FC NOW: The Fast Company Weblog
October 10, 2007
Sports: Is A-Rod Worth $1 Billion? It Might Not Be As Crazy As It Sounds
Well, that didn't take long. When the New York Yankees were eliminated from the playoffs Monday night, the baseball season, for all intents and purposes, ended.
Forget the battle between Arizona and Colorado, in an NLCS that promises to draw about twelve viewers east of the Rockies. Not to mention those upstart Indians -- who took down the Yanks -- or a Red Sox team that seems the clear favorite to win its second World Series in four seasons.
No, the story in baseball is now all about one man. One agent, to be exact, who seems to believe he is the first in history to represent a deity.
Scott Boras, the high-powered agent for several stars including Yankees third-baseman Alex Rodriguez, is already pushing up his asking price should A-Rod decide to opt out of his contract.
As CNBC's Darren Rovell reported yesterday on his sports business blog, Boras believes A-Rod is worth at least $500 million over the next 10 years. That's almost double his current $252 million deal, which was signed after the 2000 season and remains the most expensive in baseball history.
My initial reaction was that Boras must be out of his mind. But Rovell got him on the phone later in the day and came away impressed by his logic. Basically, he says, team-owned regional sports networks have changed baseball's economic landscape:
Before A-Rod, the YES Network never did better than a 3.2 rating. Since A-Rod came to the team, the network has seen its ratings rise to a record 4.7 this season. Since no significant position player has been acquired since Rodriguez joined the Yankees in 2004, Boras says he can contribute the ratings rise -- as well as the turnstile rise, by the way -- to his client being on the team……YES, which was given an initial value of $850 million upon launch in 2001 is now said to be worth about $3 billion.
While I remain dubious that A-Rod is the sole reason for the network's growth -- afterall, YES had only existed for two seasons when A-Rod arrived in New York -- Boras makes a compelling argument. If one marquee player can have a dramatic impact on an RSN's ratings, then isn't he worth whatever the ratings boost brings in advertising revenues? From a purely economic perspective, I can't say that he's not.
That said, I don't like the implications of Boras' logic. Team-owned regional sports networks should generate revenue to help support a winning team, not the other way around. And despite the potential to grow an RSN, signing A-Rod to an earth-shattering deal isn't the best way to put a successful product on the field.
Just look at the Yankees. They lost because they couldn't pitch; their go-to guy, Chien-Ming Wang, lasted exactly one inning in Monday's season-ending loss. Now consider that the four teams still alive in the playoffs have five pitchers between them who won at least 17 games this season, and that those five guys made a total of $21,054,167 in 2007 -- even less than A-Rod ($27 million) in his current deal. As far as wins and losses go, especially come playoff time, there are clearly better ways for a team to spend its money.
In the end, Scott Boras has always valued the biggest deal over championships. But A-Rod already has the biggest deal in history. If he really wants a ring to cement his place as the Greatest Of All-Time, he should be careful about how high he lets his agent go.
Posted by Matthew Finkelstein at October 10, 2007 9:13 PM | Category: sports |
20 Comments
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I am compelled to point out your malapropism. The proper phrase is "for all intents and purposes."
There are any number of flaws in Boras' thinking. Some are intentional, I would imagine. The early YES numbers can't be used to compare 2007 YES numbers because Cablevision did not carry YES for the first season. It may have stretched into Spring Training of the following year, but I don't remember.
Also, I'm sure Mr. Boras failed to mention that YES' ratings lagged in the early part of 2007 when the Yankees stunk, despite A-Rod's heroics during that span.
Finally, Boras is suggesting that a players Q-rating be factored into their salary along with their production on the field. This does happen, particularly with Japanese players, but it can't be the basis for individual negotiations as a rule. The CBA's of all major sports already figure revenue into salaries as a whole to some degree. To do so on an individual basis would be double-dipping.
New contracts, and arbitration awards, are based on comparisons of production numbers, so A-Rod's premium gets passed on down the line. In effect, A-Rod loses his premium and Boras' other clients, and Boras himself, are the beneficiaries.
The bottom line is that the man is bad for the game. Exhibit A is the Yankees are sacrificing a lot of seats for regular fans in order to add lucrative corporate suites.
I realy don`t give a hoot what mr. boras say`s,
there isn`t any one player in majer league baseball worthy of that kind of money,period!
YES wasnt available on all cable systems early on...
