Parsing the posturing

“I know our fans are very emotional and that’s what we love about them,” Steinbrenner said. “But I’ve got to do my job on behalf of the partnership and our partners and everybody else involved in the organization. [Brother and co-chariman] Hank and I need to keep a level head and realize that we’re running a business here. We have to remain somewhat objective and we’re going to do that.”

So it’s a business now, is it Hal? I do believe he has a more level head than his father and definitely better than his brother Hank, but the “we’re running a business here” stuff only works if you are playing fair with a guy like Jeter or Rivera. If you’re nickel-and-diming those guys and trot out that line, we the fans are going to skewer you and that’s a promise.  You want to use that line with the Johnny Damons of the world, cool. Just treat these two with respect; they’ve earned it.

As far as the remaining objective part…just like in that ARod opt-out/renegotiation? Just ask Hank how that worked out when he was running the ship.  Keeping a level head should mean locking Hank in a closet. Or muzzling him, as I wrote in one of my earliest blog postings. Moving on…

So what’s the right number to start at, for either side? If I am Casey Close, Jeter’s agent, I start at his 2010 salary: $21 million.   If I am Cashman and the Yankees, I start around $12 million or so, knowing damn well I’m preparing to march further north than William Tecumseh Sherman ever did.  Close will ask for five years; Yankees three. I’ve said for a while that I think the base salary lands around the 3 years, $45 million ($15m per) range, along with expected kickers for milestones and such. I’d add a option that vests upon something like games played. I’d also add a lifetime services contract that pays him some $3-5 million per year to be seen around the park. FanGraphs crowdsourced this one and the results were right in line with my guesstimate. Some smart folks think Jeter will earn plenty? Others guessed close to this as well.

Let’s say that the estimate above is at least in the ballpark of what Jeter might actually sign for.  It does, in my opinion, also represent what will surely be the largest offer out there. The Angels are not going to top this. Neither will the RedSox, or Tigers, or Twins, etc.  I don’t think there is some “mystery team” out there who sees Derek Jeter as a $20 million/year player any more. Way back in 2008, I called the Jason Varitek contract battles with Boston a proxy for this upcoming Jeter battle. Two years later, there are some things in that posting which can now viewed as silly and fairly off-base/naive, but the thrust remains:

But I am hopeful, optimistic, homer-iffic in thinking that Jeter/Close won’t be looking for a 6 year deal at age 37. But there is a part of me that fears they will and fears more that Hank & Hal will be too scared not to relent. If Jeter wants to retire a Yankee and only play for this team his entire career, he’s going to have to adapt to the changing needs of the team and the changing level of his performance.

To me, anything over the $15m/year times three years is ultimately bidding against yourself. If Jeter signs a five year, $100 million dollar contract, it will only prove to me that the Steinbrenner boys cannot hold their own at the negotiating table.  Let’s make one thing clear: Jeter and the Yankees just concluded what will likely go down in baseball history as the most successful ten-year contract ever. Jeter generated 43.1 WAR over that period, which is remarkable. I don’t think either side would say they didn’t get their value out of the 10 year, $189 million dollar transaction.  The question is: Will both sides be able to say the same at the end of this last transaction?

I hope so.


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27 thoughts on “Parsing the posturing

  1. Charlie Sheen is being paid $26 million a year to appear on a lousy TV show. What do you want to pay Jeter to appear on a much better TV show? IIATMS, particularly given that the Yankees' YES Regional Sports Network is worth twice as much as the Yankees' baseball franchise (and the franchise is the most valuable in sports). Are you saying that Derek Jeter is worth less than Charlie Sheen? Really? You can replace Jeter with Ramiro Pena if you want, but that would make as much sense as replacing Charlie Sheen with Ramiro Pena.

    The Yankees will pay Jeter, and move on. This is a no-brainer.

    • Lady Gaga and Justin Bieber (just to name two) also are grossly overpaid. So what? That is an excuse for Jeter to be the same? The A-Rod contract is roundly (and rightly) criticized; give the same thing to Jeter, and he will get the same love at the end of his contract.

      I don't think anyone wants that – something DJ needs to remember. (I don't think he NEEDS the money – if he did, that would be different.)

  2. Charlie Sheen leaves Two and a Half Men, and the show dies. Jeter leaves the Yankees, and the Yankees are still a damn good team and will continue on. I do want the Yankees to sign Jeter, but the comparison is a poor one.

  3. To expand on MikeD — I don't have a link, ut I heard on the radio that CBS makes $155M per year on that show [and that number excluded any $$ from DVD sales and syndication]. Sheen goes and so does the show, so virtually any amount of money makes sense. Pay him$50M if you have to, since a $105M+ loss is worse than an additional $24M expense.

