Just how overpaid is Alex Rodriguez?

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In the aftermath of last month’s Albert Pujols deal, one couldn’t help but constantly see Alex Rodriguez‘s name brought up in connection with the contract, as the dollar amount of Pujols’ contract was the second-highest in history after Alex’s second 10-year pact. Several WAR-based analyses were immediately conducted in an attempt to determine just how good Pujols would have to be justify the length and size of the deal, which led me to wonder just how much A-Rod has actually been worth over the duration of his mega-deals, and what he could be worth over the remainder of the six years he still has on his current Yankee contract.


The Angels will be heartened to know that Alex lived up to his contract and then some during its first three years, providing $72.3 million of value to Texas while being paid $66 million. Unfortunately for the Rangers, despite all of that value the remainder of the roster was largely ineffective, as the team finished in last place in the AL West in each of those three seasons.

Determined to rid themselves of Alex’s albatross of a contract, the Rangers first tried to trade A-Rod to the Red Sox in December 2003, only to have the MLBPA step in and put the kibosh on the deal as Alex was willing to take a pay cut to get the deal done. Two months later they found a match with the Yankees, who flipped strikeout-prone Alfonso Soriano and Joaquin Arias for a 28-year-old A-Rod and $67 million of the $186 million remaining on Alex’s deal.

From 2004-2007, the Yankees paid Alex approximately $16 million a year, or $64 million, and got $107.9 million of value out of him, good for a $43.9 million surplus. Even when you factor in the portion of his salary that Texas paid Alex still proved to be worth the money through the first seven years of his deal, putting up $180.2 million in value against $168 million in salary.

Of course, rather then rest on the fact that they nearly doubled the value of their investment during four of the best years of his (or anyone’s) career, the Yankees (not Brian Cashman) re-signed Alex after he famously opted out during the 2007 World Series to another 10-year deal that would keep him in pinstripes through his Age 42 season.

While I am an unabashed A-Rod fan, and am happy he’s still on the team not to mention the fact that they probably don’t win the 2009 World Series without him, it’d be an understatement to say his second deal hasn’t worked out nearly as neatly for the Yankees as his first contract. Through the first four years of the new deal, Alex has been paid $126 million and been worth “only” $81.8 million. It seems weird to decry a player who’s averaged more than $20 million in value during his last four seasons, and we can thank Hank Steinbrenner for that. The good news is that Alex’s $44.2 million deficit is a wash due to the $43.9 million in surplus value the Yankees got out of him during the first four years. Almost.

The bad news is that Alex is still under contract for six more seasons, and if history has taught us anything it’s that time is most unkind to aging ballplayers. On the one hand, one could argue that Alex is a special case, and his preternatural ability to be amazing at baseball will withstand the test of time. Baseball-Reference’s Similarity Scores would seem to support this idea, as Alex’s top comps through Age 35 are Hank Aaron (hit .298/.385/.574 in his Age 36 season), Mel Ott (.308/.411/.499), Frank Robinson (.251/.353/.442) and Willie Mays (.263/.334/.453). That’s some good company, although you’d hope Alex’s Age 36 season is closer to the former two than the latter two.

On the other hand, if Alex the ballplayer does indeed age like everyone else, and we apply a fairly standard -0.5 WAR annual penalty to his performances going forward and assume a continued valuation of roughly $4.5 million per win on the open market (which could of course fluctuate), he would finish out the final six years of his contract providing $66.3 million in value while being paid $149 million. This would give us a total of $148.1 million of value against $275 million in salary over 10 years, or a loss of $126.9 million.

If you want to factor in the $43.9M surplus from the first contract (which includes the $38M from the Rangers), then ultimately one could say the Yankees may end up having overpaid A-Rod by $83 million for his services after all is said and done, but of course that’s but one scenario.

An even grimmer one than I’ve presented here comes courtesy of The Hardball Times’ Oliver projection system. Now this is far from an apples-to-apples comparison, as THT seems to use its own proprietary WAR calculation (for example, they have 2011 A-Rod at 2.3 WAR, while B-Ref has 2.7), but it has Alex actually having a slightly better overall year in 2012 at 2.5 WAR before a steep decline to 1.8 in 2013, followed by 1.1, 0.3, -0.5 and then -1.2 in the last year of his deal. That would give Alex a total value of 4 WAR (or roughly $18 million) over the final six seasons of his deal, which, yikes.

