What Is A-Rod Really Worth? (Danger! Not Funny!)

Did you know that A-Rod is going to turn 34 this season? 34! I honestly had no idea he was getting that old. The guy can rake, so steroids, Madonna, purple lipstick, or whatever, he's not going to fall off a cliff. But still, 34? That's getting old. The reason that strikes me is the Yankees just gave him a ten year contract a year ago worth $275 million. That seems pretty steep for a 33 year old, even if that 33 year old is A-Rod. The mid thirties is about the time that players start to see a marked reduction in their abilities. Which all got me thinking, is there any chance that A-Rod is going to be worth $275 million over the life of his contract? Or even close?

Fortunately Baseball Prospectus has a stat called MORP which essentially does exactly what I'm looking for. It measures the predicted value of each season for a player, based on their PECOTA projection system. I'll spare you the gory details, but the basic point is to place a monetary value on each year going forward. First you predict what that player will do then you assign a monetary value based on what that value is on the free agent market.

So I compared the projected value that the Yankees will be getting for the next nine years of A-Rod's contract to what he'll actually be paid and, well, yikes:

Year...........Salary..............MORP.............Difference
2008....$27,000,000.....$28,100,000.....$1,100,000
2009....$32,000,000.....$25,425,000....-$6,575,000
2010.....$32,000,000.....$20,825,000....-$11,175,000
2011......$31,000,000.....$17,975,000.....-$13,025,000
2012.....$29,000,000.....$15,850,000.....-$13,150,000
2013.....$28,000,000.....$10,600,000.....-$17,400,000
2014.....$25,000,000.....$10,400,000.....-$14,600,000
2015.....$21,000,000.....$10,000,000.....-$11,000,000
2016.....$20,000,000.....$10,000,000.....-$10,000,000
2017.....$20,000,000.....$10,000,000....-$10,000,000
Total:...$265,000,000....$159,175,000....-$105,825,000

There is a difference of $105 million in what A-Rod's projected to give the Yankees and what the Yankees will pay him. $105 million! There are other considerations such as the marginal value of a win,* team-related endorsements, and maybe other things that I'm not thinking of right now, but that's an insane level of overpaying and I can't imagine those other things covering that difference.**

On a side note, this is a pretty big point in favor of Scott Boras, who negotiated A-Rod's first free agent contract with the Texas Rangers. That ten year $252 million deal set the market for the deal that A-Rod signed with the Yankees. The fact that there were no other teams willing to bid close to the amount A-Rod ended up getting either time is pretty impressive.

The Yankees are the biggest of the big market franchises so, as the thinking goes, they can afford to overpay for top talent if they want to. Still, is any player worth $105 million over market value? I'm going to go ahead and guess 'no.'

*Meaning a win for the Yankees may be more valuable than say a win for the Nationals. The Yankees are going to be in the playoff hunt each year and making the playoffs is a huge revenue generator for teams. If over-paying A-Rod allows them to get into the playoffs each year (or some percentage) then they can make back that money.
**And that doesn't even count his $10 million signing bonus. Doh!