    Jeter goes– what is the impact on the Yankees revenue?? They will still spend the $$$ on FAs, so the team will be perpetually competitive with or without him, so the only major loss is the Jeter fans who watch for him alone and not really the team. I can't imagine that number is anywhere near his salary, let alone $100M+.

  4. The mythical statistic at play here is Jeter's VAR (value above replacement). This would take into account the on field differences between DJ and (say) Ramiro Pena, but also the marketing value difference. What's interesting about VAR is that it's not position driven. Signing Cliff Lee would raise the team's VAR because Lee would replace some of Jeter's marketing value. It's imaginary, so work with me here.
    In the end, the Yanks can afford to let Jeter walk. How long did we stay pissed about the Bernie situation? Bad feelings mostly pass, and a big signing and/or World Series would take some of the sting out. I hope this doesn't happen, but from a dollars and sense standpoint, it certainly could.

  5. "If I am Cashman and the Yankees, I start around $12 million or so, knowing damn well I’m preparing to march further north than William Tecumseh Sherman ever did. Close will ask for five years; Yankees three. I’ve said for a while that I think the base salary lands around the 3 years, $45 million ($15m per) range, along with expected kickers for milestones and such. I’d add a option that vests upon something like games played. I’d also add a lifetime services contract that pays him some $3-5 million per year to be seen around the park. …"

    *Start* at three years and $12M per season?!? You have lost me, Jason: why on Earth would the Yankees concede so much so soon?

    • Do you really think that the number will end up close to $12m/yr? I don't, so rather than play games, start closer to where you think it'll end and shorten the mile.

      • Let's ask the inverse, Jason: do you really think the number will end up close to $21-22M per season? No, but that won't stop Close from making such a request.

        Oh, and when did Sherman *ever* march in a northerly direction? ;-)

        • After taking Savannah, Sherman marched north through the Carolinas. Who says that reading this blog is not educational?

  6. The ONLY thing I can say for sure is that the contract will end up being at least 4 years…

    Anything else is guesswork and a waste of time… we'll just have to wait and see

    But I would happily bet every last penny in my bank account that it's either a 4 or 5 year deal

    • Really, Brian? How "can you say for sure?" Why would Cashman repeat the A-Rod mistake?

      BTW, if you have a habit of making such reckless bets, please consider joining my monthly poker games! ;-)

  7. Gentleman's bet…. the contract ends up being for 4 or 5 years…. probably 4… we'll meet back up here in a few weeks and see who was right

    Sorry but I'm all talked out on this subject so I don't have anything else to add.

  8. OK … so long as I have people talking about entertainment value as well as sabermetric-measured value, I have accomplished my job.

    I have nothing against Charlie Sheen or 2-1/2 Men, though if you've ever been on an American Airlines flight stuck on the ground, you can get very very sick of CBS comedies. Charlie Sheen is, by one measure, the 7th most popular TV actor. This is a significant accomplishment, but it hardly makes him irreplaceable. Again no insult intended, but Charlie Sheen is a top-ten TV actor, meaning that he could easily be replaced by any number of movie actors. It's like saying that so-and-so is a successful Japanese baseball player — a great accomplishment, to be sure, but so-and-so could easily be replaced by any number of good U.S. baseball players.

    Contrast Derek Jeter, who is the third most popular athlete in the country by some measures. See No other baseball player makes the top ten, though Albert Pujols is lurking close by.

    Do the Yankees continue to produce $319 million in gate receipts annually with Ramiro Pena at shortstop? It certainly seems possible that they might. It's also possible that people will go see "Oceans 14" even if George Clooney doesn't star in it. But why take the risk? A 5% drop in Yankees gate receipts is a $16 million proposition, and we haven't even factored in what even a tiny drop in YES TV ratings would cost the Yankees. This is why I say that it doesn't matter whether Jeter ends up with 3 years at $45 million or 3 years at $60 million.

    There's a notion out there that fans will come to the ballpark in numbers and spend big bucks to watch a winner. That notion is demonstrably false. Sure, the Yankees and Phillies led their respective leagues in attendance, and Minnesota had a great year too. But Atlanta finished 13th (9th out of 16 teams in the national league), Texas 14th, San Diego 18th, Cincinnati 20th, and Tampa Bay 22nd. And we're not even considering how cheap some of the tickets are to see these top teams (from memory, I know that Texas and Tampa Bay tickets sell below league average).

