Financing Future Yankee Teams

The 2010 New York Yankees are the odds-on favorites to repeat as World Series Champions. They are stacked with some of baseball’s best (and richest) players, playing in the prime of their careers.

After this season though, Derek Jeter will need a new contract.

Many media outlets and fans alike have spent copious amounts of time discussing and debating Derek Jeter’s next contract. Jeter, 36, is in the final year of his 10-year, $189 million deal.

So how much should Jeter get in his next contract?

I’m in the majority who thinks Jeter should be handed a blank check. Does it make sense to give a 36-year-old shortstop at least $20 million per year over five years? Not at all.

But everything changes when he has been the face of your franchise for 10+ seasons and has massive fan appeal. Jeter will be the staple of Old Timer’s Day for decades to come.

Could you imagine the backlash that would happen if the Yankees tried to play hardball with Jeter?

For now, let’s assume that Jeter will get a five-year, $100 million deal. This contract will place Jeter into a group of Yankees who are 33+ years old that have multi-year contracts in 2013.  A.J. Burnett will be 36, A-Rod will be 38, Jeter will be 39, and Sabathia/Teixeira will be 33.

As of right now, before Jeter’s new contract is added in, this group of four players is set to make $90 million.

The Yankees must assume that Mariano Rivera, 40, will want a two- to three-year deal after this season. Rivera has had career years in 2008 and 2009, so I’ll project the Yankees to pay him $45 million over three years.

I can’t see the Yankees playing hardball with Rivera, either. This deal will vault the then 43-year-old Rivera into that same 33+ class.

Here’s a projected breakdown of the 2013 payroll:

So that’s $125 million dollars for six players who are all over the age of 33. On top of this figure, the Yankees will need to include Robinson Cano’s $15 million option, Curtis Granderson’s $13 million option, and new contracts for young pitching (Hughes, Chamberlain, Robertson, etc.) who will no longer be under team control.

**The Yankees will also pay A-Rod $6 million each time he passes a top four member of the all-time HR list. Assuming that the Yankees pick up both Cano’s and Granderson’s options, that will put the payroll at $153 million for eight players.

The Yankees have had a good track record with long-term contracts. Jeter’s expiring contract was a good one for the Yankees. Jason Giambi can be viewed as a failure to Yankee fans, but he averaged 30 HRs and 90 RBIs during his seven-year stint with the club.

My Reaction to These Numbers?

Enjoy the Yankees stars while they are in their prime.

There’s an extreme amount of financial risk involved in these contracts. A-Rod is under contract until 2017, Sabathia, 2015, and Teixeira, 2016. A.J. Burnett has thrown back-to-back 200+ innings only once in his career. Sabathia is an absolute workhorse, but he has logged 779 total innings in the last three seasons. Will that catch up with him down the road? Mariano is immortal to us. Will he become human and fall off at some point?

I don’t want to sound pessimistic. Again, there’s a huge amount of financial risk involved with aging players. The Yankees only had to worry about Giambi finishing his long-term deal before.

Going forward, the Yankees will have Jeter, Sabathia, Rodriguez, and Teixeira on tap until 2015. Do I think one of these contracts will go belly-up? No, I don’t. But it’s worth writing about and discussing.

With so much money wrapped up in players already, don’t expect the team to go ‘free-agent crazy’ this offseason.

Resigning Jeter and Mo will be the priority.

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