10 year contract for 275M signed in Dec. 2007 for the 2008 season. An AAV of 27.5, including the following breakdown from here on:
2012 at age 36 29M + 1M signing bonus
2013 at 37 28M + 1M signing bonus
2014 at 38 25M + 3M signing bonus
2015 at 39 21M
2016 at 40 20M
2017 at 41 20M
On top of that ARod is reported to get 6M bonus for tying the HR marks of Mays(660), Ruth(714), Aarons(755), Bonds(762). He is at 629 now. So it is likely that in
2013 (possibly 2012 if he has a good year) Add 6M
2015 or 16 add another 6M
And if he manages to average 22.17 home runs per year over the next 6 years
2017 add another 12M
Factor in that it is much more difficult and much less likely that PEDs will be used to avoid the inevitable breakdowns of a 36-41 year player and you have the makings of a crippling contract, even for the Yankees.
His AAV with bonuses is 27.5
Add at least 12M of HR bonuses and that figure will be 29.5. Although it will not be evenly applied over the next 6 years. I believe that type of bonus is put in the year it is earned.
Starting in 2013, when the revenue rebate of the new CBA starts to phase in 25% per year, the cost of being over the CBT(tax) threshold becomes very large. Not only will it be 50% luxury tax for the Yankees if they never get under the cap but they also lose approximately 5M - 25M in their rebate (depending on the year and actual rebate).
So in effect the Yankees do not have 189M in a luxury threshold startinig in 2014, instead they have ARod + 151.5M in some years and 146.5M in others. This makes the possibility of the Yankees staying under the cap and remaining one of the elite teams very difficult.
If we assume the Yankees will just blow through the CBT threshold, and we lay this entirely ot the feet of ARod (of course, not really fair - there are other bad contracts that got them to this point, although ARod's is clearly the worst) then the actual cost of ARod is (all approximates):
2012: 30M + tax of 11.55 (42% of 27.5 AAV #) = 41.55
2013: 29M + 6M HR Mays bonus + tax of 16.75 (50% of 33.5) + 5M (loss of rebate 25%) = 56.75
2014: 25M + tax of 13.75 (50% of 27.5) + 10M (loss of rebate 50%) = 48.75
2015: 21M + tax of 13.75 (50% of 27.5) + 15M (loss of rebate 75%) = 49.75
2016: 20M + 6M HR Ruth bonus + tax of 16.75 (50% of 33.5) + 20M (loss of rebate 100%) = 62.75
2017(assuming CBA does not change and he does not hit >754 HRs): 20M + tax of 13.75 (50% of 27.5) + 20M (loss of rebate 100%) = 53.75
2017 (if he hits 762+ HR with same CBA terms): 20M + 12M HR Aaron/Bonds bonus + tax of 19.75 (50% of 39.5) + 20M (loss of rebate 100%) = 71.75
Even to the Yankees, that is an awful lot of change that can be assigned to a player at ages 36 - 42.
I realize it is not fair to assign all of the rebate loss to ARod, and the amount listed there is just a rough guess. However, the point is that these very high long term deals handicap teams that are close to the CBT Threshold. We have seen both the Red Sox and Yankees avoid long term expensive contracts this year. The Angels will go on to regret the contract they awarded Pujols in the same way. These long-term, very rich deals will definitely decrease in annual salary as teams deal with the new CBA. It is just the penalties for an expensive long term contract to a player that ends up underperforming (and it is almost impossible to perform to a 27.5M level) is terribly expensive to clubs.
But for 6 years of an aging ARod to cost over 300 Million dollars is astounding. In the end, the Yankees will certainly try to pin $30 Million to his back and pray that someone will take him off their hands in 2016 and 2017. If this makes it possible to get them under CBT, it would save them 80 million (however the money they pay as part of any deal will still count toward their total team salary). The possibility of a deal will be good, since the cost will be much lower to the receiving team who will certainly not be close to the luxury tax. However, ARod's no trade clause will also force the Yankees to pay ARod some money to agree to be traded.
Edited by In my lifetime, 14 October 2012 - 07:35 PM.