According to ESPN.com, All-Star shorstop Troy Tulowitzki is close to signing a seven-year, $134M contract extension with the Colorado Rockies. This contract extension would start in 2014 and be tacked onto his already-existing contract which expires at the end of the 2013 season.
Why is this significant? Because as a younger player (Tulo turned 26 in early October) in the prime of his career, this contract extension should create further downward leverage on Derek Jeter’s contract demands. The average annual value of Tulowitzki’s contract extension in Colorado is worth $19.1M. Even if you add the $23.75M remaining on Tulowitzki’s original contract with the $134M offer and divide the total outstanding financial commitment ($157.7M) by the number of years he will remain in Denver, the Rockies’ remaining average annual obligation is $15.7M.
Given Jeter’s age and the mounting evidence of his decline, it’s hard to imagine why the Yankees should feel the need to pay him more than $15M per season if the best young player at the position won’t be earning even $1M more, on average, over the next ten seasons. At most, the Yankees could offer Jeter $16M to keep him as the game’s highest-paid shortstop over the life of the contract even if the truth is that Tulowitzki won’t earn more than $10M in any one season before his monster extension kicks in after 2013.
Legacy is nice and lifetime achievements are wonderful. But the Rockies — no big spenders — just set the market for what elite shortstops should be making right now. Jeter is no longer an elite shorstop and certainly doesn’t project to be in the future. Now, more than ever, the 3Y/$45M contract offer to Jeter looks like an appropriate offer. I could understand some flexibility on the dollars, perhaps up to $16M or $17M annually. But Jeter should stop dreaming if he sees more than three years $20M annual salaries out there for him.