Archive for December 4th, 2010

According to Michael S. Schmidt of the New York Times Bats Blog, the Yankees and Derek Jeter are close to a three-year agreement that will include a “highly unusual” and “creative hybrid-type option”. In his post, Schmidt includes the words “for a fourth year”, but doesn’t attribute them to his source. So, maybe the creative option doesn’t have anything to do with an extension of the contract? Either way, below are three guesses at what the deal’s creative addendum might be.

1)      A mutual option based on performance in the first three years

Assuming the two sides could agree to a formula, the value Jeter provided during the contract could be evaluated against the money paid to him. In other words, if the formula determined Jeter provided $40 million in value, it would be subtracted from the rumored $52 million contract total. Then, that $12 million difference would be used to fund a fourth year, which might be predetermined at something like $25 million (the annual value of Jeter’s rumored first request). As a result of the math, the Yankees would then have the option of paying Jeter $13 million in 2014. If they declined the option, a percentage buyout could be included. Similarly, if Jeter outperformed his contract, the amount would be added to the same $25 million starting point, but with a higher percentage buyout included if the Yankees declined. In both cases, negotiated minimums and maximums could be determined. Also, the contract could include conditions under which Jeter would be able to opt out of the fourth year.

Highly Unusual? Yes. Creative? I’ll leave that for you to decide.

2)      An option to buy part of the team upon retirement

As mentioned above, there is no confirmation that the “ creative option” involves a fourth year. So, why not offer Jeter the chance to become an owner?

Baseball rules prohibit active players from owning equity in a major league franchise, but what about a future invitation to buy a stake? If permissible, the “creative option” would give Jeter the right to acquire a specified interest in the team at pre-determined cost. Considering the exponential way the Yankees’ value has been increasing, such an option would be highly attractive to the business-minded Jeter, even if the eventual sale price is close to market value. From the Yankees’ perspective, having Jeter become a limited partner would not only provide some cash flow, but also ensure an even closer association with the team than might otherwise be expected (i.e., more than just throwing out first pitches and attending Old Timers Day).

3)      A personal services contract upon retirement

Just in case option #2 is against major league rules, the Yankees could accomplish a similar end by transitioning Jeter to an “employee” when his playing days are over.

One of the arguments made by the Jeter camp is his “brand value” should be incorporated into the value of his new contract. The Yankees have argued that to build a winner, its focus must remain on the field. So, why not compromise and offer to compensate Jeter for the value he adds to the business side…but hold off on most of it until he is finished playing? Whether it’s a 10-year, 20-year or lifetime deal, the advantage of the personal services contract is it wouldn’t count as payroll and therefore not be calculated against the luxury tax. Also, if it includes work done for YES, the Yankees’ partners in the venture would share the cost.

Thankfully, the two sides have replaced the intrigue about whether a deal would get done with how it will be structured. The solutions mentioned above are probably too unusual to actually be considered, but who knows. Your guess (feel free to leave one in the comments section below) is as good as mine.

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(In addition to appearing at The Captain’s Blog, this post is also being syndicated at TheYankeeU.)

Over the last 24 hours, the Boston Red Sox and San Diego Padres have all but agreed to a deal that would send All Star 1B Adrian Gonzalez headed east for a package of prospects. Although no one can dispute Gonzalez’ talents as a player, does the move alone make the Red Sox better?

The Red Sox hope to add Gonzalez’ powerful opposite field swing to their lineup.

There are two small red flags with Gonzalez. The first is he has played most of his career in one of the weakest divisions in baseball: the National League West. Because performance is best measured relative to competition, the Padres’ 1B may not be as successful playing in the AL East. Again, that’s not really a major concern, but it could suggest a lower level to what should be high expectations. The second question mark deals with Gonzalez’ recent surgery to repair his injured right shoulder. Speaking on XX1090AM in San Diego, the Padres’ slugging 1B indicated the surgery would require a long rehab and that he might not be able to swing a bat for 4-5 months. That was on November 10. Doing the math, it’s possible that Gonzalez will not be ready to take his normal cuts until at least Spring Training, but perhaps as late as Opening Day.  If the latter, it’s very possible that Gonzalez wouldn’t be in peak form until several weeks, or months, into the season.

Even with both of those concerns noted, acquiring Gonzalez is close to a no-brainer for the Red Sox, provided they are able to sign him to a long-term contract. Of course, picking up star players in the trade market also comes with another cost, which in this case could be Casey Kelly (ranked 18th overall by ESPN’s Keith Law), the team’s top prospect. If the combination of money expended (Gonzalez’ 2011 salary is a low $6.3 million, but a renegotiated deal could inflate that figure) and prospects traded prevent the team from making another acquisition (e.g., Jayson Werth, Carl Crawford, Justin Upton, etc.), the end result might not look so good.

Finally, if the deal for Gonzalez is consummated, that likely means the end of Adrian Beltre’s brief time in Boston. Going forward, it’s almost certain that Gonzalez will be a more productive hitter than Beltre. However, it isn’t for sure that he’ll perform much better than Beltre did in 2010. So, when you also consider Beltre’s top-shelf defense at a key position like third, the exchange becomes even less favorable. After all, Gonzalez’ gold glove at 1B will be replacing Kevin Youkilis’, who would be asked to move across the diamond to third, where he isn’t as sound defensively. Even if Youkilis is able to play third base at an acceptable level, he likely will not be in the class of Beltre. As a result, with all things considered, the Red Sox could be taking a step back in terms of infield defense.

With the departure of Beltre and Victor Martinez, the Red Sox have some ground to make up on offense. Without a doubt, Adrian Gonzalez goes along way toward doing just that. However, Boston will need its new acquisition to be healthy as well as able to make a quick adjustment to the AL East. What’s more, after wrapping up the deal, the Red Sox will need to have enough flexibility to make another addition. If everything falls into place, the deal should revive Boston’s standing in the division, but if the questions mentioned above are not answered in the affirmative, the benefit of adding Gonzalez might wind up being a more long-term proposition.

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