Must-Click Link: The Birth of an Albatross

March 31, 2013 by Michael Axisa 58 Comments

Alex Rodriguez and his ten-year, $275M contract are a noose tied around the Yankees’ neck as they try to get under the $189M luxury tax threshold in 2014 and beyond, but it’s easy to forget that when the contract was signed, A-Rod was the best player in the world. It was a big blow to the team when he exercised the opt-out clause in his previous contract after 2007 because his bat, fresh of an MVP-winning season, was irreplaceable.

David Waldstein put together a must-read article about birth of that contract, starting from the opt-out clause and right through contract negotiations, which did not include Scott Boras even though he was mandated to supervise talks as his agent. A-Rod met with team ownership and literally apologized for opting out, saying it was Boras’ idea and he never wanted to the leave the Yankees. As I said, it’s a must-read article. Waldstein covers the contract talks, the team’s anger over the opt-out, the contract insurance, basically everything. Check it out.

trr

Happy Easter!
This article lays it all out…..the obsession with star power and lack of foresight was the Yanks downfall….a hard lesson to learn. 5 years….it seems like a lifetime
- dalelama
  
  This turd of a deal was easily recognizable back then as we already had seen enough of Achoke to know we should have let this bum walk. I called it, it was truly a no brainer.
  - Burn Girardi’s Binder
    
    I’m sure both of you losers were saying this same thing during the 2009 Postseason run too…
    
    Hindsight is 20/20 but don’t you dare act like you were against the Yankees retaining A-Rod back in 2007 after his 54 HR MVP season. Give me a break.
    - mike
      
      It wasn’t difficult to foresee a 10 year deal to a 32 year old ending badly. I’m a huge Arod fan and think the public perception of him is insane and without merit, but that deal was terrible at the time.
JW

It’s interesting — Cashman is conspicuously missing from the article. I think it’s well known that he was opposed to re-signing A-Rod once he opted out, right? So I wonder just how active he was in terms of moving forward without A-Rod, whether he lobbied the Steinbrenners, etc., in terms of whether to re-sign A-Rod at all, or in terms of contract length at the time. I guess we’ll probably never know . . .
- I’m not the droids you’re looking for…
  
  Well actually it says he was there in the room.
  
  But I agree that everyone’s individual takes on the situation are the primary thing missing from the article. Would love to know if Cashman tried to keep it to say 7 or 8 years, what other teams were in contention and at what price, etc. This is a great article but for me left me with new questions to replace the old ones.
https://twitter.com/meatface55 Nick

Thanks so much for posting this Mike. Great article
Hoss

It’s time to start investigating the role of the players’ agents in the PED scandal. If there was knowledge of PED use in violation of MLB rules and a fraud was perpetrated in negotiation of contracts, the agents cannot stand behind the CBA. They could be held liable for civil (and possibly criminal) penalties. I’d make Boras #1 on the most wanted list.
- The Real Me (Formerly Chris Pengiucci)
  
  While I’m no legal expert, it seems this would be extremely difficult to prove. If it can be proven, it still seems like just a bit of a stretch legal. I’d be all for it, however, if they could do that.
  - Hoss
    
    You’re right, there is an evidentiary issue, unless a player is willing to testify that an agent knew of (or encouraged) PED use. But a bigger problem now is: Who would want to penalize an agent? Teams? No, because the agent represents other players. Players? Obviously not. The government? Not unless there’s criminal activity. MLB? No, because the MLBPA is their problem, not the agents.
    - Havok9120
      
      That would be inadmissible as hearsay under most circumstances, at least in any criminal procedure. Something else would be required.
- Cool Lester Smooth
  
  Who really cares at this point? What happened, happened.
- nsalem
  
  How about civil penalties for ass clowns repeatedly making stupid comments on the internet,
  - JMK
    
    Sadly, while stupid comments are easy to prove, the enforcement will be hard to come by.
- http://www.penuel-law.com/ Cuso
  
