Is A-Rod's Contract a Good Deal for the Yankees?

by Mike Benjamin Hit King on Nov 28, 2007 11:14 PM PST

This guy certainly seems to think so. I especially liked the idea of a player having a "performance value" as well as "marquee value". Here's a link and the summary:

http://sports.yahoo.com/mlb/news?slug=ys-gennaroarod112707&prov=yhoo&type=lgns

"Combining Rodriguez's value over the life of the contract and considering the economic effect of the new Yankee Stadium set to open in 2009, he is likely to generate approximately $450-million of "value" for the Yankees, according to my analysis of his impact. Assuming the Yankees exceed the luxury-tax threshold in each of the 10 years and trigger the 40 percent luxury tax, the total cost for Rodriguez will come to $427 million."

I would love to see a similar analysis of the Barry Zito contract so that we can quantify exactly how terrible of a contract it is.

This FanPost is reader-generated, and it does not necessarily reflect the views of McCovey Chronicles. If the author uses filler to achieve the minimum word requirement, a moderator may edit the FanPost for his or her own amusement.

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Re: Is A-Rod's Contract a Good Deal for the Yankee

Any legitimate analysis would be Arod vs what the Yankees would otherwise do with the cash, not Arod in a vacuum. If the Yankees could reasonably be expected to find a better way to spend the money, then Arod "added value" in terms of increased winning (which is where most of his economic value will come from) would be negative.

Also, there's the law of diminishing returns. Which is worth more in terms of attendence/ratings/etc: the difference between 85 wins and 90 wins, or the difference between 95 wins and 100 wins? I feel safe in saying the former jump is far more valuable to a team in terms of the bottom line. Additionally, Arod's "Marquee Value" is worth less to the star-studded Yankees than to any other team in baseball. This isn't a Barry Bonds/Giants situation. Arod is not the difference between watchability and futility, and he's not the only significantly above average hitter on the team. What he is is the charry on top of the Sundae, and while the cherry is pretty and draws the eye, it's not the real reason you drop $4 at Baskin Robbins.

Fool me seven times, shame on you. Fool me eight or more times, shame on me.

by Bhaakon on Nov 28, 2007 11:41 PM PST reply actions

Re: Is A-Rod's Contract a Good Deal for the Yankee

Actually, it is somewhat of a Barry Bonds/Giants situation. If you read the whole article, you'll see that much of A-Rod's presumed marquee value comes from revenue derived from his chase for the HR record--the same reason that Bonds' marquee value was so important to the Giants.

Also, since the Yankees have seemingly no payroll constraints, A-Rod's salary is not preventing them from making other investments in players, except for other 3rd basemen. So the only other analysis you'd need to do is something similar for their other options at 3B. I don't know how that would turn out because I haven't done it, but I suspect someone like say, Scott Rolen, would not carry the same NPV as A-Rod.

Rajai Davis: fast.

by Mike Benjamin Hit King on Nov 28, 2007 11:58 PM PST up reply actions

Re: Is A-Rod's Contract a Good Deal for the Yankee

How much extra value would the HR chase have brought to the Giants if the Giants were a playoff team? What extra value is Bonds bringing to the table if the team would sell out (and people would actually use their tickets) without him? Answering my own rhetorical question: significantly less extra value than if the fans would already have bought and used all the tickets to see a winning team.

On a winning team, which is already flush with stars (and will continue to be so), I don't see how Arod is worth all this extra cash. Also, except for the month or so when he's actually challenging the HR record, I don't see how the HR chase is going to have that much impact. As we saw with Bonds, the chase isn't terribly compelling until the player draw within striking distance of the record, and it immediately loses its drawing power once he passes the old leader. And Bonds was, of course, on a woeful team the last several seasons, on a actual good team, I think most of the chase would be overshadowed by team accomplishements.

Fool me seven times, shame on you. Fool me eight or more times, shame on me.

by Bhaakon on Nov 29, 2007 12:22 AM PST up reply actions

Re: Is A-Rod's Contract a Good Deal for the Yankee

I don't think the home-run chase itself really added much intrigue until the very end. Tying all-star tickets to season-tickets probably had a much bigger impact to the bottom line.

This is my signature, not yours.

by Goofus on Nov 29, 2007 10:32 AM PST up reply actions

Re: Is A-Rod's Contract a Good Deal for the Yankee

Whatever, dude. I was totally there for Barry's 572nd homer.

"When Jackson Williams thinks of how many times Madison Bumgarner has tried to kill Tyler Walker..."

by multiphasic on Nov 29, 2007 10:37 AM PST up reply actions

You're underestimating his value.

A-Rod's WARP-3 was 13.7. That means that Rodriguez, by himself, made the difference between the 94-win playoff season the Yankees had, and the .500 team they would have been without him. That makes an enormous difference in the economic terms you laid out.

you will suffer humiliation when the sports team from my area defeats the sports team from your area

by nick @ McCovey Chronicles on Nov 29, 2007 9:16 AM PST up reply actions

Re: You're underestimating his value.

But could the Yankees spend the money they've given him more efficiently? He's not worth 275M if the Yankees could have spread that money around in such a way to add more than 14 W's.

Fool me seven times, shame on you. Fool me eight or more times, shame on me.

by Bhaakon on Nov 29, 2007 11:29 AM PST up reply actions

There are 2 factors to consider

One is dollars per marginal win. The Yankees probably could spend the money more "efficiently".

The other is variance, or risk. The Yankees are not the Marlins, or even the A's or the Twins. For a team like them, variance is not a good thing. ARod is available now. There's no guarantee that there will be players to spend the money on when they want to spend the money. ARod is also a great player now. Not some random great player that might be available, or might become great in the future.

Generally speaking, there is always a tradeoff between efficiency and variance. Teams overpay, sign inefficient contracts, to reduce variance.

by rfloh on Nov 29, 2007 12:02 PM PST up reply actions

Re: There are 2 factors to consider

True, but investing so much money in a single player is inherently more risky than investing it several different players.

Fool me seven times, shame on you. Fool me eight or more times, shame on me.

by Bhaakon on Nov 29, 2007 12:06 PM PST up reply actions

Depends

Depends on who these several different players are: Are they pitchers, pitchers like Carl Pavano and Jaret Wright? Pitchers always come with injury concerns.

Are they just decent players? It's much easier and less risky to project superstars than it it is to project decent players who often tend to be not far away from falling off a cliff.

If you're replacing ARod with some other superstar, who is he? There's the problem of scarcity.

by rfloh on Nov 29, 2007 11:59 PM PST up reply actions

Re: Is A-Rod's Contract a Good Deal for the Yankee

Of course it's good for the Yankees. Great ball player, seems like a nice enough fella, perhaps a little naive especially with some of the people he associates with (Boras), but New York loves this...money is no object.

My question, would they be willing to acquire Zito if they lose out to Boston for Santana?

by Buzzword on Nov 29, 2007 8:07 AM PST reply actions