Friday, July 13, 2007

How much money is A-Rod really worth?

In December 2000 Alex Rodriguez signed a 10 year 252 million dollar deal with the Texas Rangers. The deal included a NTC, possible milllions in incentives, and an opt out clause after the 2007 season. The opt out clause seemed to be unimportant. After all why would anyone walk away from 90 million dollars? Now almost seven years later the possibility of A-Rod opting out of his huge contract opt out isn't a remote insane possibility. It is speculated on constantly and considered very likely.

A-Rod has had a monster season becoming only the second Yankee to hit 30 home runs in the first half. Its very likely that A-Rod will break the record for HR's by a right-handed Yankee and breaking Roger Maris' record is possible. He`s batting near .320 and already had over 80 RBI's. A-Rod also has played a fantastic third base. He is batting .317/.413/.665/.341. Combine that with his fantastic defense from third base he`s having an amazing season. Not to mention his insanely clutch hitting. I`m not going to comment on the off the field stuff and how ridiculous it is.

Last offseason contracts were ridiculous. Alfonso Soriano got 8 years, 18 million dollars a year. Soriano is at basically the same age as A-Rod but is clearly nowhere near the impact player he is. Ichiro Suzukihas agreed to a five year 100 million dollar deal and he is 34 years old not 31 like A-Rod. If these guys are getting this imagine what the best player in baseball still in the prime of his career could get. Another 200 million dollar deal? 30 million dollars a year? 40 million dollars a year? Rumors have started that he might want part ownership in the team when he retires as part of the deal.

A lot of Yankees fans are just getting sick and tired of the whole saga and want him to leave. The off the field stuff he` s been in has been annoying and their still is a perception that he chokes in the clutch. Writers in Newsday have suggested that he be traded for middle relief help. Others have suggested that they trade him to the Angels for pitching prospects and then trade for Miguel Cabrera. I think this is all ridiculous. A-Rod is the best AL player since Mickey Mantle and the best right handed hitter since Rogers Hornsby. I think the Yankees should give him whatever he wants. Tom Hicks still pays about 10 million dollars a year on A-Rod's salary. As a result the Yankees get the best player in baseball for the same or less than Alfonso Soriano is getting paid

Baseball Prospectus has a statistic called WARP. It stands for Wins Above Replacement Level. It uses the statistics BRAR and FRAR to measure how many wins a player contributes to his team. WARP3 adds on a bunch of adjustments including projecting out the season to 162 games. They don't give the exact formula so I don't use it to much but its a quick way to evaluate players. A-Rod has a WARP3 of 12.7 this season. Now based on what he has done the past three years we can get a pretty accurate idea of what we can expect from A-Rod for the next few years.

2004- 10.0

2005- 13.0

2006- 7.3

2007- 12.7

The farther you go back the less important the statistics are though so we'll have to weigh them differently. We`ll say 10 percent for 2004, 20 percent for 2005, and 35 percent for both 2006 and 2007. The weighted average is 10.6. That is what his true talent level appears to be. Take out 2006 which seems to be just a blip and it gets a lot better. We`ll say his true talent level is 11.5 WARP3

A-Rod already has a 3 year deal. If you give him a 4 year extension of 30 million dollars a year you have him until he is 38 years old. Assuming he has a normal decline he should still be a productive player for his entire contract. However, A-Rod is a five tool player and can be expected to age better than most players. He should still be A-Rod into his mid 30's and as he gets into his late 30's and loses some of his speed he could easily become more of a Gary Sheffield type hitter. That's not necesarily a bad thing either. Sheffield is still a very good hitter even if he isn't an MVP type player. So A-Rod is definitely a player worth keeping around.

Genius sabermetricians have also somehow figured out that one win is worth 2.5 million dollars. We already know that A-Rod's true talent is 11.5 WARP3. So 11.5 wins time 2.5 million dollars per win equals A-Rod's true worth. That is 28.5 million dollars. You may look at that and say that he`ll get more than that and when he declines it will be terrible but it isn't that bad for three reasons.
  1. A-Rod should be chasing the all-time HR record by the end of his contract and will generate extra revenue that way
  2. The amount of money a win is worth is almost constantly going up
  3. Major League Baseball Players are overpaid most of the time

By the last one I mean that the average player is paid more than 2.5 million dollars per win over replacement level. On average it actually costs 4 million dollars per win over replacement level. Now multiply 4 million dollars per win by 11.5 wins. You get 46 million dollars. That's how much money it would take to replace A-Rod on the FA market.

So A-Rod is actually a bargain. Yankees, please do anything you can to bring A-Rod back to the Bronx. I don't care if it means giving him part ownership, making him co-captain, or giving him a huge deal. Just make him come back otherwise you're costing the fans the chance to see one of the greatest players of all time.


Tom(Easchester) said...

I have it on the best of authority that the Yankees will field a team next year even without Arod. If they have good pitching they will win plenty of games.
Since we are doing history, the postwar Sox and the 80's Yankees sure could hit. By the way, so could JoeD.
Signing Posada is much more important.

Mike NYY said...

So will the Kasas City ROyals that doesn't make them any good.

A-Rod is a true great, a top 10 all time player. Posada is a very good player and a borderline HoF'er but he isn't A-Rod. The market for catchers is better than the market for third baseman to.

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