  I actually am an attorney. And I can’t begin to tell you how infuriating it is when people start using legal terms in context that show that they clearly have no idea what they’re talking about. Stop talking about perpetration of fraud and civil penalties. Stop perpetuating ignorance of laypeople by spewing terms on which you don’t have a firm grasp.
http://central crawdaddy

I think Cashman was ready to move on, but those above his pay grade were more interested in doing something for YES than the long-term benefit of the team itself. IMO, it’s all on the Steinbrenner sons, Levine, Trost and their Goldman Sachs partners.
- trr
  
  It certainly reads that way, doesn’t it?
http://www.twitter.com/matt__harris Matt :: Sec110

How true is it that Cashman was close to a deal with the Marlins for Miggy? I think it was supposed to include 2 of our ‘big 3′ young pitchers?
- JMK
  
  Interesting. Have a link?
The Real Me (Formerly Chris Pengiucci)

Reading an article like this leads me to 2 thoughts:

1) Alex Rodriguez seems to be easily manipulated, somewhat naive or unintelligent. Had Boras really moved without Alex’s approval, he should have come out right away and said that, gone to the Yankees and stated that he would play out the rest of his contract.

2) The Yankees must know a lot more about finance than I do (extremely likely) to see how losing the money the Rangers still owed on A-Rod’s contract and re-signing him for many millions more could make financial sense for the team. I was fully in Cashman’s court, believing that without the Texas subsidy, the Yankees should have let A-Rod move on.
- kenthadley
  
  yes, this the same decision makers who now insist on 189, but had so much money that they could create a ridiculous Arod contract and toss away the Rangers piece….so the fans ultimately pay for the idiocy and greed of the braintrust….remember this when you watch Cervelli do his Johnny Bench imitations this year.
- Ruby Rich
  
  1) There is no possible way this happened. I’ve seen A-Rod make comments like this before; he likes to hide and pass blame, and I think we all have come to recognize that. Also, Scott Boras is much smarter than that, and he would never take that risk considering that this was bound to be a very public negotiation. Had he done so, and really moved w/o the most famous player in the game’s approval, he would have decimated his reputation.
  
  2) From Cashman’s point of view(the baseball one) the deal doesn’t make any sense. The execs in the organization took a risk, hoping to grow the Yankee brand to astronomical heights, and it has blown up in their face. It happens, and even so, the Yankees are not really that much worse off than they were when they signed this deal.
tbw

The article misses a few key points, the most glaring omission being the absence of any competing bid from other teams. Whether or not the Yankees could sell themselves on the idea of paying ARod 300 million, the fact is that no one else was going to come close to 200. The contract is an albatross by another degree of magnitude because Hank didn’t use his leverage drive down the cost in dollars and years.
- Andrew Brotherton
  
  I think that is kind of ridiculous to think that other teams wouldn’t have offered 200 million plus for the best player on the planet if he was on the market.
  - tbw
    
    The articles at the time indicated that the Braves, Dodgers, Angels, and other teams with the means to sign him either were not interested because they had a competent third baseman or were not within 100 million of the ultimate number.
- viridiana
  
  Was just going to make this point when I saw the on-target tbw post. Article is flawed because it never really tackles question of why Yankees felt compelled to pay what was way way beyond apparent market value. And Boras was not really negotiating at that point– A-Rod was. Simply difficult to understand why they committed $275 mill over ten years — unless thae marketing nitwits from Goldman Sachs were already running the show and spinning out spreadsheets showing what A-Rod’s assault on the HR record would be worth. About as on-the-mark as some of the securitized mortgages Goldman was panning off on investors at the time. This franchise needs to clean house. Really poor run at this point. Dump Goldman and Cashman and put development-oriented baseball people in charge. if that doesn’t work, Hal, have the decency to sell the team.
  - kenthadley
    
    Why they felt compelled? Because they had the money. When rich boys want something, they get it…..and now they want a 189k payroll.
  - trr
    
    viri, I think you answered your own question. This was driven by marketing concerns,to wit: selling those uber-expensive seats in the new YS. What we’re seeing now, as you point out, is the inevitable decline when marketing decisions trump good baseball sense.
    - CBR
      
