The Ten-Year Contract

Derek Jeter/New York Yankees

In the same season Alex Rodriguez was moving to the Texas with a lot more money in his bank account, Derek Jeter received his own ten-year contract with the Yankees.  Jeter was a three-time All-Star at the time of his ten-year contract.  He had won Rookie of the Year in his first full season.  He could flat-out hit.  The Yankees gave him a ten-year, $189 million dollar deal to keep him around.

Here’s the Yankees’ average wins for the ten years before the contract and the ten years after:

Before – 87.1

After – 97.3

Jeter’s contract did not affect the Yankees ability to win games.  Did it enhance their ability?  Perhaps.  Jeter is 12-time All-Star, has the most hits in Yankee history, and has helped New York win five World Series.  The Yankees did not lose out on much if anything in opportunity cost by giving Jeter this contract.  The same may not be true of Jeter’s most recent deal, but that contract was more of a symbol.  This ten-year deal was given to Jeter when he was just 27 years old, and it essentially required him become the face of New York Yankees baseball.  He lived up to those expectations, and this ten-year deal would rank second on my list right behind Winfield’s.

Alex Rodriguez/New York Yankees

Prior to the 2008 season, the Yankees and Alex Rodriguez were in the midst of tense contract negotiations.  It looked as if the Red Sox may be able to lure Rodriguez away from New York.  But then, George Steinbrener dug deep into his pockets and gave Rodriguez the second ten-year contract of his career, a $275 million deal.  Rodriguez again set the record for largest contract in baseball history and became the first player to earn $27 million in a season.

I won’t go into the average wins because this contract is so recent, it wouldn’t make much sense to do so.  The Yankees have the means to sign a player to a contract like this and it not hurt them no matter the output.  However, Alex Rodriguez has performance very well since 2008.  He has hit 284 home runs with the Yankees and is closing in on 3,000 hits.  It’s hard to fault the Yankees for giving this contract, but had it been any other team, it could be crippling.