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December 19, 2003
Hart to HartIn case you've been living under a rock, it's been a pretty interesting couple of weeks in the news. If you've been feverish, like most of the populace of California's scenic Contra Costa County, you may have observed that a bombastically hirsute Alex Rodriguez was liberated from a sort of cave/hutch just north of Tikrit and west of Odessa by a U.S. Army strike force, who then checked him for ticks, packaged him in a box, and shipped him to Worcester, where he was unpacked by Larry Lucchino and Gene Orza, then shipped back to Houston, Texas, where he was awarded a Hummer by noted conservative talk show host Michael Savage.
The more coherent among you are aware that the Boston Red Sox and Texas Rangers have been discussing a deal that is, at its center, Manny Ramirez for Alex Rodriguez.
Since both players have very long, lucrative contracts, money has been a significant component of the deal. So let's dive in and take a look:
The two key players here have contractual obligations that look like this:
Present Value Year Salary (Assuming 4% hurdle) 2004 20,500,000.00 $20,500,000.00 2005 20,000,000.00 $19,230,769.23 2006 19,000,000.00 $17,566,568.05 2007 18,000,000.00 $16,001,934.46 2008 20,000,000.00 $17,096,083.82 2009 OPT 20,000,000.00 $16,438,542.14 2010 OPT 20,000,000.00 $15,806,290.51So, if this deal goes through, Tom Hicks will be obligated to pay $90,395,355.55 in present value to Ramirez through the 2008 season. I'm going to assume for the sake of this comparison that the club will not exercise its 2009 and 2010 options on Ramirez, and that Rodriguez will not void his deal after 2007.
Present Value Year Salary (Assuming 4% hurdle) 2004 21,000,000.00 $21,000,000.00 2005 25,000,000.00 $24,038,461.54 2006 25,000,000.00 $23,113,905.33 2007 27,000,000.00 $24,002,901.68 2008 PLOPT 27,000,000.00 $23,079,713.16 2009 PLOPT 27,000,000.00 $22,192,031.88 2010 PLOPT 27,000,000.00 $21,338,492.19 2011 6,719,581.90 $5,106,329.98 2012 5,375,665.52 $3,927,946.14 2013 4,031,749.14 $2,832,653.47 2014 4,031,749.14 $2,723,705.26 2015 5,375,665.52 $3,491,929.81 2016 5,375,665.52 $3,357,624.82 2017 5,375,665.52 $3,228,485.41 2018 PLOPT 4,031,749.14 $2,328,234.67 2019 PLOPT 4,031,749.14 $2,238,687.18 2020 PLOPT 4,031,749.14 $2,152,583.83Some important items about Rodriguez's contract: First, the payments from 2011-2020 are deferred salary from the year ten years previous, with a compounded APR of 3%. Hence, Texas owes the salary from 2011-2013, and whoever has the contract in each subsequent year will owe the salary during the year ten years later. So, taking that into consideration, some amounts to keep in mind:
Now, let's take a look at the recent performances of Manny and Alex, along with our forecast for their 2004, and the most salient statistic of all--age.
Manny A-Rod Year Age VORP Age VORP 2001 29 66.0 25 97.3 2002 30 74.3 26 90.9 2003 31 69.2 27 86.3 2004 (Projected) 32 57.1 28 83.2I don't really understand why Tom Hicks, John Hart, or Grady Fuson wants to make this deal. Ramirez is significantly older, inhabits a much easier defensive position to fill, plays it badly, is more fragile, has a skill profile of a player who could drop off a cliff offensively, and is just plain far more replaceable than A-Rod.
Someone asked me a question at the NorCal Mock Winter Meeting: couldn't Texas be more cost effective and just as well off by just finding somewhere else to get the 25 runs difference between the two? Well, it's not quite that simple, for three reasons:
I'm not convinced that this deal won't end up hamstringing the Rangers for years to come. One account of the driver for the whole deal is Tom Hicks' honor. If you haven't heard it, it's basically that Hicks has offered to try to move A-Rod because Hicks promised him he would try to win and wouldn't cut salary. Personally, I like to believe that. I think A-Rod's a Hell of a lot better bargain at his salary than Ramirez is at his, and if Mr. Hicks is willing to damage his financial and competitive state to live up to his word, then he's a stand-up guy, even if it ends up looking like a strange salary dump.
And no matter what happens, Texas isn't going to be playing in the postseason, and Boston is. Based on past history, this deal, if it has any impact at all, will free Texas up to spend too much money on a pitcher that's either ineffective, injured, or both. This deal isn't going to suddenly bring Tim Hudson, Jason Schmidt, and Mark Prior to Texas, nor is it going to undo the ravages of injury and time inflicted on Rusty Greer's battered bones. So if you're Texas, and A-Rod doesn't insist on leaving, you don't make this deal.
It's going to be interesting to see how things actually shake down. This has the potential of being the biggest trade of my lifetime, and it's both good and bad that money and intrigue have become such a big part of it. I do know two things: 1) from a tactical perspective, I think the OCB played this much better than I expected, and 2) Gene Orza isn't paid enough.
What am I getting at? Simply this: this whole exercise looks like Tom Hicks being a stand up guy and trying to live up to a three-year old promise, even when it's not convenient. If that's true, and I hope it is, hats off to Tom. I can't blame him for wanting to do so as inexpensively as possible.