      “This was driven by marketing concerns,to wit: selling those uber-expensive seats in the new YS”
      
      ^^THIS! I’ve been trying to tell Yankee fans this for years. The signings of all those big contract players (ARod, CC, Teixiera) had more to do with selling $2500 moat seats.
David in Cal

It should have been clear at the time that this 10-year contract was a mistake. All one had to do was add 10 to ARod’s age. I wish Waldstein’s article had assigned blame and allocated it among Hal, Hank, and Cashman.
Joba’s Fat Stache

It would be nice to have a GM with a spine.
- Tyler
  
  Yea why couldn’t Cashman force the owners of the team to do what he wanted…….
  
  Cashman was never on board with this and had next to nothing to do with the deal. What are you talking about?
- http://www.twitter.com/matt__harris Matt :: Sec110
  
  did you want Cashman to quit? The owners are the final say, and the Steinbrenner brothers wanted this to be their first big splash as owners.
Eddard

It’s ridiculous to say that anyone is irreplaceable. Albert Pujols was thought to be irreplaceable. The Cardinals made the playoffs and the Angels didn’t. And now the Angels are stuck with that contract as we are stuck with A-Rod’s. No player over 30 should ever be given more than 6-7 years. Not A-Rod or Pujols or Cano. And everybody is replaceable.
adjusts batting gloves

Correct me if I’m wrong, but it seems that most RABers, as well as Waldstein, miss an important point about the relation of the A-Rod contract to the 189 million luxury tax threshold currently in place. The changes to the CBA that made it prohibitive for the Yankees, more than any other team, to exceed the 189 limit were instituted after the A-Rod renegotiation. There was always risk involved to the Yankees when they gave A-Rod the deal, but the risks were just to the team’s finances (and, given the vast Yankee empire, these risks were probably minimal), not to the composition of the team itself. That was probably the assessment that the owners plus Levine made when they agreed to the deal, initially. They didn’t anticipate the other owners would be able to change the CBA radically in a way that really multiplied the negative effects of bloated contracts. Should they have? In 2007? Maybe. I don’t want to give them a pass for signing a dumb contract with a dumb superstar who clearly had and has performance-related issues, whether with drugs or just mental makeup. But we can’t really blame them for not calculating a risk that was barely even hypothetical at the point they signed the deal.
- flamingo
  
  I think you make a very good point – A-Rod’s contract isn’t actually an albatross because the Yankees are certainly able, from a pure financial perspective, to pay him that amount of money.
  
  It’s the new $189 million payroll plan that’s made his contract suddenly so “expensive” (although I do think that were he still producing at a 2007 level, no one would be complaining about his contract).
  
  Was a ten year deal for a 32 year old ludicrous? Absolutely. But A-Rod’s contract is an albatross only because the Yankees have made it so.
- Need Pitching & Hitting (but mostly hitting)
  
  The new CBA doesn’t make it any more expensive to field a team in their normal payroll range in 2014. If fact, they’d save $$ in 2014 as compared to previous years if they maintained about the same level of payroll because the luxury tax threshold will be higher.
  They’d just miss out on new potential savings if they don’t get below the threshold. They can still make just as much money (or more) as they were before if they just maintained in the payroll range they’ve been operating in for several years now.
- Commerce
  
  Refreshing exposition of “brutal facts”–of course the Yankees didn’t factor in future impact based on a CBA that was nowhere near in place at the time of the deal in ’07 offseason.
  
  I have a simple take on this whole matter–I never favored the acquisition in the first place. I never felt that this guy was a good fit w/ the club–he didn’t have a reputation for putting a team on his back and leading. His Seattle mates went on to gain entry to the postseason and set a new single season win mark upon his leaving, and Texas brought up the rear of the AL West for all his juice-sotted years (3) there. In 8 postseasons w/ the Yankees–except for one heroic display of his prowess–he has not shown up at all in almost every series except for the ALDS v. the Twins in his first season. He seemed to me self-centered and ill-suited to join the Cap’n in leading the club to glory especially since his put-down of Derek in the infamous “Esquire” piece.
  
