Over the past few days, we have heard from every corner of the media how Alex Rodriguez, in what has become "the story that writes itself", has made another shameless money-grab, the push for every last dollar with no regard for his teammates, fans, or legacy. Given the facts, it is hard to disagree with this portrayal, even if Alex is taking a disproportional amount of criticism for a decision that is fairly commonplace in the world of multi-million dollar sports contracts.
However, now that the dust has started to settle, I started thinking about this with less emotion and more reason and I have come up with another possible angle: the Yankees simply let Alex go. That's right. The Yankees had no intention of ever re-signing Alex Rodriguez for the type of money the market would demand they pay him.
Now, there are obvious questions here: why would the Yankees allow their best hitter (and main right handed power threat) to simply walk away? Why would they possibly open the door for Alex Rodriguez to sign with their fiercest rival, thereby causing a huge shift in the balance of power in the AL East for the next 5 years? Why?
To begin to understand this situation fully, we have to think back to the winter of 2004 when the Yankees first agreed to trade for Alex Rodriguez. At the time, the market for large free agent contracts looked a lot different than it does now. The huge mega-deals that were signed in 2000-2001 were several years old, and many of them were not looking so great. The Red Sox put Manny Ramirez on irrevocable waivers in an attempt to shed the contract that seemed onerous at the time. The previous year, the Colorado Rockies sent a large amount of money to be rid of Mike Hampton. And the Rangers looked desperate to get rid of Alex Rodriguez, who by all accounts, had completely held up his share of the bargain during the first 3 years of his contract by putting up jaw dropping numbers in every season.
That same year, Miguel Tejada, 1 year removed from an MVP season, signed a 6 year $72M deal, while Vladimir Guerrero signed a 5 year, $70M deal. These are nice contracts, no doubt, but for 2 superstars entering their prime years, these deals were a far cry from the contracts handed out to players like Ramirez, Derek Jeter, Hampton, Jason Giambi, and of course, Alex Rodriguez, just a few years earlier. Salaries seemed to be pulling back.
It was in this environment that the New York Yankees traded for Alex Rodriguez. It seems reasonable, if we transport ourselves back 3 years before Barry Zito, Carlos Lee, and Alfonso Soriano signed their latest contracts, to think that the Yankees did not consider the opt out clause written into Alex Rodriguez's contract to have a high probability of ever coming into play. If superstars like Vlad were signing for $14M per year, who was going to pay a 32 year old Alex Rodriguez an amount that would cause him to test the market and forego the last 3 years of his record setting contract? The Yankees, with the subsidy from Texas, believed they were trading for 7 years of Alex Rodriguez at about $17M per year. It was a tremendous trade for Brian Ca$hmoney and the Yankees.
But how things change. After a period of moderate salary pullback, the sport is now awash in money. Attendance is booming all around baseball, lucrative broadcasting deals are filling owners' pockets with cash, and even MLB.com has turned into a cash cow for baseball. Owners are flush and seem willing to spend the money on players again. In other words, the environment has shifted so dramatically in just a few years that there is now an environment in which it makes sense for Alex Rodriguez to opt out of his contract and get a brand new contract that would possibly run through his age 40 season at annual prices rumored to be in the $30M range.
This is where my theory comes into play: is it possible the Yankees looked at paying $30M to a 38-39 year old player and simply said "no way"?
Under the original contract, the Yankees were on the hook for Alex's age 33, 34, and 35 seasons. I would imagine that Brian Ca$hmoney and the Yankees would be willing to keep Alex for the next three seasons even if they were not getting the Texas subsidy. It is the out years that may have given them serious pause. In recent years, the Yankees have shown a willingness to overpay in dollars for the flexibility of avoiding longer term deals (Damon, Pettitte, Clemens, the Abreu trade). It is a sound strategy that tries to avoid saddling your roster with unmovable contracts after the players' performance has declined. The same principle applies here: how likely is it that a 38 year old Alex Rodriguez, now possibly playing 1B or DH, will be worth $30M as a player? It is probably very unlikely.
