- On Sunday, Alex Rodriguez announced the end of his career. We examine if his record-setting contracts with the Rangers and Yankees paid off.
UPDATE: Rodriguez announced Sunday that he will play the final game of his career on Aug. 12, then take an instructor position with the Yankees.
The Yankees have scheduled a press conference with Alex Rodriguez, manager Joe Girardi and general manager Brian Cashman for 11 a.m. Sunday. After a week of speculation about Rodriguez’s possible release, with even Rodriguez himself saying he would be “at peace” with whatever decision the Yankees make, expectations are that Sunday’s presser does indeed concern the end of Rodriguez’s tenure with the team.
With speculation rampant but no official word forthcoming until the morning, it’s pre-mature for a full post-mortem on Rodriguez’s career. However, given that Rodriguez has fallen below replacement-level this season—.204/.252/.356, 62 OPS+ without so much as an inning played in the field—and that his 10-year, $275 million contract is due to expire after next season, it does not seem too early to look back at that particular aspect of his singular 22-year career.
Rodriguez signed two record-setting contracts in his career. Selected out of his Miami high school with the top overall pick in the 1993 draft, Rodriguez made his major league debut just 13 months later at the age of 18, and had one of his greatest seasons at the age of 20. By the end of his age-24 season he was a four-time All-Star, a four-time Silver Slugger winner at shortstop, had twice finished in the top three in the American League Most Valuable Player voting, had authored the third 40/40 season in major league history and was arguably the most valuable free agent in the game’s history. Today, the mind reels at the thought of how much Bryce Harper and Manny Machado stand to make when they become free agents after their age-25 seasons in 2018. However, neither will be as good or as young upon reaching free agency as Rodriguez was after the 2000 season.
Prior to that off-season, the richest contract ever signed by a major league player was the nine-year, $116.5 million extension Rodriguez’s former teammate Ken Griffey Jr. signed after forcing a trade to the Reds the previous off-season. Meanwhile, the $15 million average annual value of the contract Kevin Brown signed with the Dodgers after the 1998 season had only just been surpassed that August by Roger Clemens’ two-year extension with the Yankees, worth $15.45 million per season. The sport had far more to offer. Griffey had rejected an eight-year, $148 million offer from the Mariners in 1999 (average annual value: $18.5 million). The 2000-01 free agent class broke the existing records several times over. In early December, the Rockies signed 28-year-old lefty Mike Hampton to an eight-year, $121 million contract. Later that month, the Red Sox inked 28-year-old slugger Manny Ramirez to an eight-year, $160 million deal. In February, the Yankees gave 26-year-old shortstop Derek Jeter a 10-year, $189 million extension. In between the Hampton and Ramirez contracts, however, came Rodriguez’s deal with the Texas Rangers, and it was barely even on the same scale.
On Monday, Dec. 11, 2000, Texas Rangers owner Tom Hicks came to terms with Rodriguez and his agent, Scott Boras, on a 10-year, $252 million deal. Just three years earlier, Hicks had paid $250 million to buy the entire Rangers franchise from the group headed by future president George W. Bush. Now he was spending two million more than that on a single player. That contract changed the tenor of Rodriguez’s career in countless ways, instantly transforming him from fresh-faced superstar to overpaid pariah.
Absurd as that contract may have seemed, Rodriguez was great in his first three years in Texas, making the All-Star team, winning the Silver Slugger and leading the league in home runs every year, winning two Gold Gloves and his first AL MVP award. However, after the 2003 season, he decided he wanted out of Texas, and was even willing to reduce the value of his contract to make it happen. The Major League Baseball Players Association refused to let Rodriguez devalue his deal, killing a blockbuster trade to Boston in the process, but the Rangers rebounded to work out deal that sent Rodriguez and a $71 million contribution to the $179 million remaining on his contract, to the Yankees for infielders Alfonso Soriano and Joaquin Arias.
Despite moving to third base to accommodate Jeter, an inferior fielder, facing an even greater level of day-to-day scrutiny from the local and national media and moving into a more pitching-friendly ballpark, Rodriguez remained one of the best all-around players in the majors, turning in two more monster seasons in 2005 and 2007, both of which netted him the AL’s MVP award. Before the votes were revealed for the latter trophy, however, Rodriguez had a decision to make. His contract contained an opt-out after the 2007 season. Just 32 and having just led the majors in home runs (54), RBI (156), runs (143), slugging (.645), OPS (1.067) and OPS+ (176), Rodriguez took the out, with Boras releasing the news during Game 4 of the Red Sox World Series sweep of the Rockies.
The Yankees had long taken the stance that they would not sign Rodriguez if he opted out, but by mid-December they had not only gone back on their word, they had blown Hicks out of the water by giving the now-32-year-old Rodriguez another 10 year deal, this one worth a record-setting $275 million. Not only had no one surpassed the total value of Rodriguez initial contract in the seven years between his signing with the Rangers and his re-signing with the Yankees, no one had surpassed Jeter’s $189 million total, either, and only Jeter had surpassed Ramirez’s $160 million. In fact, since the start of the 2001 season, the only major league contract to exceed $130 million in total value was the $136 million deal the Cubs gave Soriano when he hit free agency the previous off-season at the age of 30, and that contract was widely viewed by the industry as a mistake. Nonetheless, the Yankees more than doubled it.
