By Sweeny Murti
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Hal Steinbrenner joined Mike Francesa on WFAN Tuesday afternoon. You can click here to listen to the entire interview.
A few statements made during this interview fascinated me. In respect to negotiations with Derek Jeter and Mariano Rivera, at various times Hal was quoted as saying, “Obviously we want them back…It’s gonna have to be a deal both sides are happy with…I’m running a business and I have responsibilities.”
Ladies and Gentlemen: the posturing has begun.
Hal Steinbrenner fired the first salvo in the negotiating process. It doesn’t sound like much, but when you read between the lines he doesn’t sound like a guy willing to open the bank vault to two iconic players simply for payment on past glories. And those who know Hal have told me he means it when he says it’s a business. He believes in tradition, but he is not sentimental.
There are people in the industry who believe it would be imprudent of the Yankees to just overpay Jeter and Rivera. This speaks more to Jeter, who’s coming off the worst statistical year of his career. Rivera is still pitching at an elite level and as long as he remains the highest paid closer in the game, there is little more the Yankees would need to do (Rivera earned $15 million each of the last three years; the next highest paid closer is Brad Lidge, signed for $12.5 million for next year).
But several big league executives have told me Jeter and his representative might have to come to the table prepared for a pay cut from the $18.9 million average of the last decade. Michael Young was signed to a contract that made him the second highest paid shortstop at $16 million per year, but Young is now a third baseman, not a shortstop, so its doubtful he can be used as a comparable salary player. The next highest paid shortstop is now Hanley Ramirez, averaging $11.67 million on a deal that runs through 2014.
So it’s possible for the Yankees to make Jeter the highest paid shortstop at merely $12 million per year (although Ramirez averages $15.5 million the last three years of his deal). A $12 million salary would be a pay cut of almost $7 million per year from the last contract. Is that something Jeter and his agent can live with? The Yankees can probably sweeten the deal a little bit based on any marketing incentives they can build into his 3000th hit milestone (Jeter should hit that mark in late May or early June 2011).
But how much do they have to sweeten it? The Yankees have really no competition for Jeter’s services because there probably isn’t a team out there that would give a 37-year old shortstop a multi-year deal worth $15 million per year. The Yankees are bidding against themselves.
One agent told me recently that Jeter’s representative has to do right by his client and try to get him the most money he can, even if the market is limited to one team. Another agent said he might even have (and probably already has) to prepare offers for other teams simply to maximize value. So that might not mean signing the first thing the Yankees put in front of them. Both agents did echo what many others have told me this year—that there is no such thing as an easy negotiation, and even if it doesn’t become public there will be more than one tense moment during the process as the two sides try to come together.
The Yankees need to be fair in dealing with Jeter, but their version of fair and Jeter’s version of fair might create a gap. They can’t insult the most iconic Yankee since Mickey Mantle, so their first offer will be extremely important. Do they really want to tell Jeter he will be the 6th or 7th highest paid Yankee? Remember—A-Rod, Sabathia, Teixeira, and Burnett already make more than $16 million, and so will Cliff Lee and possibly Rivera.
Hal Steinbrenner said during the interview on WFAN that “we have money coming off the payroll” when asked about the Yankees ability to spend freely in the free agent market. While part of that payroll shedding comes in the forms of Nick Johnson ($5.75 million) and Javier Vazquez ($11.5 million), the other parts are the expiring contracts of Jeter, Rivera, and Andy Pettitte.
Signing three-fourths of the Core Fore to raises or equal value contracts does nothing to lower the payroll because the Yankees also have contracted raises coming to Curtis Granderson ($2.75 million), Nick Swisher ($2.25 million), and Mark Teixeira ($2.5 million), plus first-time arbitration raises due to Phil Hughes and Joba Chamberlain.
And yes, there’s also Cliff Lee. And that will take money too.
The Yankees have to be careful here. In the recent past they have taken cold-hearted, business-like approaches with Andy Pettitte, Bernie Williams, Joe Torre, Johnny Damon, and Hideki Matsui. This time its different. They can’t low-ball Derek Jeter and start a PR nightmare. If it gets messy, whom do you think gets perceived as the bad guy—Derek Jeter or Brian Cashman? The Yankees can’t win that battle.
Let’s not jump to extremes here, though. I still think Derek Jeter and Mariano Rivera will be Yankees for the rest of their careers. I’m just beginning to become even more fascinated with what the final numbers are going to look like.