Can Alex Rodriguez get a better deal for himself if he opts out of his contract and leaves the Yankees (as a Free Agent) after this season?
I get asked this question – often. So, I thought it made sense to have something here to point towards (for the next time I’m asked it). First, what’s the bird in A-Rod’s hand now? As I stated back on December 6, 2006 -
We know that the remainder of Alex Rodriguez’ current contract looks like this:
2007: $27 million – $7 million paid by Texas
2008: $27 million – $8 million paid by Texas
2009: $27 million – $7 million paid by Texas
2010: $27 million – $6 million paid by Texas
But, we also know that A-Rod’s team must increase the salaries for 2009 and 2010 by the higher of $5 million or $1 million greater than the average annual value of the non-pitcher with highest annual average value.
However, after the 2007, 2008 or 2009 season, A-Rod can void the remainder on his contract as well.
Therefore, if Alex Rodriguez does nothing and lives out the life of his current deal, he will get $91 million (from 2008 through 2010) – with the Texas Rangers paying 23% of the bill. It’s this $91 million for three years that Rodriguez has sitting on the table – to keep or to walk away from (with the hope of doing better) after the season.
Actually, the key number – in terms of an initial driver for A-Rod’s call – has nothing to do with money. Instead, it’s all about age.
Alex will be 32-years old after this season. Related, he would be 35-years old after 2010 (the last year of his current contract).
Alex Rodriguez the 32-year old should be able to get a 6-or-7 year contract offer in the Free Agent market after this season. Why so many years? Simple – teams will be willing to pay for a guy, that long, since he would only be 37-or-38 at the end of deal.
Alex Rodriguez the 35-year old will have a hard time getting a contract offer for more than 4 years after 2010. The fact of the matter is, given the money that Alex will command, no one will want to be paying that much to a guy who will be so close to his 40th birthday at the end of the deal – unless they know that they’re going to get a very good number of years from the guy prior to his 40th birthday.
Yes, I’m following the math here. If A-Rod opts out of his contract after this season, his “new” deal will probably run through 2014. If A-Rod lives out his current contract, his “next” deal will probably run through 2014 as well (according to what I am saying here). So, what’s the big difference?
Here’s where it goes back to dollars. Right now, at this stage in his career, Alex is no longer the best hitter in the game. Granted, he’s one of the “Top 15″ hitters in the game – thereabouts. But, he’s no longer where he was circa 2000-2003. Now, as a member of the “Top 15,” Rodriguez, these days, will still command top dollar on the open market next winter. However, who’s to say that Alex will still be a “Top 15″ hitter by the time he’s 35-years old? He could start to slip some more? Or, he could have an injury? If A-Rod and Scott Boras think that Alex v.2011 will be the same hitter as Alex v.2008 they’re ignoring the risk factors that are out there for a player as he gets older.
In the end, this is what it’s all about for A-Rod:
1. Keep the $91 million for three years and hope that nothing happens to you, or your production, or even the market, and then take your chances as a the 35-year old Free Agent (who will be lucky to get a new deal that runs through 2014). Or,
2. Walk away from the $91 million for three years, enter a player-friendly market, while you’re still one of the best 15 hitters in the game, and take your chances as a 32-year old Free Agent (who should easily get a deal that will run through 2014).
Do you keep the bird in the hand and hope for another to come (knowing there’s risk that the next bird may not be as good), or, do you let the bird in the hand go, because the skies are full of birds now and you’re at your peak in terms of bird-catching (and should have no problem getting more than one bird once your hands are free)?
The old line is “A bird in the hand is worth two in the bush.” But, this is A-Rod the poker-player and Scott Boras the wheeler-dealer we’re talking about here. These guys want to be on the top of the leader board in terms of having the most birds. If they see a chance, they’re going for it. To them, I’m sure they believe that “Alex Rodriguez can get a better deal for himself if he opts out of his contract and leaves the Yankees (as a Free Agent) after this season.”
It will be a “better deal” (if he goes now) because it will be a “sure” deal to run through 2014 at mega bucks – instead of a deal that may not happen after 2010 (or maybe not to the levels that he’s used to seeing).