The Captain's Blog

Last year, the Yankees had one of the worst offenses in baseball. This year, the Bronx Bombers’ bats rank among the best. How has the team’s lineup improved so significantly without making a big offseason acquisition? There but for the grace of “bad contracts” go the Yankees.

The Yankees’ offense has been revived because Mark Teixeira and Alex Rodriguez have both resurrected their careers. The two sluggers currently have the second most home runs among any pair of teammates, and rank among the top-10 in the American League in terms of OPS+ (and within the top-12 in wRC+). As a result, the Yankees’ offense has improved by nearly three-quarters of a run per game compared to last year.

Dynamic Duos: Top Home Run Hitting Teammates
Source: fangraphs.com

According to the recent narrative, Arod and Teixeira were supposed to be part of the problem with the Yankees offense, not the solution. Because of their onerous contracts and declining play, the two aged sluggers had supposedly become an insurmountable burden that the cost conscious Yankees couldn’t overcome. That’s why if many Yankee fans (and team executives) had gotten their way, Teixeira and Arod wouldn’t even be on the team this year, let alone at the forefront of an offensive resurgence. And yet, despite all the criticism, the two All Stars continue to pound the baseball…and earn their substantial salaries.

Over the previous two seasons, Arod and Teixeira played 182 games combined, so it’s easy to understand why most people had muted expectations for the duo. It’s also clear to see why so many view the pair as grossly overpaid. However, even before this year’s hot start, that characterization was unfair. Although the two sluggers had suffered an obvious decline with age and injury, their cumulative performance, combined with reasonable assumptions about post season contributions and economic impact, suggested that the Yankees had at least gotten their money’s worth from the two mega-dollar contracts, especially when considered in light of the financial structure of the game (click here for an analysis of Robinson Cano’s contract presented in this context).

WAR-Based Evaluation of Mark Teixeira’s Current Contract
Note: Signing bonus is attributed to year in which it was paid. 2015 salary is pro-rated; 2013 salary excludes insurance claim.
Source: fangraphs.com

Mark Teixeira’s contract has certainly lived up to its value proposition. Since signing his current eight-year, $180 million deal, the first baseman has provided $119.6 million of value, according to Fangraphs’ WAR-based valuations. That contribution almost matches exactly the $121.9 million the Yankees have paid Teixeira to date (includes pro-rated 2015 amount and excludes $18.7 million insurance claim in 2013). Of course, that doesn’t take into account post season contribution and marketing derivatives, but considering Teixeira’s poor October numbers and his less than stellar persona, it’s likely that those add-ons are negligible. Still, even a small positive contribution would push Teixeira’s contract into the black.

WAR-Based Evaluation of Alex Rodriguez’ Current Contract
Note: Signing bonus is attributed to year in which it was paid. 2015 salary is pro-rated. 2014 salary is sum of $3 million signing bonus and pro-rated salary based on off days (click here for more details).
Source: fangraphs.com

Alex Rodriguez’ second 10-year deal requires a more complicated analysis (his first contract was a slam-dunk win for the Yankees). In terms of WAR-based valuation and total salary, the Yankees have over-paid Arod by $50 million since 2008 (or about $7 million per season). But, unlike Teixeira, the extenuating circumstances surrounding Arod are much more significant. In 36 post season games since 2008, Rodriguez has posted a line of .244/.365/.441 in 156 plate appearances. What is the value of that production? There is no calculation of WAR for the postseason, but a back of the envelope analysis (see below) suggests a bear case valuation (that doesn’t take into account relative performance in the postseason nor the financial rewards for advancing to subsequent rounds) of at least $10 million, which narrows the deficit to $40 million. Then, when you consider Arod’s impact on attendance and ratings, as well as the marketability of his stardom (at least before the Biogenesis scandal), the needle moves even closer to break even. Unfortunately, it’s impossible to really know the Yankees’ financial return on Arod’s contract, but if the team thought milestone home runs were worth $5 million, it seems obvious that his overall presence on the team has been worth substantially more.

Valuing Alex Rodriguez’ Postseason Performance
Note: 2011 is used as a comparison year because production rates are similar to Arod’s postseason performance from 2009 to 2012. Total value is determined by pro-rating 2011 WAR based on post season plate appearances from 2009-2012 and then multiplying by the average $/WAR value during that period.
Source: baseball-reference.com and fangraphs.com

With one and two more years to go on their respective contracts, Mark Teixeira and Alex Rodriguez have plenty of time to change the perception of their value, for better or worse. At this point, however, both players have not only given the Yankees their money’s worth on a cumulative basis, but each continues to produce at a level befitting their salary. Keep that in mind the next time someone laments how bad contracts are killing the Yankees. When considered in the proper context, many deals described as onerous actually turn out to be very good investments, especially for a team like the Yankees that has more than enough money to afford them, not to mention a vested interest in maintaining the image of its brand. So, whether it’s the 2009 World Series championship, perennial postseason appearances and 90-win seasons until 2013, or this week’s sweep of the Kansas City Royals, remember that much of the good accomplished by the Yankees over the last decade has been made possible by having so many “bad contracts”.