Now the Oliver forecast appears to be pretty extreme — while I think we can expect Alex’s skills to deteriorate to a certain degree, I don’t know about to the point of providing negative value — although it should also serve as something of a cautionary tale. We saw firsthand how rapidly a once-robust offensive performer can decline with Jorge Posada this past year alone, and though Posada was never consistently an A-Rod-caliber hitter, he did post several seasons that wouldn’t look out of place on the back of Alex’s baseball card. That said, I still feel confident that Alex will at least outperform his seemingly worst case scenario Oliver projections, and I also think he can turn in more than 14.7 WAR over the next six seasons after all is said and done.

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  • your mom

    Ah yes, the gift that keeps on giving.

    • Gonzo

      Herpes?

  • JohnC

    If there is any silver lining to this, its his salary gradually decreases over the last 6 years. The next 3 years are 29,28 and 25. The last 3 years of the contract his salary is 21, 20 and 20 million

    • Pounder

      Albert will be raking in 30 mil in his last season.

  • Jumpin’ Jack Swisher

    This may not end well (thread….well, and contract.)

  • Bronx Byte

    Fortunately, A-Rod’s contract was front loaded.

    08:$27M, 09:$32M, 10:$32M, 11:$31M, 12:$29M, 13:$28M, 14:$25M, 15:$21M, 16:$20M, 17:$20M

    • http://www.twitter.com/matt__harris Matt :: Sec110

      yes, good thing we will only be paying him $25M in 2014 when he will require a walker to get out to 3B (if he is even still playing the field).

    • Need Pitching

      unfortunately, all years count the same for luxury tax purposes (if the Yankees ever really do decide to try to get under the threshold), and he’s likely to earn at least 2 of his 6M HR bonuses over the rest of the contract

  • Jose M. Vazquez..

    I doubt the Yankees will test those waters again (ten year contracts). I have often wondered what would have happened in 2007 if the Yankees had traded for Miguel Cabrera as they were presumably thinking after Arod’s optout. This could have led to not signing Teix as Cabrera wound up as a first baseman instead of at third. But that is water under the bridge. My desire is that Arod do well in those six years if not what he used to be, at least a productive hitter and fielder.

    • CJ

      Miguel Cabrera, as great as he is with the bat, doesn’t have that star power marketing advantage of ARod/Pujols.

      • Sweet Dick Willie

        Championships are the best marketing power.

        • CJ

          Continuously being in the hunt for championships is more valuable (revenue generating) than 7 game outcome. Thats 162 games of TV ratings, and 81 home games of revenue. St Louis is an interesting test case measuring advertising merchandising revenue after winning WS and losing Pujols. St Louis is still probably the best pure baseball city in the country so it may be hard to use them as a standard rule of thumb.

          • http://www.twitter.com/matt__harris Matt :: Sec110

            you really think the dropoff would be that drastic Miggy vs ARod?

            • CJ

              I do in terms of brand revenue generated. Especially with YES start up through 2009 and the HR numbers moving forward. Even those who are going to say record is tainted, people outside the hardcore baseball fans will flock to the Stadium and TV and go crazy for it.

    • Dan

      There also is the question of how Cabrera would have handled playing in NY? He has had numerous off-field problems and legal issues in Detroit, it’s not a stretch to think that it might have been much worse in NY. Arod even with his marital issues and gambling, has never had domestic violence or drunk driving issues like Cabrera. The steroids allegations could create a Barry Bonds type legal issue, but the pressure and atmosphere of playing in NYC might have cause Cabrera to spiral further out of control.

      • http://www.riveraveblues.com Mike Axisa

        Or he might have never had those problems because more attention was being paid to him. We have no idea how it would have turned out, it’s the great what if.

        I believe that great players will be great everywhere though, regardless of city, stadium, distractions, the whole nine. Chances are Cabrera would have been great.

