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Tuesday, November 30, 2010

Derek Jeter's New Contract

Derek Jeter is negotiating a new contract. The Yankees offered $15M/year for three years. That's a pay cut compared to his last contract. However, Derek Jeter is now an older player with declining skills.

The Yankees told Derek Jeter. "You're a free agent. You aren't going to get more than $15M/yr from another team." That's probably true.

A-Rod's contract totally skews the comparison. The Yankees definitely overpaid for him. He's only 3 years into his 10 year $25M/yr contract, and his performance is already substantially decreasing.

However, it's only a partially free market. There are only a handful of teams that could afford to pay $15M/yr for a shortstop, even one that's actually worth it.

What is Derek Jeter worth? These two pages do a "value over replacement player" analysis. They compare Derek Jeter's "increased win chance" compared to what someone earning the minimum salary would do. However, that's flawed. Even if the Yankees didn't have Derek Jeter, they'd still be spending $10M+/yr for a high-quality shortstop. Derek Jeter shouldn't be statistically compared to someone earning the minimum. He should be compared to the top shortstop free agent the Yankees would otherwise sign.

They Yankees risk "bidding against themselves" if they increase their offer. Why offer Derek Jeter more than $15M/yr, if no other team is going to come close to that?

Another interesting example is Cliff Lee. He's probably going to get a huge windfall. He's marketed as a "clutch postseason pitcher". Is he really that super-awesome in the postseason? Or, is it sampling error, because he only had a small handful of starts. There probably will be some "mean reversion". However, he probably has a few good years left before he's too old to pitch well.

Studying sports CBA negotiations and player negotiations is interesting. It's a non-free market. In a really free market, the top free agents could tell the owners "I'm starting my own competing team!", if they weren't getting a fair deal.

Alternatively, someone would start a new league and pay the players more. This does not occur, because it's not a free market. There are a lot of barriers to entry for starting a new sports league. Most of the "competing leagues" were formed decades ago when there was a freer market. They ended in a merger with the established league, creating a State-backed monopoly.


Anonymous said...

A free market for normal workers does not exist.

Millionaires and billionaires do not create all their wealth by themselves. The wealth comes from their hundreds or thousands of workers.

They are obviously paid MUCH less than the value they create.

In the companies I've worked for, it is much easier to get a decent salary by getting hired on a big salary by a friend than by good work.

Anonymous said...

Although this if off-topic, I've seen a very good idea in a comment for a Max Keiser video. The video URL is!

The idea is that we should replace the police by a VOLUNTEER department.

The commentators mentioned how this would be far cheaper and would save us from the tyranny of government.

Just image a police force composed of part-time volunteer ordinary folk.

Stupid laws would no longer be enforced.

People would not be arrested for stupid things. As an example one man was visited by the police in the UK for clipping a neighbour's plant that was growing over into his garden. The UK law says it is legal to clip a planet that is overgrown and in your garden, but you must return the clippings. The man did not return the clippings and the police gave him a criminal record.

Two women were told they would be prosecuted in the UK if they looked after each others' babies.

With a volunteer police force STUPID LAWS WOULD NOT BE ENFORCED.

An ex-solider was arrested for finding a shotgun in his garden and returning it to the police station. The idiot clown lawyers in the court said that any possession of a gun is illegal, even if you are returning it to a police station. Presumably the court broke the law when they showed the gun in evidence! The judge should have sentenced himself to jail.

The stupid, useless, scumbag lawyers in this case (defence, prosecution, judge - all of them) failed to tell the jury about JURY NULLIFICATION, which is ENSHRINED IN UK CASE LAW.

FSK said...

Actually, jury nullification works different in the UK than in the USA.

In the USA, a "not guilty" jury verdict is absolute and cannot be appealed. In the UK, a "not guilty" jury verdict can be appealed and overturned.

However, in the USA, you can be prosecuted under state law and Federal law for the same action.

The whole point of State-paid police is that they're a private army working for insiders.

Anonymous said...

Off-topic Post

Where did my job go?

Wages mostly have to be high in countries like the United Kingdom because rents and property are high.

So it is cheaper for employers to ship jobs offshore or to employ immigrants living 15 in a flat. Native workers would be very unlikely to work for such a low wage that they would only be able afford to live in a flat with 15 other people. Immigrants only do this because they only plan to do it for a few years and they send a proportion of their salary back home where it has more value.

It is the sick, work-shy, sad little clowns that want to make a living just by renting out property that are partly responsible for driving jobs overseas.

Our stupid politicians often crow how they are self-mad millionaires. But they never invented anything useful. They made their empire off the back of rental income and rising property prices. They are just parasites that want to make money by simply turning the handle.

A company that does not want to improve itself and its processes (like many in the UK) is sick and sad. But they can make loads of money by conning money out of the government c.f. the discredited PFI (Public Private Finance initiatives).

The PFI clowns do work for the government. But a private company gets a loan from a bank at private company rates and not cheap government rates which makes the whole thing counter-productive. Worse than that once the bulk of the construction work is completed, the interest rates go down (less risk) but the difference in rates is not passed back to the government.

So the sick, little stinky breathe PFI clowns siphon 60 million pounds out of the National Health Service.

Money for free at no risk is a very nice thing!

The impotent UK government does not do a thing. Are they stupid or corrupt?

Anonymous said...

I hadn't actually seen the article below when I wrote the previous comment.

But it seems the stinky MPs in the UK have found another way to shaft taxpayers.

The stinky MPs rent out their property, but claim expenses in rent for another property that they need to live in to do their "work" as an MP.

As all our laws come from the unelected European Union, our Parliament doesn't really have a job to do.

Idle hands make the devil's work.

The clowns are caught fiddling one way. They are then told to stop. Then the clowns do the dirty thing another way.

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