Buying out A-Rod

Late last week, word spread that the Giants would “consider” buying Barry Zito out of the final three years and $64.5M left on his contract. It all turned out to be nothing but speculation, and the team has repeatedly denied the report. It doesn’t make a lick of sense for them either; Zito’s overpaid but not useless. Guys that you can pencil in for at least 180 IP with a FIP in the mid-4.00’s have value, especially when your rotation is a bunch of 20-somethings coming off career high workloads following a World Series run. Anyway, hearing that stuff made me think about the Yankees’ own albatross contract, the one belonging to Alex Rodriguez.

As many of you may know, I’m also a pretty big hockey fan, and unlike MLB, the NHL has a system in place that allows a team to buy out a player’s contract. It’s complicated and I won’t bore you with the gory details, but the general idea is that the player gets two-thirds of the money spread out over twice the years. There’s salary cap ramifications and all that, plus the actual year-to-year distribution of the cash is a little tricky, but the general idea is two-thirds the money, twice the years. If you want to read more about the process, check out the Understanding The Cap page at Blue Seat Blogs.

I wanted to have a little fun, so I applied the NHL buyout rules to the remainder of Alex Rodriguez’s contract. We’re a little too late in the game to buy out the 2011 season, so let’s just assume that this would occur next offseason. At that point, Alex will have six years and $143M left on his deal (yikes), so we’re converting it to 12 years and $95.3M. Here’s the breakdown of the annual payouts and savings, so make sure you click the graph for a larger view…

If the Yankees were to buy out Alex as per the NHL rules in my completely hypothetical situation, it would clearly be a trade of long-term pain for short-term gain. The team would save upwards of $20M in both 2012 and 2013, plus another $14M in 2014 before single-digit savings in each of the next three seasons. That brings us to when the contract is supposed to expire, but per the terms of the buyout, the Yankees would still have to pay A-Rod close to $8M a year for the next six seasons. That’s chump change for the Yanks, but $8M is still $8M.

So with Alex bought out, what would the Yankees do at the hot corner? I suppose they could always give Brandon Laird a shot, but that’s pretty much it for the in-house candidates. There aren’t many third baseman on the free agent market next offseason, with Bill Hall representing the only option that jumps out as affordable and reasonably productive. The Yankees aren’t going to buy out A-Rod only to sign Aramis Ramirez (another older and declining third baseman) to a big contract, so that rules him out.

The smart move would probably involve sliding Derek Jeter over to third and finding a new shortstop. That would open the door for Jose Reyes or J.J. Hardy, two guys scheduled to hit the open market after the season. The end result would be a younger team, certainly, but probably one lacking a big bat in the middle of the lineup, something A-Rod still provides at his age.

Would I do it? Eh, probably not. I guess it really depends on how Alex looks in 2011. If he has a big rebound year, say .290/.380/.530 with 35 homers or so, then I’d keep him. If he continues his slide and puts up something like .250/.335/.475 with 25 homers, I’d probably buy him out and take the savings. What about you?