  • Steve (different one)

    Yes, baked into the whole idea of Pujols’ contract is the idea that Pujols is simply a better player than A-Rod. Which he is. But that is kindof irrelevant. The question is if 2011 Pujols is better than 2007 A-Rod. A-rod’s contract is absurd, but at least he got that contract coming off an an insane season, maybe his best ever. Pujols is coming off his worst but is being paid as if 2011 didn’t happen.

    It will be interesting to see it play out, but I would not bet on the second half of that deal looking any better than A-Rod’s.

    • Jose M. Vazquez..

      Arod at his best, playing short, was better tan Pujols at his best, no doubt about it.

  • CJ

    Fun reading, interesting analysis!

    “The good news is that Alex’s $44.2 million deficit is a wash due to the $43.9 million in surplus value the Yankees got out of him during the first four years.”

    I didn’t realize ARod has provided fair value in performance/salary in his time with Yanks.
    How can his marketing value possibly be measured? In terms of YES network ratings, merchandise, ticket sales leading to new stadium? Even for those who overvalue/undervalue marketing it is clear he has generated tons of revenue.
    I think this is why the Angels signed Pujols. Even when his performance declines at the end of contract, the Angels are sure to have capitalized on their investment. Arte Moreno made his money in marketing and investments.

  • mike

    The key to the future scenario is Alex remaining healthy – even if his numbers and performacne slip a bit, he will undoubtedly be better than the next/backup option on the roster.

  • CJ

    After ARod and Pujols, what other players are at the next level of revenue producing star power beyond statistical performance?

    Jeter, Ichiro, Mauer, Lincecum…??

    • http://www.mystiqueandaura.com/ JMK

      Nyjer Morgan.

    • Artie DeVanzo

      Babe Ruth

    • Jon Targaryen

      Jeter is a level above A-Rod. He provides the same star power at a lower level of performance.

  • Eric

    If you were an agent like Scott Boras, you would claim that Alex also adds to the franchise value of the Yankees. How much less would the Yankees be worth if they had not won the World Series in 2009 (presuming they would not have done so without Alex), and how much less might they be worth in the future if Alex isn’t breaking home run records in a Yankee uniform?

    • CJ

      I think you are right, not only Boras. Also, the value of the team if they sold it would be worth more because of YES ratings growing during ARODs years. Hardcore fans watch games anyway so we don’t appreciate how many people are drawn in by a single star player. The teams do know.

    • Rich in NJ

      The problem with that analysis is that Alex could provide whatever value he is able to offer in much shorter contractual increments. It’s not like the Yankees haven’t flourished (and won’t continue to do so) without him.

      So protecting the franchise against a precipitous decline by A-Rod has to be a countervailing consideration in any hypothetical negotiations.

      As it is, he is less likely to break Bonds’s HR record due to how many games he has already missed.

      • CJ

        ARod and Pujols are different players, different situations. These contracts are like making of a partner in a law firm. Those contracts are making them almost a team partner during their career.

        • Rich in NJ

          Lawyers usually make partner in their mid- to late-30s. That gives the firm about 30 years of productive service. Giving a ten year contract to a player in even his early 30s seems like a much less sound bet on productive longevity.

          So I really don’t see the analogy.

          Now, if you’re talking about giving a ten year contract to a 27 year old star, as Jeter was, then I get it.

          • CJ

            Different career span and revenue generation. It’s almost exponential.

      • Eric

        Unless he wouldn’t have signed with the Yankees for a shorter contractual increment.

        Plus, when the Yankees signed him, they fully expected him to break Bonds record toward the end of his contract, which would not happen with a shorter contract.

  • CJ

    We saw first hand how many Japanese fans came to the stadium to see Hideki Matsui. Between Matsui’s performance, the 2009 WS and the Japanese following, the Yanks made a fortune off of him.

    • http://www.riveraveblues.com Mike Axisa

      The amount of money Matsui brought the Yankees is wildly overestimated. They were selling out the stadium anyway, and they were having no trouble selling ad space. All the merchandising money made in Japan goes to all 30 teams, the Yankees only get it if they buy the stuff in their stadium.

      http://riveraveblues.com/2009/.....sui-21485/

      They made money off him, but they didn’t exactly pay for himself.

