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Solutions to the Yankees-Jeter Contract Gridlock PDF Print E-mail
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Written by Maury Brown   
Friday, 26 November 2010 12:36
Derek Jeter
There's more than one way for the Yankees
and Derek Jeter to bridge the "take it or leave
it" gap.

UPDATE: Michael S. Schmidt of The New York Times reports that Derek Jeter’s agent, Casey Close, is currently asking the Yankees to agree to a new contract of either four or five years at $23 to $24 million a year, according to a person in baseball who had been briefed on the matter.


Earlier this week, a television network that share remain nameless, contacted me asking if I’d be willing to come on the air today and talk about Derek Jeter’s contract negotiations with the Yankees. With the two being, as I have said, the “Battle of the Brands” I can understand television seeing the talks as compelling television.

There was a problem, however. The network producer added, “I’m looking for some that says, ‘The Yankees should not just open up their wallet for Jeter.”

I won’t get into how the media has become a key player in the negotiations between the two powerhouses (for that, see Matthew Coller’s column), but rather say what I said in response to the network request: I lean toward the Yankees 3-year, $45 million offer on the table, with some additions that allows for Jeter to get what he wants, as well.

Here’s how the deal can get done.

First off, Bill Madden of the New York Daily News is reporting that the Yankees and Jeter are “$80 million apart” and that The Captain’s agent Casey Close has said that they aren’t budging from $25 million a year. Jim Baumbach of Newsday is saying that the Jeter camp is looking for less than the 6-year, $150 million mentioned by Madden. But if it were correct, the Yankees deal Madden mentions has an average annual value (AAV) of 25 million – a $10 million gap from the Yankees offer.

There are good reasons for the Yankees to not want to move off their annual salary figure. For one, Jeter is now 36 and coming off the worst full season he’s had in his career. Secondly, while it’s the Yankees, and fans can say they don’t care about it, if the club chases after Cliff Lee, with other payroll obligations, the Yankees will see their Opening Day payroll increase above the gaudy numbers they post annually. And, to add to that issue, since the Lee and Jeter deals are of the multi-year variety, it’s not just the 2011 Luxury Tax bill that could get hefty, it’s possible with a new CBA being reached in Dec. that the Luxury Tax could see adjustments upward to the rate for those busting MLB’s soft cap threshold. Last year, the Yankees doled out $25,689,173 in Luxury Tax, down from nearly $27 million the year prior, but when you think about the fact that the Yankees have paid the Luxury Ta… I mean the Competitive Balance Tax, as the league calls it, each and every year since 2003, it all begins to add up. How much? To date, $174,183,419 and that doesn’t include the 2010 figures which have yet to be released. It’s possible that the Yankees could bust $200 million in Luxury Tax payments before the calendar flips over to 2011. While it’s of their own doing when you throw in revenue-sharing into the mix, and Yankees will come out of December (again) a bit black and blue from the financial beating they get for being glutinous over-spenders.

So, for Jeter and Close, “not budging” needs to be reconsidered. But, just because you reconsider doesn’t mean you can’t get more out of the Yankees current offer.

If the issue with the Yankees centers on Jeter’s poor performance last season, put in performance clauses that could trigger more years in the contract or at the very least bonuses (years might be a stretch as it would need to be based on matters such as games played or plate appearances as the CBA does not allow performance to be tied in for that aspect). This route does two things: it shows that the Yankees are willing to be flexible from there current “if-you-don’t-like-it-go-shop-yourself” stance, and it plays to Jeter’s ego by saying, “Fine. If you still have gas in the tank, prove it.” The latter tact is hard to fight. After all, you’re being offered a contract that should, for the most part, speak to what you are going to do as a player not, what I have done for you in the past. If a dove were to land on the shoulder of the two camps, you could add one or more years to the contract that were of the mutual option variety. That way, if Jeter tanks, the Yankees could simply opt out.

The other way for the Yankees to stick to a position on the books with the contract dollars is offer up a signing bonus. Or, add in other perks (maybe Jeter could be interested in courtside seats in The Garden for life. Don’t laugh; there have been similar contract clauses. Just ask Randy Johnson). The advantage for the Yankees would be that such perks don’t go against player payroll and therefore would not impact their Luxury Tax bill.

Another way for the Yankees (and Jeter) to be flexible is to have salary deferred over time, with interest. This allows salary numbers to remain lower on the books, allow Jeter to collect a paycheck over an extended period, and with the interest, make extra.

The point is, the “take it or leave it” stance that both the Yankees and Jeter seem to be in now are (how can this be put lightly?) silly. There are ways to compromise while saving face—there are options available to allow each side to get what they want. For Jeter, it’s going to likely have to come through his performance on the field, which is as it should be. But, back to the network producer, there’s ways to have Jeter earn additional salary as opposed to portraying it as just “opening up their wallet for Jeter.”

NOTES: Why Didn’t the Yankees Offer Jeter Salary Arbitration?

There were a lot of questions floating around Tues. night and Weds. morning after the deadline as to why Jeter wasn’t offered free agent salary arbitration (see a complete listing of those free agents offered or declined salary arbitration). There are a few reasons why.

As is the case with many veterans, as the calendar continues to tick, the number of years in a contract become more important. Sure, the money matters, but knowing that you’re going to be getting guaranteed money over time becomes more attractive. With that, Jeter’s camp has been asking for possibly a 6-year deal. Arbitration would be for one year; just 2011. It wouldn’t be attractive based on the long-term contract he looks to be seeking.

For the Yankees, arbitration isn’t attractive, either. If Jeter were to accept, the club would basically have nothing more than last year’s stats to hang their hat on, while Jeter’s camp would be able to roll out a litany of awards, brand power that he’s brought the Yankees, on top of his stats. While these two are pitchers, with the “special accomplishments” provision within the CBA, Jeter and Close could point to the highest asking figures in salary arbitration prior.

In 2004, Roger Clemens accepted salary arbitration from the Astros. With 20.142 years of service time, Rocket asked for $22 million – a record asking figure, while the Astros offered $13.5 million. Close could also bring up Greg Maddux, who then had 16.043 in ML service time and his 2000 salary arbitration case. In that instance, Maddox asked for $18.5 million, second only to Clemens, while the Braves offered $14.25 million.

But, where Close could have really have gotten the attention of an arbitration panel would have been to bring up, yes… Derek Jeter. In 2000, with Jeter having 5.043 of MLS, he asked for $18 million while the Yankees offered $14.25 million.


Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to FanGraphs and Forbes SportsMoney. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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