  Those two reasons are enough to not to favor any tie at all w/ A-Rod–I didn’t favor the deal in ’04 and I hated the extension in “07 w/o any financial or PEDS issues in consideration. I’m not a fan of the talented player from Miami…never was…never will be.
LarryM Fl

I’m a firm believer that Cashman was opposed to the deal. The driving force to the new contract probably was Hank and Levine’s doing coupled with the business input of Goldman Sachs folks.

It is what it is. How do the Yanks move forward if Arod is a shell of his former sell. If he’s incapable of performing at the level of the contract? The Yankees have the money that isn’t the issue but the CBA has them handcuffed because of the 23 million salary a year. Save on luxury tax money and get a rebate which would help with the Arod money expenditure which is not needed or pay at close to 50% luxury tax on everything over 189 million.
- Commerce
  
  I don’t care, LarryM–we have the resources to eat the rest of what is probably a total waste of $$$ if we remain true to the Yankee way: 1) Always try to make the team better regardless of cost; 2) Try to build a balanced team built around a core of exceptional players (3 or 4) who perform w/ character and class; 3) Given our disadvantage in the Amateur draft, turn a laser eye to the Caribbean and Asia for talent; 4) Develop a player personnel system that can tell “shit from Shinola” since International Free Agents, smart trades and drafts, and proper evaluation of free agents are the only avenues we can use to improve the team–takes lots of $$$.
  
  The $189 Lux Tax Conundrum is plain stupid–we can’t compete if we aren’t willing to spend our way to championships–financial resources are the trump cards of the Yankees. We seem to have discarded our trumps.
DInnings

The Yankees should’ve offered A-Rod a half-decade after 2007 and let him walk if he rejected it. If he accepted it, he would’ve been let go after last season.

No use talking about the contract now, it is what it is.

The Yanks need to perpetually keep him on the disabled list until he agrees to a buyout and I don’t wanna read “they have to activate him” when they don’t. All the team doctors have to do is say is he is unfit to play whenever the time comes and that’s it. At some point he’ll refuse to see the team doctors because they won’t clear him to play and that’ll be the team’s out.

Bottom line is A-Rod needs to take a fucking hike after this season. He’s guaranteed $86M after this season right? Ok, offer him $49M- half his remaining contract plus the $6M homerun milestone bonus he didn’t reach to go away. ‘Say he takes that. Who says he can’t play elsewhere – perhaps (back with) Seattle as a DH? If he was a DH for the next three years at $6M a year, that’s $18M recouped from the $37M he forfeited in the buyout, a loss of $19M. $49M ain’t bad for doing nothing and he still makes a whopping $67M 2014-16 ($49M buyout + $18M post-buyout earnings.)

BTW there’s this thing called PITCHING the doom-and-gloomer sportswriters like George King, Joel Sherman etc. might want to remember is the most important part of the game.

The “Yankees will finish last” predictions are absurd considering Bos ton, Tampa Bay, and Bal timore did nothing or nothing much to improve. Boston has a question mark at every rotation slot, their bullpen, outfield, and benc h suck WTF did they do to improve from 69 wins to .500 let alone 75 wins? If they suck come June you could be seeing the last of John Lester in a Red Sox uniform and if so there goes their ace and who are they signing to replace him in 2014? Who in their right mind who cares about winning would sign with them? Baltimore did nothing this offseason and let’s see them do it again after fifteen years of sucking. Tampa Bay traded their #2 starter Shields and still can’t hit, so they’re not winning 90 or more games.
- DF
  
  You realize you’re advocating that the Yankees team doctors violate their oaths as doctors, and commit fraud, right? They’re not going to do that, nor should they, nor should the team want them to do that.
  
