How far will the Yankees go for Cliff Lee?

We’re still waiting for the Yankees to officially offer Cliff Lee a contract. That might not come for a few weeks now — as Joel Sherman notes in his latest column, the Yankees are privy to the planned bidding war for Lee’s services. This could lead the Yankees to take the opposite approach as they took with CC Sabathia two years ago. Whereas then they made a huge initial offer, here we could see them come in with their monster offer a bit later in the process. How large an offer will they make? Sherman gives us a hint.

Rangers officials, however, have told friends in the industry that they assume the Yankees will go to a place financially — specifically in years offered — that Texas probably cannot follow. The Rangers might be able to afford it, but unlike the uber-rich Yankees, they cannot absorb it on the payroll if Lee’s performance declines steeply because of age and/or injury.

(But…but…the income tax!)

That the Rangers can even afford Lee for one year is a fairly recent development. When they traded for him in July they needed Seattle to kick in $2.5 million of the $4.2 million remaining on Lee’s $9 million contract. The Rangers were working through bankruptcy proceedings at the time, so it was surprising that they were allowed to take on payroll, period. But MLB made an exception. Then, in September, the team signed a new TV deal that would pay out $3 billion over 20 years. That supposedly set up the Rangers to increase payroll and retain the players that helped them capture the AL West crown.

That might not actually be the case. As Jayson Stark notes in his latest Rumblings & Grumblings, the Rangers won’t see the full effects of that TV deal for a few years.

One baseball man with knowledge of the Rangers’ massive new TV deal says people are overestimating the impact that contract will have on their ability to bring back Cliff Lee.

For one thing, the new deal doesn’t kick in until 2015, when Lee would be in the fifth season of his next contract.

For another, Rumblings was told, the new Rangers ownership has already used a large chunk of the upcoming TV money, which it collected up front as a signing bonus, to help finance its purchase of the franchise.

And, finally, the Rangers are about to lose their status as a revenue-sharing taker, which was allowing them to collect $8 million to $15 million a year.

So the bottom line is that this TV deal is not going to be worth an extra $80 million a season, as some people have speculated, and will have only minimal impact initially. Which means the Rangers still have to decide if it’s a sane business decision to outbid the Yankees in years and dollars on a player the Yankees seem determined to sign. We wish them luck on that.

Stark’s and Sherman’s stories seem to jibe. The Rangers will certainly benefit from this new TV deal, but perhaps not to the degree that would allow them to spend $20 to $25 million annually on a pitcher — even if that pitcher is Cliff Lee.

We should still expect the Rangers to bid aggressively on Lee, even if they ultimately won’t go to the Yankees’ lengths. This will certainly have an effect on what the Yankees pay — remember that bidding war that Lee and his agent want to enact. The end result could be a five-year, $125 million contract (with a sixth year option, opines Sherman). That’s a ton of money, especially considering the other high-end contracts on the Yankees’ ledger, but it’s probably the figure necessary to land Lee. That, however, does not make it a good idea.

ESPN New York’s Mark Simon recently looked at the 52 pitchers who have signed a deal of four years or longer since 1991-1992 and found that only four produced an ERA+ of 120 or greater for the length of the contract. That’s a bit misleading, of course. There were some pretty horrible pitchers signed to deals of four years or greater. Cliff Lee is quite a bit better than guys such as Jeff Suppan, Chan Ho Park, and Barry Zito. This is the challenge we face when comparing free agents to their predecessors. How can you accurately forecast the outlook for an outlier?

Cliff Lee is clearly in it for the money, and the Yankees have the most of it. That allows them to be a bit reckless where other teams require restraint. The Rangers might want to keep Lee, but they might not be in the best position to do so. We saw what happened the last time the Rangers went out of their way to overpay a player. After their first ever World Series berth, would they be willing to take that same risk again 10 years later?