      • CJ

        I remember that argument but I have a hard time buying it. Sure, the Yanks didn’t have a hard time selling ad space but the Japanese newspaper in the outfield? That is spin from a public relations point of view.

        Not to mention how many Japanese fans we actually saw in the stadium.
        Add the fact that he had a fair contract and was a good player (better than his stats) WS MVP, he payed for himself for sure.

      • CJ

        What about ratings on YES network in US by Japanese fans? That wouldn’t go to 30 teams.
        Also, were the games in Japan broad cast on YES? If so, that’s how they could filter revenue generated by Matsui through YES to Yanks. Even stateside Japanese national cable viewers of YES on the west coast would have generated substantial ratings to revenue.

        • http://www.riveraveblues.com Mike Axisa

          I’m almost certain there’s no YES in Japan. It’s MLB.tv or bust (or illegal online feed).

          • CJ

            I thought they could watch 162 games in Japan. With satellite broadcasting it’s not much of a stretch. Probably used a YES video feed, had Japanese media every night. I don’t know how MLB worked out the revenue but I’m pretty sure they could get every Yankees game in Japan.

    • Rich in NJ

      I have seen this claim made before (and it may well be true), however, I have never seen a credible accounting of the revenue streams.

      But it seems to me that if it’s true, the Yankees would have made a stronger effort to acquire another Japanese star (so not Igawa) as it became apparent that Matsui was declining.

      • CJ

        We will never see a credible accounting of revenue. Either will the MLB players association for that matter.

        “if it’s true, the Yankees would have made a stronger effort to acquire another Japanese star”
        This is a good point but Matsui had huge star power in Japan, that ‘rock star” status. He was bigger than Ichiro. Still, the player has to be good enough to stick and do well, it cant just be any Japanese player. Even Yu Darvish will on be in 30-something games as opposed to 162 of Ichiro and Matsui. That would have a big impact on TV viewers tuning in each day vs once every 5

    • Foghorn Leghorn

      everyone wanted a piece of that big porn stash

  • Steve (different one)

    The only other point I would make is that this contract was signed before we knew A-Rod took steroids. In retrospect it seems incredibly obvious, but I remember being shocked at the time (which also marks the last time I was ever shocked by something like this).

    In other words, if the Yankees knew, they would not have given him this contract. So much of the negotiation was tied to owning the HR record. But how much of that marketing opportunity flew out the window upon his steroid admission? Maybe not all of it, but I have to think a big chunk of it.

    • I am not the droids you’re looking for…

      What’s bizarre to me is that after the Giambi steroids flap, and all the hoopla surrounding the question about whether or not his steroids admission was enough to void his contract (due to what i recall was something like a conduct clause) I can’t help but wonder if the Yanks didn’t at least try to get stronger anti-ped language into the A-Rod contract. Even if it were only to see whether or not he’d push back…

  • CJ

    I dont mean to start any controversy of finance and economics but I think it’s worth noting that ARods contract after opt out involved representation from Goldman Sachs. There is an “investment” quality to ARod

    I think that goes with Pujols as well. Angels can’t sign Pujols and finish in 3rd or last place like Texas did with ARod. Angels make sure of that by signing CJ wilson right away. Winning plus the star power in a large market with a TV network is the key.

  • Total

    Wait, you mean when the team has more leverage the player is underpaid and when the player has leverage the player is overpaid?

    The Yankees have, to this point, broken even on what they’ve paid A-Rod. That’s quite remarkable.

    (Also, I call shennanigans on the idea that each WAR should be considered the same value. There are lots of 1 WAR players. There aren’t a lot of 9 WAR players, so why is that ninth WAR priced the same?)

    • http://www.riveraveblues.com Mike Axisa

      (Also, I call shennanigans on the idea that each WAR should be considered the same value. There are lots of 1 WAR players. There aren’t a lot of 9 WAR players, so why is that ninth WAR priced the same?)

      Exactly, $/WAR is not linear.

