Steve Strasburg, Pink Jerseys and the Derek Jeter Saga

The following is a guest post from David Meadvin, who previously penned “A common-sense approach to contracts” and “The Strasburg experience from someone who was there” for Yankeeist.

Two days after Stephen Strasburg made his record-breaking debut for the Washington Nationals this past summer, my friend’s one-year-old girl was tottering around the house in a brand-new #37 jersey. She wasn’t alone. In fact, I was at that first start vs. the Pirates on June 8th. Before the last out was recorded, the line to the team’s clubhouse shop stretched practically around the concourse, and the next day, it seemed like everyone in the DC area was wearing one.

I should be clear off the bat: I’m confident that before long, Derek Jeter and the Yankees will agree to a new contract that’ll keep the captain in pinstripes for the rest of his career. But if his free agency evolved from a cat-and-mouse game between the team and their franchise player to a real bidding war with multiple teams, I wouldn’t be shocked. The baseball media who assume that it’s a foregone conclusion that Jeter re-signs with the Yanks are missing a huge part of the equation.

What does this have to do with Steve Strasburg? Running a baseball team in 2010 really means running two separate — and sometimes conflicting — businesses. The first is the business of producing a quality on-field product. The second is building a team that makes the most possible money for the team’s owners and shareholders.

Yahoo! Sports speculated that the Strasburg debut was worth at least $1.5 million in additional revenue for the Nationals, based on additional ticket sales, concessions and parking. They predicted that Strasburg’s rookie season alone might generate enough revenue to more than pay his 4-year, $15 million deal.

The prevalent view that a Jeter/Yankees deal is a foregone conclusion is probably right on the baseball side of the ledger, but might be wrong on the business side. True, the current 3-year, $45 million deal on the table would almost certainly pay Jeter more than he produces on the field. According to Fangraphs, Jeter was only worth $9.8 million on the field in 2010, and that total should continue to decline as he ages into his late 30s.

But what about the business side of the ledger? Nate Silver considered this a few days ago and concluded:

“How much those off-the-field contributions are worth is hard to say. Baseball statisticians are just starting to get a handle on how to value on-the-field performance, and there has been little work done on the attendance and marketing premium provided by popular players.”

But one thing’s for certain: Derek Jeter is worth more outside the foul lines to almost any team besides the Yankees. All those pink Jeter #2 shirts the Yanks sold to every teenage girl in the Tri-State area? They won’t go out and buy another one if Jeter re-ups for three more years. Much of the merchandising value Jeter has for the Yanks has already been realized. Same with ticket sales: the day the new deal is announced, you won’t see a surge in 2011 ticket sales (nor, I would suspect, would you see a dramatic drop in sales if Jeter departs).

But let’s look at it another way. The Giants are known to have contacted Jeter’s agent. The Nationals apparently have money to spend and could use a veteran face of the franchise. Maybe Jeter wants to return home to Michigan, and the Tigers always seem to have money to throw around. If one of these teams — 0or almost any other — announced that they had signed Jeter, they would score the PR win of the century. Ticket sales would skyrocket. And there’d be an entire new city of teenage girls to buy those pink shirts.

Maybe it would take a 4-year, $80 million deal to get it done. Would that kind of money make sense from an on-field performance measure? Heck no. But it just might pay for itself in ticket sales and merchandising. The value of bringing the sport’s most beloved and recognizable face to your city can’t be understated, yet it seems like most observers of these contract negotiations are all but ignoring it.

Not every team will see it this way, but all it takes is one for these contract talks to get interesting. In a sense I admire Brian Cashman’s hardline stance that Jeter’s agent should talk to other teams if he doesn’t like the Yanks’ offer. It shows a radically new tactic in the aftermath of the absurd extension the team gave Alex Rodriguez after his opt-out tantrum. Cashman’s poker face is impressive, but all it takes is one adventurous team to call his bluff.

By night, David Meadvin is a diehard Yankees fan and Yankeeist reader. By day, he is president of a Washington, DC speechwriting and communications firm, Inkwell Strategies.

5 thoughts on “Steve Strasburg, Pink Jerseys and the Derek Jeter Saga

  1. Hi David,

    Great to see you posting on Yankeeist again!

    when you say "if [Jeter's] free agency evolved from a cat-and-mouse game between the team and their franchise player to a real bidding war with multiple teams, I wouldn’t be shocked" I have to say I disagree – I would be totally shocked (and awed). Despite the potential gain in merchandise sales, I don't think Jeter is worth that much more to another franchise besides the Yankees – and I predict the Yankees will sell a ton of "Mr. 3000" t-shirts (in pink and other colors), and I can't imagine people in a new city buying both the jeter shirt and the mr 3000 shirt.
    sure, I think Jeter could temporarily boost someone's ticket sales and tv contracts (assuming those aren't already signed), but the gain would be short term, and Jeter's deal would be long term. He'd have to pay for most of his contract in that first year, and to leave the Yankees, Jeter is going to need a real sweet heart of a deal. if he was younger, maybe there would be more of a potential for someone to bid high and steal him, but I don't see it happening, giving the current circumstances. if he does leave, I think he'll leave Andy Pettitte style and take less than the Yankees offered.

    that being said, does Inkwell Strategies have a New York office? =)


  2. Jamie,
    Thanks for your comments. I definitely tried to clarify that I'm writing the post mostly to raise a perspective that I think isn't getting the attention it deserves. Certainly it would be a surprise if Jetes isn't donning the pinstripes next year. But my line of thinking remains that for a ballclub devoid of a major star or public face of the franchise, something in the $50-80 million range may not be a totally crazy investment when you look at the on- and off-field calculations together.

    One other thought: Jeter had a pretty bad year in 2010, and that may be because his skills are fading, or it may be that he just had a bad year at a really bad time. If he had just come off a 2009-caliber year, would we even bat an eyelash at 3/$45?

    Inkwell's office is in New York, but in a larger sense, we're everywhere :-)

  3. Hi Davey,

    Here in greater NYC, WFAN's Mike Francesa waves the "Jeter isn't just another ballplayer" flag pretty hard, and he strongly advocated that the Mets try to steal him for the exact reasons you mentioned, but I'm pretty sure the Mets already came out and said they weren't interested.

    Yeah, if Jeter had put up 2009-esque numbers I think the Yankees might have started at 4 yrs/$80, but the fact that he didn't coupled with his age is the determining factor.

    Finally, my personal feeling is that when you're Jeter's age, a middle infielder, coming off a bad year, have already made over $200 million and let your representation call 3 yr/$45 million 'baffling' when you're still the top paid middle infielder in the game (or is TT getting more?) and don't step in and at least let your counter leak somehow, you're not doing right by yourself and you come off greedy. It's hard to get behind a guy in a situation like this… It could be his last chance to get paid (at least as a baseball player), but at some point it goes from being ugly to tainting him, I don't see how he comes through this clean

  4. I think you're overestimating Jeter's value "outside the foul lines" to any other team in the league besides the yankees, and I think the Yankees know that.

    If I'm a fan of another team who signs Jeter to a ridiculous contract (and it would have to be a ridiculous contract for him to leave the yankees), I'm not running out to buy season tickets or Derek Jeter merchandise. In fact, if my team gets in a bidding war with the Yankees for him, I'm probably organizing a rally to get my GM fired…or hiring a Hitman.