@Grammar: no, it isn't. If you're going to be prescriptivist at least try to be right.
arod isnt even worth 15mil a season, ya he did good in the regular season but his performance sucks balls when it matters aka the playoffs, wow 1rbi in liek 50+ ab's in the post season hes really clutch
uh, syntax - yes, Grammar is correct. I don't know what you had in mind, but the correct phrase is "for all intents and purposes" (can also be "to all intents and purposes."). Check out http://wiki.answers.com/Q/Is_the_saying_'all_intents_and_purposes'_or_'all_intense_purposes'
http://wsu.edu/~brians/errors/intensive.html
http://www.wordwebonline.com/en/FORALLINTENTSANDPURPOSES
for background.
The "upstart" Indians who you prefer "not to mention" have been winning and showing promise all year.
You can bemoan the season's end, but true baseball fans and all fans of the 4 markets still in contention, of which I am one, heartily disagree.
I'll never understand why the americans like "their" sports (nascar, baseball, american football..) so much.
The hype around some of their fellow sportsmen is just ridiculous.
I mean "you" didn't even care about football/soccer but you seem to care about a second class player like beckham...?
I've recently read an american list called something like "the worlds most important sportsmen" and the first 29 places were a joke.
Almost no one outside the US has even heard of these people and someone like federer (one of the, if not THE all time great/s in tennis) ranks place 30...
I certainly wasn't bemoaning the season's end. I was simply commenting that a lot of national coverage has shifted away from the playoffs, which still have plenty of exciting story lines (including the "upstart" Indians) to A-Rod and other Yankee-related matters.
@Bob - I agree with your analysis. In addition, ratings on YES declined in each of the 2 seasons prior to 2007. Boras clearly intends to be misleading.
What bothers me is the implication of his "logic" -- that the product on the field is simply an accessory to the more important moneymaking venture that is the network. That owners should value ratings over wins. Like you said, he is bad for the game.
@hell no! -- screw you you f'n foreigner. You talk about the 29 names on the list being a joke, (Tiger is on that and he is no joke), when you're living in the Beyond section of Bed, Bath and Beyond; some uber clandestic reality world that you call Europe.
You whiney little bitches in europe always have something to say about america. As if you wish to think you guys actually have some importance in the world now. You flaunt your history, your fashion, your taste for fine wine, but the fact of the matter you want to make your egos feel good by pulling down America.
This IS the greatest country in the world. And you want to hold on to your history, well fine, I'll hold on to mine. We saved all your European asses 60 years ago when Hitler was marching all over you b*tches. Show a little bit of gratitude. You are all so pompous and full of yourselves.
F you, and F soccer!!
You do realize that A-Rod sucks in the playoffs right? He has proven time and time again that he sucks royally when it matters most: the playoffs.
No player that chokes that bad will ever be worth $1 billion...that idea is just ridiculous.
@Steve
Please die. I'm an American, and you are embarrassing this country that you claim to be so proud of.
@Steve
yes you have proven your point mate. You have belittled your knowledge of "the world" outside the US borders. Football/Soccer is the most followed sport globally, not baseball. TV makes baseball huge, not players internationally. A-Rod is not known in Europe/Asia or anywhere else in the world.
Remember history lives long before the Mayflower pulled up.
@Syntax
What? You must have missed that Finkelstein's original post said "for all intensive purposes," but he edited it. Grammar is right.
Also, Steve, please crawl back in your hole. Your xenophobic attitude is now welcome here.
I agree with hell no. Federer is to tennis what Tiger Woods is to golf. With the exception that Federer has a much higher win %. Furthermore, soccer players such as Ronaldino should be given much more credit, they are the premier athletes of the most participated sport of the WORLD.
Let me preface the next statement with the fact that I am an avid sports fan. But still...
AROD will never be worth the amount he is paid. NO professional sports person is. Millions of dollars paid to help improve a sports teams record. Oh, and every year EVERY team is back to 0-0-0. Other occupations involve contributions of much greater importance.
Arod is the best example of an overinflated salary. If he was to be paid $1,000,000 it would be too much. It is the market that pays these amounts that is to blame, not his money-hungry agent. Who could blame him if teams like NY continue to increase their payrolls year after year?
I'm still waiting for the other shoe to drop on a player/ownership deal. When that rumor came out a couple of weeks ago, I shuddered at the implications. Thing is, it could happen. Just as big companies offer stakes in a company to big-time CEOs, a franchise could lure a marquee player with future stakes in that franchise. How MLB and the MLBPA handled it is up for debate, but I don't see how it couldn't at least come up in conversation.
If someone were prepared to offer a billion dollars for a player, there's no saying that they wouldn't offer half that, but include profit sharing in the team. I wouldn't be surprised to see this rumor surface again in the future, if not with A-Rod and baseball, then someone else in another sport.
Boras is the devil, genius, a visionary, and out of his mind. Has anyone seen what some of his thoughts on how to change baseball?
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