    • thenamestsam

      Evidence suggests that teams actually do treat it linearly.

      http://www.fangraphs.com/blogs.....win-again/

      • I am not the droids you’re looking for…

        That doesn’t make it the correct approach.

        • thenamestsam

          Absolutely. I tend to agree that it shouldn’t be linear. But there are reasons to think it might be, and teams certainly seem to act that way.

  • Foghorn Leghorn

    The headline made me think of Gene Rayburn. Alex Rodriguez is so overpaid. HOW OVERPAID IS HE????

    you younguns will have to google Gene Rayburn to get this post. Of course you’re probably wondering who Foghorn Leghorn is.

    • Slugger27

      funny you say that, i had no idea who either were. after looking up who they were, i dont feel bad at all for not knowing.

      • Slugger27

        and i still dont get the post…

        • Foghorn Leghorn

          don’t feel bad…however, Rayburn’s gameshow was a classic…very good comedy.

    • John Ya Ya

      He’s so overpaid, when he went to the bank the teller had a blank.

  • Carson

    That’s only taking baseball value into account and A-Rod was signed for corporate value too. 2009 WS netted the Yankees in excess of $50M that may not have been realized without A-Rod. He’s also brought corporate sponsors to the team and raised the value of YES Network.

  • vin

    The key in all this is that WAR is a counting stat. If Alex can stay reasonably healthy, then the contract won’t sting nearly as much. I’m working on two assumptions…
    1) he’s still a talented player (even at age 35)
    2) subsequently, he’s got a longer way to fall then a lesser player.

    If you factor out his 2011 production over the course of 145 games (more than he played, obviously, but not an outrageous number), he was a 6 win player, and a 4 win player in 2010, and a 5 win player in 2009.

    Will he be overpaid? Almost certainly. But if he can avoid the prolonged absences from the lineup, I’m willing to bet he will still be a productive member of the lineup for probably the next 4 years. Years 9 and 10 of the contract will almost certainly be painful, but we all knew that going in.

  • Total

    Evidence suggests that teams actually do treat it linearly.

    Teams also like the sacrifice bunt. Does that mean we should evaluate A-Rod on how good a bunter he is? Teams used not to like people who drew walks. Should we discount A-Rod’s walk totals?

  • Monteroisdinero

    Of course, it all gets back to Montero. He has to catch enough these next 5-6 years to give Alex some DH time. Assuming both bats are indispensable, Montero’s because it truly is and ARod’s 40-42 year old version because we can’t pay zillions to a guy to NOT play.

    How many games a season can a 38-42 year old ARod realistically play at 3B?

  • Foghorn Leghorn

    I wonder how things would’ve turned out if Arod landed on the Sox. Arod became the whipping boy for the Sox. He probably would’ve mashed that monster all to hell and they’d be singing his praises only to come to hate him a few years later like they do all their good players.

  • thenamestsam

    As much as it pains me to say it I don’t actually think that Oliver forecast is that extreme. You say you’re not sure about projecting him for negative values, but assuming he is forced to DH at some point I think it could happen fairly easily. I don’t think it’s too controversial to say I expect him to be a DH by 2016 or 2017. The move from 3rd base is going to cost him a lot. This year he had 11.2 RAR for defense and position combined. Move him to DH and that number is going to look more like -10 to -15 depending on playing time. That slices 2 and a half wins off is value right there. So his absolute upside as a DH if he could keep hitting the way he has the last two years would be something like 1.6 or 1.7 WAR.

    To get from there to negative value would mean his wOBA deteriorating from about .360 to closer to .300. I don’t think that’s a foregone conclusion, and as one of the best players of all time I wouldn’t be shocked if he held up much better than expected but we’re talking about 5+ years out for a 36 year old. Anticipating a 60 point decline in wOBA isn’t all that aggressive in my mind and certainly doesn’t represent a worst case scenario.

  • RkyMtnYank

    My calculations were a bit different. AT $275mil for 10yrs I have Arod over paid by about $265mil. But those calculations apply to all of baseball.

  • craig

    I am confused…in 2002 he accounted for 10 WAR, which should be $45 million in value, but it is listed as only $25.9 million.

    Can anyone help me with this?

