150 million, or 6 years for $180 million.

    You can see that no matter how you apportion that money over the next six years (even if you don’t have to keep the next three years intact as they stand on the current contract), that we’re talking about a sum and duration that really isn’t worth it for any club.

  6. A-Rod has kickers in his contract that he will certainly make the Yankees exercise, which push his salary to 32 mil, for the last 2 years, if he doesn’t opt out.

    Year Salary Yankees Pay
    2008 27 16
    2009 32 21
    2010 32 21
    91 58

    He’ll be 35 and looking for another contract. Let’s assume that some team, needed a hitter who (probably) would be .300/35/120 and still able to play somewhere in the field, and would be chasing the home run record during that contract, would offer him 4 years/$80 mil (factor in inflation and this may be cheap). That’s a total of $171 over the next seven years, about a 24.5 million avg.

    Opting out gives him the opportunity to seek a seven or eight year contract (not unreasonable to seek a contract until after he’s 40). In today’s market, he could possibly get 8 years and $240 million, a 30 per year average. So he definitely opts out.

    In order to get him to forgo that opportunity, and not opt out of his contract, the Yankees have to make it worth his while. That means giving him at least $240 over the next 8 years. So you extend him this way:

    Year Salary Yankees Pay
    2011 32 32
    2012 32 32
    2013 33 33
    2014 33 33
    2015 35 35
    165 165

    A five-year $165 million extension does that. He’d be making $256 million over the next 8 years, a $32 million average. But since the Yankees only pay 58 million on the remaining 91, they pay a total of $223. Anyone else to pay $223 over 8 is giving an average salary of just under 28 million. Not what he wants. The Yankees are in a position to pay less to offer him more money.

    Boras doesn’t win with the “give us the savings” argument, because then the Yankees say “with no savings, walk.” But with this structure, A-Rod gets more than he would anywhere else (and that’s all that matters to him) and the Yankees pay less than anyone else would have to to even come close.

  7. You think the Yankees should agree to pay him $35 million ($35 million!) at age 40?

  8. Well, if that’s what it takes to keep him, then yes. If you want to argue they should front load the contract instead of backload it, fine, do that, we’re talking about a difference of $3/year.

    And these are ridiculous and astronomical numbers, yes, but that’s where it’s headed.

    Do the Yankees want the first 800 homer man in baseball history to be a Yankee when he does it (that’s how Boras is going to sell it).

  9. Ah, a true Yankee. He’ll be enshrined in the Hall of Fame right next to a bronze bust of Roger Clemens.


  10. It is an especially bad business model to give someone a new contract to reward past performance.

    You wanna know what was the first thing that went through my mind after I read this sentence?

    “Hey, past peformance isn’t consideration unless it’s in NY and there’s a signed writing.”

    I hate studying for the bar. 🙂

  11. Interesting argument – I think that Ichiro gets a premium because of the Asiam marketing angle that a player like Matsui and Dice-K bring to the home team – jersey sales, broadcasting, outfield wall ads, etc…

    There was an interesting conversation on ESPN radio (I think – I don’t know NY radio stations and I was flipping the AM dial looking for a Boston station to hear the Sox/Jays) with Keith Law. The host asked Law whether he’d pay $30 million to A-Rod or $20 million and Law said he’d unequivocally take A-Rod at $30 mln (not sure whether that took into account Ichiro’s marketing dollars that offset the salary costs or not).

    Law also noted that he doesn’t think that there are other bidders for A-Rod other than the Yankees; that a team with a payroll north of $100 million isn’t going to spend 25 – 30 % of the payroll on one player.

  12. Talking about your comment the other day about managing to the stat and not to the victory – last night was a classic example of managerial ineptitude.

    Gibbons should not have left Towers in the game with two outs in the fifth. It’s almost as if he left him in there so that he’d be win-eligible instead of doing the smart thing and pulling a guy who had let 9 of 24 batters reach base, had thrown 102 pitches, had put two runners in scoring position, and was anything but sharp throughout the game.

  13. Pingback: Posada’s Shoulder « The Noy G Show

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s