Differing Perspectives on Jeter's Next Deal

As Derek Jeter’s free agency draws closer, fans and analysts alike are having difficulty imagining what his next contract will look like.  On one hand, you have an aging shortstop in the midst of one of the worst years of his career. On the other hand, you have the “face of the franchise”, an iconic New York sports legend who has been synonymous with the Yankee brand for the past 15 years.  Like it or not, resigning Derek Jeter is messy and complicated, and represents one of the more intriguing cases of free agency in recent memory.

On August 6th, Mark Feinsand took a stab at picturing Jeter’s next contract.  In his piece, “Cannot value Jeter but millions will do”, Feinsand argues that Jeter isn’t going anywhere and should command an extremely lucrative contract from the Yankees this offseason.

“There will be a lot of talk this winter about what Jeter is worth as he finishes his 10-year, $189 million contract. Contracts aren’t what they were a decade ago, but if there’s one player who should be handed a blank check, it’s Jeter, who has represented the franchise with as much class and dignity as any player could.”

Handing a blank check to Jeter, who has gone .208/.292/.292 since August 6th (h/t Larry Koestler), doesn’t seem like the wisest idea.  Plenty of time could be spent demonstrating how this sort of sentiment is, well, insane, but that’s not really the point of this exercise.  Instead, it is relevant to note that the potential difficulty that Alex Rodriguez’s contract poses for the Yankees when negotiating with Jeter.  It’s hard to sell the need for austerity measures when you just finished spreading money around like a politician in an election year.  It may be necessary, but it’s unsavory.  As Feinsand notes:

“Alex Rodriguez is due to earn $184 million over the next seven years - and that doesn’t even include the $30 million he can collect from his pursuit of Barry Bonds‘ home run record. Jeter won’t get that kind of money, but if A-Rod is making an average of $26.2 million through 2014, how can the Yankees pay Jeter less than the $21 million he’s making now?

It’s more likely that Jeter will get a raise to $22 million to $25 million per over the next four or five years. That sounds like a ton of money for a shortstop who will turn 37 next summer, but as the rival GM points out, the value of Jeter’s 3,000th hit alone - he was recently named the most marketable player in baseball by Sports Business Daily - is enough to make an inflated deal worthwhile for the Yankees.

“He’s always going to be worth far more to the Yankees than he will be anywhere else,” the GM said. “You can’t quantify what he’s worth with a normal equation. Forget what he does on the field - and he’s still an excellent player - but the business reasons alone are so compelling, it makes too much sense on both sides.”"

Yikes.  Jeter won’t be worth $25 million dollars per year going forward, few players are, and the club doesn’t have that kind of payroll flexibility if they plan to sign Cliff Lee.  Aside from that, and the idea that he would get a raise really should be put aside, are two distinct claims that merit examination. First is the argument that Jeter’s pursuit of 3000 hits is “enough to make an inflated deal worthwhile for the Yankees”.  This is probably hollow.  The Yankees already sell plenty of tickets, so there isn’t upside in gate revenue.  It’s possible that they would get a bump in television ratings, but it’s dubious that they would get the extra viewers necessary to make up tens of millions of dollars in salary to Derek Jeter.  It’s a spurious argument, really.  More persuasive is the claim that his off-the-field value provides the Yankees with reason to keep him.  Giving that concept more than just lip service is Baseball Prospectus’ Ben Lindbergh in his piece “Overthinking It: A Captain’s Ransom“.  First, Lindbergh examines all aspects of Jeter’s performance and then makes the following conclusion:

That combination of weak contact and poor discipline could be a passing phase, but it could also be the mark of a player with declining bat speed, who’s starting his swing early to compensate and adopting a less discriminating approach as a result (as Frankie Piliere suggested yesterday). A mild rebound certainly isn’t out of the question, but an improvement on defense or a complete return to form with the bat at the age of 37 is unlikely, to say the least, and shouldn’t be taken for granted by a prospective employer.

Noting that Jeter’s performance looks a lot like, gulp, Marco Scutaro, Lindberg goes on to argue that Jeter would likely command a salary with an average annual value south of $10M, were he a generic, faceless 37 year-old shortstop hitting the open market after a down year.  But he’s not:

“Jeter boasts not only a far more impressive pedigree as a player but appreciable ancillary off-field value. Can we quantify what sort of worth Jeter brings to a team’s coffers, above and beyond his on-field contributions?”

Lindberg cites a book written by Vincent Gennaro in which he attempts to identify the way that marquee, or brand, value contributes to higher gate receipts, revenue, and franchise value.  Gennaro evaluated all the factors that comprise a “brand”, like image, recognizability, performance and continuity, and concluded that Jeter’s off-the-field value to the Yankees was $3.9 million, separate from his actual on-the-field performance.

“All told, Gennaro set Jeter’s value to the Yankees at $3.9 million, above and beyond any on-field contributions he might make. Jeter’s performance factor has suffered since then, which lowers his marquee value, but in light of inflation, increased continuity and association with the Yankees brand, and his pursuit of his 3,000^th hit, it’s not unreasonable to credit him with upward of $5 million in marquee value alone. Essentially, if when the terms of a deal are eventually announced, it seems like the Yankees paid for one more win than they’re likely to get from Jeter’s bat and glove, they may have simply valued his persona and overall package accurately. While Jeter would retain some of his marquee value in any uniform, he’d sacrifice much of it by forsaking the team with which his brand has become identified. Thus, independent of performance, payroll, or position on the win curve, Jeter is worth more to the Yankees than he is to any other club.”

It’s obvious that Jeter and the New York Yankees have good reason to stay joined at the hip.  What is less clear is how aggressive Jeter will be in attempting to secure another long-term deal for himself, and how reluctant the Yankees will be in doling out big money for an aging star.  It is important, though, to recognize that Jeter’s off-the-field value has a limit.  Whether you buy Gennaro’s analysis and specific figures or not, Jeter’s brand isn’t an endless, unimaginable source of monetary value for the Yankees meriting a giant payday.  Even with all his championships, his pursuit of 3000 hits, and the inimitable way he sells the Ford Edge,  the brand value of Derek Jeter has a limit.