  I hate the A-Rod contract, too, but the Yankees made their bed, and now they have to lie in it. They shouldn’t defraud the public and A-Rod just because we all now regret it.
  - Herby
    
    Yes, because doctors are shining examples of purity and honesty. Just offer them a free weekend golf trip to the Caribbean and see what drugs they start to prescribe.
    - CBR
      
      That works if they dupe an insurance plan for one of us regular folks, but its not going to work in a case like A-Rod. Lloyds of London – who is probably insuring A-Rod’s contract – aren’t so easily fooled.
DInnings

Wait – $77M for doing nothing if A-Rod doesn’t play this season ($28M salary + $49 buyout), $95M if he plays for three more years (2014-16) at $6M a year.
JohnLegend

I look at it like this, when we signed him for 10 years he was the best player in baseball. As selfish Yankee fans we started thinking 5 or 6 titles during his 10 year period. Realisitically, two titles would be closer to what should have happened, We already won one and he was the main reason. If we win one or two more during his last five years on the books and he is semi productive (batting 6th as a DH lets say) I would say the ownership would be satisfied.
There’s the Door

It was a bad deal at the time, and it has led directly to a series of other bad moves. Hal and Hank have seriously damaged the Yankee brand.
Those of us old enough to remember the late 60’s and early 70’s Yankees can tell you how fast a great franchise can become a losing one. It takes less than you think. The idea that Hank thinks the jury is still out on the contract is absolutely amazing. We are talking about arguably the worst business decision in the history or American professional sports.
- bkight13
  
  I don’t know about severely damaged. The opening of the new Stadium and TV deals were the driving force behind the deal and the Yankees have been paid handsomely for it. They just received a $400m signing bonus from Fox and are getting somewhere around $3b in TV money over the next decade or so. Winning that championship in 2009 was a huge part of that and ARod was a huge part of that. In hindsight it would’ve been much wiser to make the last 3 or 4 years option years for the team, as payback for the opt it. But no one expected the steroid issue and the hip complications. Baseball forgot how players used to age naturally, with out PEDs.
  - CS Yankee
    
    Well said, businesses that are successful manage to the projected bottom line.
    
    The projections lead them to the conclusion that this was a sound decision and since we don’t know that calculus we can only “armchair QB” it from afar.
    
    The end result, IMO is that;
    1) They are worth quite a bit more than they were in 2007…likely double.
    2) They added a ring.
    3) 189M$
    - CS Yankee
      
      err,
      
      3) 189M$ budget limit doesn’t really pertain to Arod. They haven’t used it as an excuse, just stated that a Championship caliber team doesn’t need to spend 220M$ annually. They will protect their investment and spend that for a greater return or to maintain their revenue stream but feel they can do both and remain under 189.
      4) They will trump Cashman when they feel they need to respond to their market interest (or voices)
      5) Hank has been neutered, Levine lives on.
- Pat D
  
  What other bad moves did it lead to?
  
  Seriously damaged the brand? Yea, when it’s worth more than ever before. Damaged in your mind only.
CS Yankee

The new stadium, the involvement of G-S, the throwing Boras under the bus all makes it more complicated.

For all we know, maybe G-S leaned real heavily on the NYY brass or offered to cover them if it didn’t work out long-term…those seats for those business fans require the best effort to strike the deal, as they pay anything for what they want, the Yankees can’t come up with less and create that desire to entertain to the elite…maybe Boras offered (wink-wink) to be thrown under the bus. The ultimatum given by Cashman was unfair to what was placed in his contract years before he was traded. Arod may have not even bowed down to the lit’l Steins, but to regain “face” had to say he did.

BTW, although as a fan I was way against it (new deal), but it still might have already paid off for them…YES became #1, the stadium was built, #27 was won, and now baseball is a 8B$ machine. From a business standpoint, Arod’s new contract might have been a great investment at the time and the return might already be in the bank. Don’t let the 189M$ narrative change the fact, as it wasn’t even in place at the time of the deal. I recall a KC pitcher who walked away from 20M$ and retired to save the team the money,that guy is both genuine and a fool. Arod understands the business too well and has put up with too much shit to do that and that is his choice.

