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ÝBASEBALLSpare the Cash, Spoil the RodA Q&A on the implications of Alex Rodriguez's new deal with the Texas Rangers
Far be it from me to thwart the will of the people. So, forthwith,
here's
everything you wanted to know about A-Rod's new contract, its impact on
the baseball industry, and on your wallet, but were afraid to ask -- in
handy-dandy Q&A format: Q. $252 MILLION???? A. First off, it's not really $252 million. It's a ten-year contract,
starting at $21 million a year and rising to $27 million by the year
2011
-- and much of that is deferred to the end of the contract. A promise
to
pay money ten years from now is not the same as cash up front. (If you
disagree, I've got a no-interest savings account I'd like to sell
you...) So forget all those stories of how Rodriguez is getting paid more than
Tom
Hicks paid for the whole Rangers team. Though if he invests carefully
and
saves his pennies, he can probably pick up the Montreal Expos or
something
once he's done playing. Q. Yeah, but... $252 MILLION???? A. Well, yeah. Any way you slice it, this is what economists like to
call
"a buttload of money." The problem is that denying Rodriguez his dough isn't going to help the
bottom line of Joe and Mary Schoolteacher. The man cutting A-Rod's
checks,
mergers-and-acquisitions baron Tom Hicks, doubtless raked in a lot more
than a measly $21 mil this year -- and he can't even hit a curveball. There are really only two ways to keep people from getting filthy rich
off
sports: Keep the money out of the sports industry at the inflow end, or
extract it once it's already there. If you're interested in doing the
former, stop buying tickets, stop watching games on TV (a large chunk
of
A-Rod's salary will be floated by local and national TV advertisers),
stop
watching TV after games (you "Malcolm in the Middle" viewers, you're
the
ones to blame for the mammoth NFL TV contract), and stop voting for
politicians who push public stadium subsidies, which enable teams to
spend
luxury box revenue on players instead of on actually building luxury
boxes. That's the complicated way. The easy way is to just raise the top tax
rate, simultaneously pumping money back into the public's pocket
(criticize the federal government all you want, it's a no-brainer that
the
more taxes they squeeze out of someone else, the less they need from
you)
and reducing the incentive to earn obscene salaries, since much of it
would go straight to Uncle Sam. Under Jimmy Carter -- hell, under
Richard Nixon -- A-Rod would be kicking back an extra $6 million
or
so a year to the public via federal income taxes. I'd be down with that, but somehow I think a certain former Texas
Rangers
owner thinks otherwise. Q. Okay, but why A-Rod? Can he possibly be worth that much money? Can
anyone? A. One of the most unintentionally funny things I've heard in recent
weeks
came from ESPN's Tim Kurkjian, who opined after the Red Sox inked Manny
Ramirez: "Ramirez is more like a 14, 15 million dollar player, but in
this
market, he gets 20 million." Right, Tim -- just like a gallon of gas is
really only worth a dollar, but in this market it costs a buck-fifty. In the end, a player's worth to his team is equal to how much extra
revenue he can pull in. And at least one economist believes that, yeah,
A-Rod sure can bring the Rangers an extra 21 million simoleons a year.
Dallas-Fort Worth may not be much larger than Seattle in terms of
population, notes Washington State University sports economist Rod
Fort,
but the Rangers have a larger untapped TV market. "What I think you'll
see
happen there is the local TV contract will jump," he says. "And
remember
that Hicks has a wealth function -- the Rangers are one component in
his
asset portfolio." Even losing money on A-Rod, in other words, could be
worth it if it helps raise the profile of Hicks' other business
interests. Of course, it's always possible that Hicks is just treating himself to
a
damn-the-torpedoes drive for a championship, and has no illusions about
ever getting his investment back. In which case, more power to him --
though he might have wanted to sign a pitcher or two before loading up
on
pricey 40-year-old first basemen. Next page: Sky-high ticket prices?
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