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December 18, 2003

Prospectus Today

The A-Rod Mess

by Joe Sheehan

My attempts to put together a coherent winter meetings wrap-up failed as teams continued to make moves that changed the landscape, effectively making the post-meetings period as busy as the weekend was. I'll get around to evaluating the work done--and not done--by teams in the near future.

Today, I want to address the Alex Rodriguez mess. I haven't to date, in part because I really don't want Rodriguez to be traded. I joked about it last week, but the relentless flow of top players to a few teams isn't good for the game. This is exactly what didn't happen in the free-agent era until the last two years, when the luxury-tax structure and increased revenue sharing went into effect. Go wait for that to be a sound bite from Bud Selig's next press conference on the success of the newest Collective Bargaining Agreement.

The way in which Rodriguez's lucrative contract has been positioned as a barrier to the Rangers' success, as a reason for their three straight last-place finishes, is violently counterfactual. The Rangers' problem isn't Rodriguez, but the players around him who comprised, without Rodriguez, a waste of an above-median payroll. The story of "252" took root because there is an entrenched jealousy of baseball players and the money they make, and if there's one thing the mainstream sports media does well, it's schadenfreude.

This deal validates the notion that the Rangers were somehow ruined by the signing of Alex Rodriguez, when in fact, Rodriguez has been worth the money. The Rangers' problems have more to do with wasted money on non-contributors, the failure of some B and C pitching prospects, and the absence of a center fielder for years on end.

We've reached a point in the trade negotiations between the Rangers and Red Sox where the issues aren't players, but money. Money as in "how much less can the Red Sox pay Rodriguez?" The Sox have been negotiating that point with Rodriguez for some time, and the two sides appear to have an agreement that satisfies both sides, one in which he gets much less guaranteed compensation and assumes a lot more risk.

Conceding that we don't yet know exactly how much money he might be giving up to make this happen, I think it's entirely possible that Rodriguez would be doing himself a disservice. Is it reasonable for someone to pay, for the sake of argument, $40 million just to change employers and base cities? I know I don't get to make that decision for him, but forty million dollars?

I hate the argument--which is set up in a macro for some people--that if a player makes X, he shouldn't care about some amount of marginal dollars because "he could never spend it all in one lifetime." The amount of money even the most well-compensated athletes make is really nothing if your goals are ambitious, and the notion that someone should take less, in a business with Pohlads and McMorrises and, my god, Reinsdorfs, is appalling to me. What if Alex Rodriguez wants to own a baseball team? What if he wants to run for president? What if he wants to find a cure for cancer? Baseball owners make bad decisions all the time for fear of losing a couple million dollars, yet Alex Rodriguez is supposed to negotiate away $40,000,000?

To say that it's a perfectly natural thing to want to give up $40 million for a better work environment seems like as much a disconnect from reality as comparing ballplayers' compensation to that of schoolteachers. If the people in this can convince Alex Rodriguez that it's in his best interests to leave that on the table, than I think he needs to get better advice. There's a reason why Tom Hicks and John Henry have the net worths that they do, and I'd imagine that both would laugh you out of the room if you ever suggested that there were touchy-feely reasons for leaving forty million bucks on the table. Why they get to be businessmen, while Alex Rodriguez gets held to a different standard, passes understanding.

The Major League Baseball Players Association is effectively saying the same thing. While Rodriguez has the right to renegotiate his contract, he does so under Article II of the Collective Bargaining Agreement, which states that a player can negotiate "Special Covenants to be included in an individual Uniform Player's Contract, which actually or potentially provide additional benefits to the Player." Doug Pappas points out that any clause that does not meet this standard--actually or potentially providing benefits to the player--must be approved by the MLBPA.

Now, I haven't been a real big fan of union intervention in individual player choices. My initial reaction to this, over and above my distaste for the whole thing, was to think that the union's leaders were wrong for interfering.

Wednesday, I got an e-mail from someone who thinks much along the same lines, but then he wrote this:

"In addition, the union's short-sightedness should not be overlooked: By not allowing Rodriguez to reduce his own salary, the union is really just keeping money in Alex's pocket that would (unless it's Bud Selig's money) otherwise be used to increase salaries of other players, hurting, if only to a small degree, the other 749 players in the union."
There is no evidence to suggest that the money Alex Rodriguez gives up will find its way into other players' pockets. There is evidence to suggest it will enrich Tom Hicks.

After reading that e-mail, I started thinking about it, and I realized that this is why the union gets involved. If a player renegotiates his contract to accept less compensation, the benefit of that accrues entirely to the player's owner. All the other issues, the reasons why the player might do this, are tertiary to this one. Alex Rodriguez is essentially giving money back to Tom Hicks, and I do see the interest of other players not having that become standard operating procedure.

If Rodriguez, to use the likely case, drops the player options in the years 2008-10 from his deal and forfeits somewhere between $30 million and $80 million depending on things we can't know, then all players become fair game for this kind of action. The balance of leverage would be shifted in favor of management, which could start pressuring players to lower their compensation in all kinds of situations. Once the first one happens--especially a high-profile one like this--the next one becomes easier, and the next one, until you have a relentless downward pressure not just on the market, but on existing contracts.

We saw this, only with less subtlety, when MLB basically extorted more road trips from the Expos by threatening to go Rachel Phelps on them if they didn't agree to another 22 games in Puerto Rico. Is it that hard to see, if this deal goes through with Rodriguez taking $20 mil., $30 mil., $40 mil. less, a future where teams actively alienate their superstars in an effort to push them into trades in which they have to take less money to get out of town?

I appreciate that there's an argument that Rodriguez would gain some non-monetary benefits by accepting this deal, but I don't think there's any way you can spin things to satisfy the CBA clause. There is no way that giving up as much as $81 million in guaranteed money "actually or potentially provides benefits to the player." This isn't a free agent changing teams for a few dollars more, or you deciding whether to take $70,000 in Denver versus $82,000 in Memphis. This is tens of millions of dollars, and a bellwether for future attempts by management to get out from under contract obligations.

So I think the union is again forced to defend an unpopular, not easily explained position, but one which is ultimately right.

You really couldn't pay me enough to be Gene Orza.

Joe Sheehan is an author of Baseball Prospectus. 
Click here to see Joe's other articles. You can contact Joe by clicking here

Related Content:  Tom Hicks,  Alex Rodriguez,  Henry Rodriguez,  Money

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