To me, this is a more logical explanation than the one offered by the Yankee brass: i.e. that it no longer made sense to negotiate with Alex once the Texas subsidy was gone. If the Yankees truly wanted Alex Rodriguez to remain a Yankee, this stance makes little sense. The Yankees need Alex Rodriguez next year more than Alex Rodriguez needs the Yankees. They have a huge hole in the middle of their lefty heavy lineup. They have a vacancy at 3B with no logical internal candidate to fill it. They are the richest team in the largest market set to open a new stadium in one year. The marriage of the New York Yankees with baseball's best player is a logical and natural one. Does it make sense that the Yankees would let a player they really wanted get away because of $21M over a 7-8 year contract? That $21M is $5M less than the team threw away on Kei Igawa's posting fee. Kei Igawa was a complete unknown, yet spending an additional $21M on the best player in baseball is a dealbreaker?
I am not sure I believe that. It seems more likely to me that the Yankees have known for quite a while (perhaps as far back as the Betemit trade) that Alex Rodriguez would opt out of his contract. It didn't take a genius to look at the season he was having and see that he stood to make a huge sum of money by opting out after the season. From Alex's perspective, opting out was the logical choice and his contractual right. Unless the Yankees were prepared to offer him an extension that would undoubtedly blow any other possible offer out of the water, what did Alex stand to gain by not opting out and starting a bidding war? And by making it a requirement that Alex only negotiate with the Yankees, the Yankees were trying to prevent Alex from establishing his true market value the only way possible (without tampering): by placing his services on the open market. The Yankees probably knew this would be a non-starter for a Scott Boras client, who holds his clients' right to free agency as sacrosanct. Rule 1 in the Scott Boras playbook: get your client to free agency as quickly as possible.
But what about the rumored offer the Yankees were preparing, the 5 year $150M extension? Well, the key word in there is "rumored". The Yankees never actually made an offer. Is it possible this offer was leaked to make Alex look like the greedy villain? If so, it certainly worked. Why did they wait so long to request a meeting? The Yankees have known every detail of the Alex Rodriguez opt-out saga since before the season even started.
Additionally, there is one further angle that no one seems to be talking about: the escalators that Alex Rodriguez already had built into his current contract. According to mlb4u.com, the details read as follows: "he has a guaranteed salary increase for 2009 and 2010 by the higher of the following: $5M or $1M greater than average annual value of the position player w/ highest annual average salary". This is how I interpret that language: Alex was set to earn $32M in 2009 and $37M in 2010 under his current contract. Once he opts out, those raises go away. If the Yankees believe, as their rumored extension "offer" would imply, that Alex's market value is about $30M per year, then opting out of those escalator clauses offsets a lot of the lost money from Texas.
Compare these scenarios:
1. Under the rumored extension, Alex would make $27M in 2008, $32M in 2009, $37M in 2010, then $30M from 2011-2015. Less the $21M from Texas is $225M.
2. After opting out, the Yankees could offer Alex an 8 year $28M contract, for a total of $224M.
Now, $28M is not $30M, but we sure are getting a lot closer to the framework of a deal, aren't we? Close enough where it certainly makes a lot of sense for the Yankees to still be at the negotiating table, doesn't it? If the Yankees were willing to budget $225M on A-Rod, then they should STILL be willing to go to the table with an 8 year $28M per year offer. Maybe that's good enough and maybe it isn't, but they should still be involved in the process. The only reason they wouldn't be is if they never had any intention of offering that extension.
Of course, there still exists the very strong possibility that Boras already has an offer in hand for more than $30M per year. If that is the case, then this theory falls apart. It would mean that Boras looked at the extension and knew that Alex would beat those numbers by a considerable sum. If that happens, I will not fault the Yankees for holding their line. There also exists the very strong possibility that Alex simply has had enough of New York and the suffocating New York media. If that is the case, then he will probably sign somewhere in California for an amount less than $30M per year. If that happens, then the Yankees really had no chance to re-sign him anyway. Finally, there is the possibility that the Yankees really believed that their high stakes game of chicken would work on Boras, and they completely misread the situation. A good sign that this has happened would be if Alex signs with the Red Sox, Phillies, or Mets for less than $30M per year. All of these are possibilities that would disprove my theory.
So what really happened? We'll never really know, but it won't be until we see where he does sign and for how much that we'll have any further insight. What we do know is this: the new Yankee ownership and Brian Ca$hmoney are not afraid to make potentially unpopular decisions. Though it may hurt in the short run, I believe it bodes well for the future of the team.