A-Rod: more than ‘obscene’?

November 20, 2007

(originally published at Baseballgb.co.uk – check out the site for the latest news and views)

The A-Rod auction is going to fuel hundreds of reports and news items over the coming weeks and months. The biggest star in the sport is on the market and the most powerful agent in the game is intent on making that $252 million deal from 2001 look like peanuts.

While I’m not intending to turn BaseballGB into an A-Rod news feed, it’s difficult to avoid the subject because it is so extraordinary. Lots of figures were bandied about leading up to A-Rod’s decision to opt out of his contract, the main one being that Scott Boras wants his client to become the first $30 million-a-year man. We then heard noises from Team Boras that A-Rod was looking to sign a deal to cover the rest of his career and that he would be looking for at least a ten-year deal.

As they like to say in America: you do the math.

ESPN.com is reporting that a twelve-year deal worth $360 million is Boras and A-Rod’s goal. In British terms, that’s a contract worth £172,434,602. Or £14,369,550 a year. Or £276,337.50 a week.

Blimey!

Last week, the British Sports Minister Gerry Sutcliffe caused some controversy by branding John Terry’s salary as “obscene”. Terry signed his new deal in July this year and its terms were dictated by the salaries of his colleagues Michael Ballack and Andrei Shevchenko, both of whom pocket £130,000 a week. Terry won his battle to become Chelsea’s highest-paid player (not unreasonable when you consider his performances and importance to the team) and signed a five-year deal worth £135,000 a week. Add it up and you get a contract worth a total of approximately £35 million, labelled by one newspaper as “the most lucrative deal in the history of English football”. The deal would be worth approximately $73 million, mere small change compared to many of the recent free agent deals in baseball, never mind the A-Rod mega-deal in waiting.

This comparison has to be qualified though. To coin a favourite stat-head phrase, we’re comparing apples with oranges to a certain extent. There are many reasons for the wide disparity, factors arising from fundamental differences between the two sports.

The main points to take into account are:

  • While exceptional players in both games can start playing regularly at the top professional level when they are eighteen/nineteen years old, baseball players generally don’t make the Majors until they are around twenty-three. Ryan Howard, for example, didn’t become a regular until he was twenty-five (although this was partly due to his path being blocked by Jim Thome).
  • Baseball players don’t become free agents, and therefore earn the staggering salaries, until they have been in the Majors for six years
  • In those first six years, the player will earn considerably less than they might be ‘worth’ on the open market (to return to the Ryan Howard example, he was paid just $900,000 this season as he was only in his third year, despite being named the NL MVP in 2006)
  • In MLB, when a player moves to a new team, his existing contract is simply carried over, as opposed to a completely new contract being agreed (as is the case in football). This has two key consequences. Firstly, a baseball player cannot capitalize on a good year by pushing through a move to a new team and receiving a massive wage rise in the process. Secondly, a baseball team is more likely to give a free agent a long contract as, unlike in football, they do not have to pay-up a large proportion of the money left on the contract when they trade/sell the player (although they may have to agree to give the new team a certain amount of money to cover some of the future financial commitment) . Five years, the length of John Terry’s contract, is about as long as a footballer will receive.
  • Finally, the most obvious difference is that baseball players generally change teams via trades, while footballers command transfer fees (the current record is thought to be Zinedine Zidane’s transfer from Juventus to Real Madrid for £46 million, or $96 million). The massive amount of money that changes hands between clubs naturally reduces the money that the players receive. A footballer can reach ‘free agency’ if their contract runs out, enabling them to move to new team without a transfer fee being paid (commonly referred to as a ‘Bosman free transfer’). In these cases, the player will receive a higher salary than they would command if the buying team had to find a large transfer fee as well. However, these salaries still trail a long way behind free agent salaries in baseball. That’s because free transfers are rare in football and therefore the salary market is still set by the going rate received following a transfer.

So there are valid reasons why a baseball free agent can command a longer, more lucrative contract than a footballer could ever hope for. Whether players from either sport ‘deserve’ the money they receive is a subjective matter. We can all sympathise with the moral argument: that the salaries are almost insulting to the nurses and fire fighters who do a much more important job for a relative pittance. Yet the truth is, baseball players and footballers are merely getting their cut from the billions of dollars/pounds in revenue they play a large part in creating. If the market ultimately determines that A-Rod is worth $360 million, so be it.

I’m not entirely convinced he will get quite that much money in the end, but then again few thought a team would be prepared to spend $252 million on a player before the Rangers blew apart the wage ceiling. Whether it’s $360 million or a mere $300 million, Gerry Sutcliffe is likely to be lost for words and whatever you think about the ‘greed’ of A-Rod and his agent, anything that shuts up a politician can’t be completely bad.