    • Larry Koestler

      I took the 2002-2011 Value amounts from his Fangraphs page. Per the Fangraphs data, the value of a marginal win in 2002 was ~$2.59 million, not the ~$4.5 it is today.

      • piratechef

        Does Fangraphs take into account ticket sales, jerseys and other memorabilia into account when they calculate “value”?

        I highly doubt it.

        Still not a great contract, but you can’t assess the idea of value without looking at the big picture.

        • Plank

          Winning affects ticket sales. Washed up veterans don’t. If they did, the 90s Devil Rays would have sold out every night.

          Merchandise sales are pooled among all 30 teams.

          If you want to make an argument that adding additional wins at the cusp of making the playoffs would effect how teams value a player, that’s fair.

          • Evan3457

            Nothing affects Rays’ ticket sales. Winning the last 4 years didn’t budge the needle much. They didn’t even sell out for the two ALDS games there this year, after one of the greatest regular season comebacks of all time.

  • craig

    Thanks Larry.

    Interesting read, as well.

  • piratechef

    If players were only paid for what they produce on the field you would have a point….. Don’t get me wrong; it’s still an outrageous contract, but some ballplayers today get paid for more than hitting home runs. It’s not solely about production, but includes how much money they can make their employer. When Alex came on board attendance soared by about 1M asses in the seats. Now we don’t know what attendance would be like since 2004 without him, but it’s safe to assume it wouldn’t have been where it’s at.

    Like it or not, it’s more than numbers on a baseball card.

    • Plank

      I think attendance would be higher in 2012 if they had Aramis Ramirez at 3B and Darvish or Wilson in the rotation than they will with the current roster.

      • Andrew518

        I really am not convinced that Alex was that big of a factor in drawing fans. I would think that the renewal of the Sox rivalry/last few years of old stadium were much larger determining factors.

  • Plank

    Thank you for writing this.

    Just one question. I know the idea of dropping .5 WAR/year as a quick and dirty tool, but wouldn’t that decline get steeper past 40?

  • http://riveraveblues.com Okyankee24

    If Borass had not convinced Arod to opt out when would that Ranger contract have expired? I’m sure he could be had for lesser money at the end of it and the money not already obligated to him could have been put in the Lee pot.

  • forensic

    A-Rod’s first contract has nothing to do with the Pujols contract other than that they were 10 year contracts. He was going into his age 25 season, which is completely different than Pujols, so there is no way that should hearten the Angels.

    The second contract is a somewhat better comparison as they were both entering their age 32 seasons, but you barely mentioned or totally left out several things. One, A-Rod was coming off the best year of his career while Pujols is coming off the worst year of his career. Two, A-Rod had room to move down on the defensive spectrum (though not anymore with Tex at 1B) while Pujols didn’t (other than DH for both obviously). Three, though it may not be steep for a player of his caliber, there may be a bit of a learning curve for a new League for Pujols (even though his interleague numbers are crazy good), while there wasn’t for A-Rod. He also needs to acclimate himself to a new city and franchise, and one in a very large city too, which some people have speculated may be somewhat difficult for him as he’s used to smaller St. Louis and be able to do no wrong in that city. While A-Rod certainly had pressure mounting from some of his playoff appearances, he was at least settled into the city and somewhat used to what was happening to him. And lastly, A-Rod’s contract was front-loaded while Pujols’ contract is back-loaded. At least it’s a small victory that they’re not going to be paying A-Rod $30 million at age 40 and beyond like the Angels will be doing with Pujols.

    This doesn’t even mention the long-standing rumors of age issues with Pujols and the possibility of his arm injuries increasing further (as A-Rod’s leg/hip injuries have increased with age) or suddenly going out requiring major surgery.

    Neither contract was probably smart to do overall, but I think at the time A-Rod had far fewer red flags or issues to consider than Pujols.

  • he is a yankee doodle!

    so extremely overrated, overpaid and nothing else! how can arod keep earning so much when his performance doesnt even begin to stack up to warrant this kind of money!! the mans only tabloid fodder gives baseball a bad name! hurray up and retire and be the male hoe you were born to be! the sooner he exists out the more money for more deserving stars!!