Monday, November 19, 2007

Because $275 Million Just Isn't Enough

Will A-Rod be a unanimous choice when he wins the AL MVP award today? He'll be the first Yankee since Mickey Mantle to do so. But apparently he won't get re-signed today because they want to reward A-Rod for breaking the home run record but it's against the rules to give players bonuses for hitting milestones so they have to figure out a way to pretend that's NOT what they're doing. (Just like Jeter pretends to live most of the year in Tampa.)

But putting aside my feelings about the deal in general and my blanket condemnation of incentives since I think it's crazy to pay a player tens of millions of dollars and then add on "incentives" to stay in shape, get lots of hits, win a Gold Glove, etc -- yes, putting aside all of that, isn't there something insane in the fact that he's getting $275 MILLION DOLLARS but they've somehow got to figure out a way to GIVE HIM MORE MONEY so he can "benefit" from the windfall of his home run chase. What the heck do you call A QUARTER OF A BILLION DOLLARS? I would have thought that was pretty good compensation for ALL the revenue you created. Am I crazy to think it's a little absurd to suggest that the $275 million contract DOESN'T reflect fair compensation for everything A-Rod brings to the table?


dasnootz said...

You're forgetting about two very important factors... Inflation and the US/Canada currency exchange rate...

Say he breaks that record in the 10th year. The future value of 27.5 million in 10 years is approximately 20.5 million Present Value (assuming the contract is evenly prorated and a 3% annual rate of inflation). That's nearly 350,000 fewer Canadian lap dances (CLDs) he can afford in 2017 if the currency exchange rates stay stable. (I assume he tips $5.00 on a $15.00 dance.) It’s obvious that he needs the incentives to create a cost of living raise to afford his recently negotiated current level of CLDs.

Now let’s compare his new proposed contract with the former contract he just opted out of. In 2001, the beginning of his last 252 million dollar contract, the US/Canada exchange rate was 0.64 on 11/19. That means that the same $20CAN dance cost him $12.82US. The total value of that contract was 19,656,786 CLDs with $8.46CAN left over for the cover charge at the time of signature. The new 275 million dollar contract currently equates to 13,480,392 CLDs (present value) and $3.06CAN for a cover (1.02 exchange rate). That’s a reduction of 31.4% in CLD value.

I hope this puts to rest any debate on whether or not ARod is a true Yankee… He’s taking a 31.4% reduction in CLD Salary this time around to remain in pinstripes. Sure he’s asking for more CLDs than what his old contract was worth at the date of opt out, but he’s human… and he has needs. He’s still only asking a fraction of his previous CLD value, despite last year’s heroic regular season.

Michael in New York said...

Insert all the usual abbreviations: LOL, ROFLOL etc. Very funny. CLD's would be a valid comparison for a LOT of players.