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I posted this on a message board that my friend runs...thought you might find it interesting:

It seems like almost all sports contracts are "back-loaded", in that the salary starts small, and gets progressively larger, so the highest annual salary is in the last year of the contract. But in this case, A-Rod will be getting paid according to his approximate contributions to the team...as his talent diminishes with age, so will his salary.

Now, you might be saying "Well, he'll still be making $20 million in the last year of his contract, that's not too shabby". Well no, it's not shabby at all. But consider that that is 10 years in the future. When you take inflation and growth in MLB salaries into account, that $20 million looks liek a lot less.

In the years 1995-2006 (the post-strike years), MLB salaries rose at an annual rate of 4.8%. That means that if salaries keep rising at that rate, A-Rod's $20 million in 2017 will be the equivalent of $12.5 million today, which is quite reasonable

Just to take it a step further, if you "discount" each year's salary by the average growth in salaries, these are the annual salaries:

2008: $27.665M
2009: $30.031M
2010: $28.648M
2011: $26.500M
2012: $23.700M
2013: $21.855M
2014: $20.130M
2015: $14.402M
2016: $13.084M
2017: $12.482M

Bringing the total value of the contract in "today's dollars" to $218.496M

Yup, I'm a nerd...

Tom,

I think this contract really is a concession on A-Rod's part. The Yanks aren't going to have a 42 year-old albatross around their necks in 2017, they're going to have a reasonably priced legend. His historic incentives will probably kick in right when the yearly salaries drop significantly (2011-2013/4), so the Yanks will keep their costs pretty static even if he's breaking the records then.

I like the deal for the Yanks, I really think they did recoup the $21M they lost when he opted out.

On that note, how do you think Texas is going to spend that found money?


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