Just to let you all know this is not just a pure Wall Street blog as I will discuss some sports business, specifically one that concerns the GREATEST sports team of all time ... the NY Yankees.
Now the biggest issue facing my beloved Yankees aside from planning their 27th parade down Boardway at the end of October is whether or not their MVP, league MVP, offensive player of the year, Alex Rodriguez will re-up with the Yankees. Now there are a lot of critics who will argue that Greedy Rod will leave the Yanks for another vaster field of riches like the Cubs who had doled up approx. $300 million to free agents in the past season and has a manager in Lou Pinella who loves A-Rod and vice versa. Again cause of concern for A-Rod is the constant criticisms NY has given him and how he would fare better in a more relax baseball environment like the LA Angels (or even Baltimore there are no standards there anymore) who have the financial flexibility to sign him.
Let me address those causes of concern on the Yankees signing their star player. My take is this: A-ROD ISN'T GOING ANYWHERE BUT TO THE NEW YANKEES STADIUM ACROSS IN THE STREET.
Say all you want about the baseball fans of NY, they hate you and boo you lustfully when you suck but would fall behind you and give you loyalty like no other when you can hammer it up. There is no better market to showcase your talent, skills, and marketability when you succeed in New York since few have. One only have to look at Derek Jeter, who is not even the best shortstop on the team as evidence of how players on the Yankees get overrated and overhyped by the rest of the country.
Everyone knows that the Yankees have money so naturally one would assume that money is not the problem with them. Then the media comes out and stating their sources, go on to say that the Yankees will not overpay A-Rod to keep him in NY and will only pay him a small increase relative to his current salary of $25 million per season. The writers then assume that that future pay would fall into the $27-$30 million range. Playing the shrewd agent that he his, A-Rod's go to guy, Scott Boras comes out and publicly stated that his client is looking for a minimum of $32 million per year before talking. Clinging to that line, the writers of NY pretty much blasted A-Rod and dismissing him for an ex-Yankee in a season in which he is lighting up the offensive numbers.
That my friends, are false assumptions to cling on to. I truthfully, to the bottom of my heart believe that A-Rod will stay as a Yankee with a contract in the range of around $32-$34 million per year for the next 6-7 years (probably an extra 1-2 year option thrown in as well). What leads me to say this is all due to the health of George Steinbrenner.
http://money.cnn.com/2007/08/01/news/companies/yes_sale.fortune/index.htm
The article correctly guesses that the owner is in distress shape and that the sale of the Yankees are eminent. My guess is that within 5 years, the Yankees will no longer belong in the hands of the Steinbrenner family. Of course, if George passes away sooner (may that day never come), all bets are off and within 2 years of that unfortunate event, the team will be sold. Now when the team is up for sale, the assets that you promote to boost the value of the team is the services/products that the team provides. For the NY Yankees, the service is an entertaining baseball team which is known around the world. The product, and this is key here, is the players. For the Yankees, their most marketable players are Derek Jeter and A-Rod. DJ could only get you so much value as he is not big offensive player (save me the whole Mr. Clutch argument) who can singlehandedly drive people to the stadium. In this day and age, people (not only chicks) dig the long ball and the most potent player at that is A-Rod. The Steinbrenners would be extremely foolish if they do not resign their best HR hitter which would thereby stabilize and or boost the values of the stadium. With a new stadium set to open in 2009, this only makes the case to get A-Rod to stay stronger as he would be a pivotal attendance grabber. The best example of how a team would spend to keep/lure in marquee players is the 2007 Chicago Cubs. For a team which historically is not a big spender in the free agent market, it came as a surprise to most baseball experts they would spend about $300 million to bring in a few big name guys. To me though it was not surprising as it was well known that the Tribune company is up for sale and thus the Cubs. Like I says earlier, what better to boost the value of your company then to have valuable assets like Alfonso Soriano, Ted Lilly (vastly underrated front line pitcher), and resigning Aramis Ramirez. In the end, the Tribune company was sold to Sam Zell and the team was up for sale. No sooner was it announced that already the Cubs have several suitors, namely Mark Cuban of the Dallas Maverick fame.
Look, the Yankees will resign A-Rod to give them a big time draw for the new stadium. Players like DJ, Joba, Posada, and A-Rod would help usher in future record setting crowds at the brand new Yankees stadium as well as MLB in general. Having a 27th and perhaps 28th championship banner would only serve to an additional catalyst in that effort. Here is my early congratulations Mr. Alex Rodriguez for remaining a Yankee for the rest of your playing career. In your HOF induction speech, please tell the NY media that I told you so.
New York, New York !!!!!
-Myth
P.S. - big props to Goldman for investing in the YES network early and recognizing the platinum value of the Yankees brand
