By Sweeny Murti
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That’s the most fascinating question of this off-season. It’s fascinating for so many reasons: Jeter is the face of the Yankees, but 36 years old and coming off the worst season of his career, going into a year in which he will become the first Yankee ever to reach 3000 career hits.
There is none of the intrigue reserved for other free agents who have multiple suitors. Jeter wants to be a Yankee, and the Yankees want to keep him, and his value on the open market is a fraction of what his value is with the Yankees. What makes this so interesting? The final numbers.
If this was last year, Jeter coming off one of the best seasons of his career (.334 BA, Gold Glove, World Series Championship) this wouldn’t be nearly as tough to figure out: a five year deal for $100-125 million, right? But this year Jeter hit .270 with a .340 OBP and .370 SLG. All three percentages were easily the worst of his career. Was it an aberration or the beginning of a downward trend?
Anybody who knows Derek Jeter is betting on a rebound in 2011. But the Yankees have to bet with real money because they have to sign him to a new contract. And the one factor they can’t ignore is the natural decline that comes with age. Jeter turns 37 next June.
So with all this in mind, I decided to poll some experts to find out what they thought Derek Jeter would end up signing for. I asked 26 people around baseball (13 agents and 13 current or former executives) for their predictions. For obvious reasons, none of the executives were from the Yankees and none of the agents was Jeter’s rep Casey Close. The results were as interesting as I hoped they would be.
Of the 26 guesses, I tossed out the highest and the lowest. The highest was a $150 million dollar lifetime package, and the lowest was 2 years at $10 million per year. Both those guesses came from team executives. Of the remaining 24 figures, the average terms were 2.9 years at $17.1 million per year. The 13 agents averaged out at 3 yrs, $17.6 million, while 11 executives averaged out at 2.7 years, $16.5 million. Many of these people added possibilities for deferred income, a personal services deal after his playing days, and a 3000-hit marketing/bonus clause.
The year Jeter is coming off in 2010 is the main reason why this exercise is so intriguing. Of the 24 guesses used in the figures above, the AAV (average annual value) ranged as low as $10 million and as high as $23 million. If I polled the same people about Cliff Lee, I doubt I would get as big a disparity in the AAV. And while the agents’ AAV averaged slightly higher than the executives’ guesses, the $23 million guess came from a team exec, acknowledging the deep connection and the deep pockets that play into this equation.
This topic is so interesting it’s being discussed not only on the airwaves and at water coolers, but also in classrooms. “The Business of Baseball” is a graduate level class in the Sports Business Management program at Manhattanville College in Purchase, NY. The class is taught by Vince Gennaro, author of the book “Diamond Dollars: The Economics of Winning in Baseball.”
Earlier this month, the class dissected a case study of Derek Jeter and his upcoming contract negotiations. The 22 grad students, asked to submit their proposals based on all the on-field and off-field factors, posted a median contract of 4 years. $18 million per. The length in this study is skewed a bit by six proposals for five-year deals and two more for six-year deals. Of those in my poll, only two agents guessed as high as four years in length.
So again we come back to this…what is Derek Jeter going to get? We all know he is going to be a Yankee for life. Maybe that’s the important part. It’s just not the fun part.