Rob Neyer touched on a subject that few others have even dared to speculate about, but I must admit it’s something I’ve been kicking around myself the past few days. Here’s what Rob said:
I haven’t seen Derek Jeter‘s portfolio. I’ll guess that even a paltry $45 million (before taxes) does mean something to him, but it’s quite possible that it doesn’t. Or that it does, but not as much as his foolish pride.
I still think everything will work out OK in the end. The Yankees will move some, Jeter will move some, and everyone smiles a lot and says all the right things when the shortstop gets his $19 million per season. It’s like Sam Goldwyn said about one of his movie stars: “We’re overpaying him, but he’s worth it.”
It might not work out OK in the end, though. Either way, I’m reminded of how many pundits were so sure, just a few weeks ago, that of course Derek Jeter would never leave the Yankees. Something like that would be impossible.
Except it’s really not impossible, and never was.
I agree completely, it’s not out of the realm of possibility. It’s not as if we haven’t seen athletes walk away from the game with something left in the tank. Jermaine Dye and Jarrod Washburn did it as recently as last year. Joe DiMaggio did it. Michael Jordan did it twice. The cases of DiMaggio and Jordan are most comparable to Jeter. Both were iconic stars, the trappings of fame wore on them as they aged and they pined for an easier, simpler life.
What made me wonder about this was the 23-24 mil per year Derek is asking for. It doesn’t seem to be based on his value as a baseball player in any way. We don’t know much about Derek’s personal finances, but we do know some. He earns around 9 mil per year in endorsements according to Forbes. He’s been paid a total of 205 mil by the Yankees. Let’s say his endorsements roughly cover his tax bills, and he’s lived on the investment income his money generates. Let’s just assume for purposes of this discussion that Derek has held onto his gross baseball earnings. The days of the easy 10% return are gone with the real estate crash, but a smart money manager (which I’m sure Derek has) should still get you 6-8% annual return blending stocks, bonds and emerging markets without taking too much risk. If these numbers are anything close to being accurate, Derek could be earning 14 mil per year on his money alone, plus his 9 mil annually in endorsements that isn’t going anywhere even if he retires. That might explain why he’s asking the Yanks for 23-24 mil per. He could sit down with Hal and say “Look, I earn 23 mil per year without even playing Baseball. In order to make this worth my while, you need to match that.” We have all assumed the Yanks have the leverage in these negotiations, but Derek may hold the trump card after all. He may simply walk away.
Much has been made of his pursuit of 3000 hits, but if we know anything about Derek it’s that he’s not motivated by numbers. Every time he passed a milestone of some sort and asked what it means to him, he would retort “It means I’m getting old”. Does Derek love the game so much he wouldn’t walk away from it? I don’t know about that. Alex Rodriguez once recounted a story about how Derek doesn’t even watch the playoffs once the Yanks are eliminated. His place in Cooperstown is secure, with or without a 3,000th hit. He’s already one of the best hitting Shortstops who ever played the game.
Let me close with a story about my father. He was a Wall Street executive at a major firm. While he retired before the money got crazy in the mid-2000’s he still did well enough to provide his family with an upper-middle class lifestyle. As he got older he would often discuss retirement, saying “I make more now on my investments than I do in salary.” That made him wonder why he was fighting traffic, cramming himself into a subway car, and dealing with all the headaches that were waiting for him at the office on a daily basis. Derek may be asking himself a similar question, and asking him to take a pay cut at this stage of his career may be something he is simply unwilling to do.