    Fans come to the ballpark for a lot of different reasons, and not simply because their team is currently winning around 60% of the time. When I visit NY, there are hundreds of different ways I might spend time with my family. I TRY to convince everyone to come with me to the Bronx … and when I make my sales pitch to my wife, what argument do you think is most convincing? Brett Gardner's WAR, or Derek Jeter's star power?

    • This is why I say that it doesn't matter whether Jeter ends up with 3 years at $45 million or 3 years at $60 million.

      I completely agree. The incremental $ that Jeter earns has almost no negative bearing on the team. It's simply scorekeeping.

      It's about the money, stupid, but the money doesn't matter.

      • "…but the money doesn't matter."

        Hang on a sec: I keep reading that the Yankees *do* have a budget; otherwise, why has the roster hovered in the $210M range for the past few years?

  9. The Yankees have a budget…

    Their budget is… whatever it takes to make the playoffs every year or virtually (like, say, 15 of 16) every year

    IMO, the Yankees *true* budget is probably around 260-275 million dollars…

  10. This is the subject of an upcoming post, but the Yankees have a real budget this year. That budget is tied to the luxury tax. There's been talk in baseball about raising that tax, because the Yankees exceed the tax limit year after year. The Yankees do not want to see the tax raised, and the tax will be up for reconsideration next year when the collective bargaining agreement is renegotiated.

    This is a tricky business, and it's one time where the baseball player's union can be a friend of the Yankees. The union is firmly opposed to a salary cap, and to anything that smells like a salary cap. Yet the union OK'd the luxury tax in its current form. The Yankees have to act this year like the luxury tax matters to them (I think it DOES matter to them, but they have to publicly act that way). The Yankees have to look like they're spending cautiously this year, and they have to tell the players' agents that the luxury tax (both at its current level and at the level where it may be reset) is preventing the Yanks from bidding more aggressively on free agents. The Yankees have to turn away a free agent or two that they might otherwise want to add to the roster, to drive this point home.

    The Yankees cannot prevent the other 29 teams from jacking up the luxury tax. But the union CAN prevent this from happening, and I think the union will take the Yankees' side on this … just so long as the Yankees prove that the tax discourages the team from spending more on payroll.

  11. All I know is that this must be a "Real" issue – Jim Rome just discussed it on his show. Now I know why he is so big – it is his insightful reporting. Fwiw, "If the Yankees don't get this sorted out, it could get messy."

    Sorry Jason, Larry – will have to spend more time listening to Romee. You just don't find details like that on the net. "Messy."

    The Yankees will do what they do; I probably won't like it; they definitely won't care.

    • Hey! I LIKE Jim Rome. (Radio more than TV.) I like him even better than Charlie Sheen.

      • I agree – he's more entertainging than Charlie; but I wouldn't pay Mr. Rome 26 mil either.

        ( I forgot that he works for ESPN with you guys. oops)

  12. would love to see the yanks get creative and give him a part of the team and lower the near-term cost of his contract…that way, he saves face with a-rod and can point to a very lucrative deal, and the yankees free up some space to sign other guys…he always talks about TEAM…let's see if he really means it

  13. Adam, I should have said something earlier, but the Yankees are restricted by rule from being able to offer Jeter a piece of the team. Which makes sense — what if Jeter had a piece of the Yankees and was traded to the Angels? It would lead people to question whether Jeter was playing on the up and up. In any event … I doubt that Jeter would turn down a piece of this particular action; my suspicion is that the Yankees would not want to go through the hassle of having to get league approval to make the offer.

    The rule in question is rule 20(e) from the Major League Rules, and it reads as follows:

    "No manager or player on a Club shall, directly or indirectly, own stock or any other proprietary interest or have any financial interest in the Club by which the manager or player is employed except under an agreement approved by the Commissioner, which agreement shall provide for the immediate sale (and the terms thereof) of such stock or other proprietary interest or financial interest in the event of the manager or player's transfer (if a player or playing manager) to or joining another Club. A manager or player having any such interest in the Club by which the manager or player is employed shall be ineligible to play for or manage any other Club in that League while, in the opinion of the Commissioner, such interest is retained by or for the manager or player, directly or indirectly."

  14. Everyone is talking about Jeter's value to the Yankees. On the flip side, the Yankees are very valuable to Jeter. Jeter needs to finish his career with the Yankees. His marketing value will decrease dramatically if he signs elsewhere… especially considering his skills are diminishing. Johnny Damon is a prime example. Add in the fact that other teams will likely not pay him any premiums for being Derek Jeter, I would not give in and give him more than $6 million/year. The Yankees don't "owe" Jeter anything. They paid him $190 million and he's earned it. I agree with the comment above about Bernie Williams… if we let Jeter walk, people will get over it and still love the Yankees.