skyking162

Let’s try to figure out this whole ARod contract thing — should he opt out? Should the Yankees extend his contract? Should we all hire Scott Boras as our personal agents?

First of all, I’m assuming he can get $30 million per season for six years. (Whether or not he’s worth that is a separate discussion.) That gives four basic options for this drama to play out. For each option I’ve listed the salary paid by the Yankees, Rangers, an Other team that gets involved, and the total salary earned by ARod.

A) play out contract at $25 mil per, sign for three more years later at $30 mil per
Yankees: $39 million ($13 mil per)
Rangers: $36 million ($12 mil per)
Other: $90 million ($30 mil per)
ARod: $165 million ($27.5 mil per)

B) extend current Yankee contract at $25 mil per by three years at $30 mil per
Yankees: $129 million ($21.5 milper)
Rangers: $36 million ($12 mil per)
Other: none
ARod: $165 million ($27.5 mil per)

C) opt out and sign with the Yankees for six years at $30 mil per
Yankees: $180 million ($30 mil per)
Rangers: none
Other: none
ARod: $180 million ($30 mil per)

D) opt out and sign for six years with another team at $30 mil per
Yankees: none
Rangers: none
Other: $180 million ($30 mil per)
ARod: $180 million ($30 mil per)

Let’s assume ARod would prefer option C or D, since those pay him the most. (Do you see him giving the Yankees a hometown discount? I don’t think so.) Therefore, if the Yankees want him, they need to be willing to pay ARod $180 million over the next six years. Since they don’t want to lose the Rangers’ money, they need to extend ARod’s current contract to six seasons, paying him $30 million per season for the second three years and giving him a $15 million bonus to bring the net pay for first three seasons up from $25 million per season to $30 million per season.

B*) extend current contract with Yankees by three years, plus equalizing bonus
Yankees: $144 million ($24 mil per)
Rangers: $36 million ($12 mil per)
Other: none
ARod: $180 million ($30 mil per)

If ARod wants to play for the Yankees, he’ll take this deal. If not, he’ll opt out and sign for the same money with another team. If equal money means ARod will play elsewhere, but extra money will keep him in New York, the Yankees could bump up his pay even more (say, by $15 million total) and still end up paying less than $30 per year, thanks to Texas.

B**) extend current Yankee contract by three years, plus equalizing bonus, plus big-money bonus
Yankees: $159 million ($26.5 mil per)
Rangers: $36 million ($12 mil per)
Other: none
ARod: $195 million ($32.5 mil per)

Now, there’s one player in all of this that hasn’t yet gotten their say — the Texas Rangers. Unless ARod opts out of his contract, they’ll pay him $36 million over the next three years. Now, if they think the Yankees will convince ARod to extend his contract, the Rangers should try to offer ARod some cash to opt out (assuming that’s legal). If the Rangers can match the big-money bonus the Yankees offer ARod and he would rather play elsewhere for the same money, the Rangers save money — like this:

D*) opt out and sign for six years with another team, plus big-money bonus from Texas
Yankees: none
Rangers: $15 million ($5 mil per
Other: $180 million ($30 mil per)
ARod: $195 million ($32.5 mil per)

To me, that’s pretty interesting. If you assume ARod can sign for $30 million per season, Scott Boras could be able to negotiate him into making $32.5 million per season.

What do I think will happen?
50% — ARod opts out and signs longer contract with a non-Yankee team
35% — ARod plays out contract as-is with Yankees
15% — ARod extends contract with Yankees

Obviously the Yankees would prefer ARod plays out his current contract — for what they’re paying him it’s a steal — but I think it’s likely ARod will want more guaranteed money. If he does, my guess is that Brian Cashman would prefer to spend $200 million elsewhere, especially considering The Boss’ health has given Cashman greater freedom to embrace younger players — Hughes, Melky, and Betemit for example. Hello, Anaheim?

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This entry was posted on Tuesday, August 21st, 2007 at 11:08 am and is filed under Baseball. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.