I expect him to provide 1-2 good years and 1-2 years of DL, and just maybe 1 monster year…and again i have never been a big Arod fan as he is a flake, but he has delivered well in the regular season and had one monster postseason.
- http://www.penuel-law.com/ Cuso
  
  FWIW, I always believed Boras agreed to be wink-winked thrown under the bus.
Robinson Tilapia

Actually, the best thing about this article is that it’s not just some write-up, it’s the main front page story in the Sunday times.

I found it an interesting, balanced read, with the Mo phone call what stood out to me the most.

Otherwise, nothing else to say. You all know the deal already.
pc

when i heard that arod had opted out of his contract during the 2007 ws i was ecstatic, but when i heard the nyy resigned him for even more compensation i was left speechless, ny was given a xmas present in oct 07 and didn’t even realize it, bad management at its worst.
Mickey Scheister

I’ll get raked over the coals for this but A-Rod is still my favorite baseball player, yes it sucks that he’s become that oft injuried player but hindsight is always 20/20. The same people calling for his head were the same ones cheering him on in 2009. My A-Rod signed ball remains on my mantle, next to me Edgar Martienz signed bat. He was almost never injuried prior to that contract. Yes it’s an albatross but another team would’ve signed him to a Pujols type deal if the Yanks didn’t sign him for that massive 275MM deal. The worst part, IMO, are the milestone markers. I wish he’d coincide them, or settle on a straight payout this year in lieu of them.

We all love 500ft home runs, or just jacks in general a lot of the people on this site prob were captivated by the Bonds’, Sosa’s and A-Rods of the world now only to verbally castrate them now. We cheered when we knew, or at least had our suspicions, just to tune in anyways. We bought the jerseys, bought the MLB packages and attended games just to see those same power numbers we diss now. MLB knew what was happening, but turned the blind eye in lieu of ratings and profit. We tuned in for entertainment and excitement. I hope a healthy A-Rod comes back and hushes the nay-sayers for the next several years. Stay healthy Alex, stay healthy.
Jason A

Mets fan here – who always keeps tabs on the Yankees and loves this blog…

I’m not a Yankee fan… but I’m also not a fan of unfairness, and I think the biggest issue with A-Rod’s contract, the new CBA, 189 etc… is the lack of an amnesty provision in the new agreement.

I can (kind of) understand MLB pushing a back-door effort to contain excessive payrolls (i.e. go after the Yankees) – but how is it fair to change the rules right in the middle of the game?

The Yankees are always operating under a 5 – 10 year outlook given their big contract commitments. How could MLB justly make the Yankees adhere to a new, rigid structure only 2 – 3 years out? I find that patently unfair and I honestly don’t know why more Yankee fans don’t howl about this.

It’s one thing to try put a soft ceiling on salaries (and I even have mixed feelings about this…) it’s another to adopt a contract agreement that deliberately sets out to sabotage one team (the Dodgers were able to make their decisions understanding the consequences of the new CBA). The Yankees should’ve been granted some sort of “get of jail free” card to soften this blow. Without it, this new CBA is vindictive. It was obviously meant to sandbag the Yankees.

Cashman should have either years, or an amnesty-type provision to mitigate the more onerous aspects of the luxury tax.

What’s done is done. Nothing can be changed. But as another fan of a big-market team, it gets old constantly being demonized as being responsible for the sport’s demise. The Yankees obviously enjoy significant revenue advantages, but they also generate significant revenues and attention for the sport. NY is one of the few markets in the country where MLB reigns over the NFL. That’s nothing to be taken lightly.

Everyone sharpening their knives, out to carve up the Yankees, should be careful what they wish for.
- CBR
  
  Great point about the amnesty provision. But I think baseball didn’t need to enact an amnesty program because, unlike the other sports leagues, MLB teams aren’t short on cash.

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