» A-Rod and Yankees: Unparalleled Money-Making Marriage

A-Rod and Yankees: Unparalleled Money-Making Marriage

Alex Rodriguez

After the upstaging, the opting-out and all of the one-upsmanship, posturing and the circuitous route travelled toward an upcoming 10 year marriage, 3rd baseman Alex Rodriguez and the Yankees finally seem to be walking the isle in easily the most mutually lucrative deal in all of organized professional sports history.

The deal; $275 million for 10 years, plus another $30 million if he cracks Barry Bonds’ all-time home run record. But that is just the simple take on the depth and breadth of this deal.

Vince Gennaro, noted MLB consultant, author of “Diamond Dollars: The Economics of Winning in Baseball” and former billion-dollar CEO provides insightful glimpses behind this deal and it’s structuring.

Gennaro writes;

The true economic value of A-Rod is based on the Yankees’ revenue growth and asset appreciation that we can attribute to him. Economists call this a player’s marginal revenue product, but I’ve expanded it beyond revenue to include the marginal value of the Yankees’ assets – their ownership stake in the YES Network and the value of the franchise.

Rodriguez has two sources of value: performance and marquee. Performance value is determined by the impact of his playing performance on the Yankees’ win total and the resulting financial gains from the team being more successful because of his contribution We derive marquee value from A-Rod’s persona, image and even the more tangible value of drawing fans to watch him chase future personal milestones.

By adding his performance and marquee values for each year, we can assess the full 10-year value of A-Rod to the Yankees and prove why the $275 million salary with the potential for $30 million more in incentives negotiated by Rodriguez made a lot more sense than the $350 million his agent, Scott Boras, originally postulated.

Now, all A-Rod needs to do is to produce, both in the regular season and in the post-season; he’s not exactly been Mr. October, and avoid Bond’s alleged fix with steriods.

To read the full piece on the dimensions of the A-Rod, Yankees deal, click here.

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