Rodriguez’s two contracts, which remain the second- and third-largest in major league history, surpassed only by Giancarlo Stanton’s 13-year, $325 million extension, may have looked like comparable overpays on their face, but in retrospect they played out very differently. When the Rangers signed Rodriguez prior to his age-25 season, his best years were still ahead. When the Yankees signed him after his age-31 campaign, they were all behind him. One thus need look no further than Rodriguez to understand why signing a player to an extension in his mid-twenties is an infinitely better investment than signing a player every bit as talented and even more accomplished to a comparable deal in his early thirties.
Let’s go to the numbers. Using our What’s He Really Worth? (or in this case, Was He Really Worth It?) formula, we can find the approximate market value of a marginal win (that is one win above replacement or one full point of WAR) for each season of Rodriguez’s post-Seattle career, multiply that by Rodriguez actual on-field value as measured by Baseball-Reference.com’s wins above replacement (bWAR) in each season, and add those total values up to see how close Rodriguez came to earning those two record-setting contracts.
The Rangers contract we can slice up a few different ways, but here’s his value over the full ten-year term.
That’s astonishing. As much as Hicks clearly overbid for Rodriguez, he nearly hit A-Rod’s value on the head when he gave him that $252 million contract. Rodriguez didn’t quite earn every last dollar, but he came remarkably close given how far above the market that contract appeared to be. When you factor in the fact that Rodriguez deferred $45 million of $252 million total, the total value of the deal gets even closer to his actual on-field value. Then again, there were a variety of awards bonuses included in the deal.
Let’s slice this a couple of different ways. First, let’s deal with the contract as it played out. Rodriguez opted out after 2007 having earned $185.45 million, per Cot’s Baseball Contracts. Here’s what he was worth over those seven seasons:
That figure falls shorter due to the factoring in of his various bonuses, though that $185.45 million figure does not factor in a reduction of the value of the contract due to the deferments.
The Rangers wound up paying roughly $120 million for just three seasons of Rodriguez under the terms of that contract. Those three seasons, great as they were, were worth just $65.5 million, barely more than half of what the Rangers ultimately paid for them. The Yankees wound up paying roughly $65 million for four seasons of Rodriguez. Per the numbers above, those four seasons were worth more than $72 million.
The upshot of all of that is that Rodriguez’s $252 million contract was actually a solid investment. Rodriguez was indeed that valuable over the course of the initial 10-year term of the contract. However, the need to trade Rodriguez resulted in the Rangers continuing to pay Rodriguez 10s of millions of dollars after he had departed the team. Rodriguez’s actual salary during his three seasons in Texas was just $63 million, with a few bonuses folded in, such as $500,000 for his first MVP award, that’s a near match for his $65.5 million in value during those seasons, but the Rangers spent another $55 million or so just to manifest the trade and got nothing for that investment. Soriano was a disappointment in Texas and already making millions himself via arbitration. Arias was a replacement level player in parts of four seasons with the Rangers from 2006 to 2010, and the players Soriano and Arias brought back in trades were similar dead ends.
With the Rangers taking the hit on Rodriguez’s contract in the trade, the Yankees made out like bandits on the initial deal and would have been well ahead of the game had they indeed let Rodriguez walk after the 2007 season. Instead they signed him to a 10-year $275 million contract that has thus far yielded this:
Rodriguez’s 162-game suspension for performance-enhancing drug use negated $22.13 million of his 2014 salary, but his 660th home run, hit in 2015, cost the Yankees a $3.5 million bonus, which was donated to charity. The adjusted total value of the contract is roughly $256.4 million, or 218% of what Rodriguez has been worth on the field over the first nine seasons that he has played under that deal. Let me repeat that. The Yankees have paid Rodriguez more than twice was he has been worth over the term of his current contract, and that’s after saving more than $22 million via his 2014 suspension. You could even toss out the negative dollar value from this season and Rodriguez would still have failed to have earned even half of what the Yankees have paid him since 2008.
For all of his performance-enhancing drug entanglements, Rodriguez did not have an abnormal aging curve, particularly for a player who reached so high a level so young. Lopping off his first two partial seasons as a teenager (total 65 games, -0.6 bWAR), gives us the 20 seasons during which Rodriguez was a full-fledged major leaguer. Breaking those 20 years into five-year chunks we get this:
Those numbers show a typical late-20s peak, early-30s fade and late-30s collapse. Those final two stages are why investing in free agents in close proximity to their 30th birthday is almost always a bad idea. That age-25-to-29 period, meanwhile, is why investing in players in their mid-20s, as has become far more common in the wake of Rodriguez’s second contract, is, if never a sure thing, the safest strategy when it comes to long-term contracts. When Rodriguez’s playing career does come to an end, he will leave a variety of different legacies behind, but the lesson of his two contracts may ultimately be the most valuable.