Thursday, August 23, 2007

Where will A-Rod Play in 2008?
A-Rod is at the peak of his career and may opt out of his contract at the end of the year. 
 
Steve thinks he'll be in Boston but I think he'll remain a Yankee because the Yankees would be on the hook for $30 million that Rangers owner Tom Hicks is still on the hook for.  A-Rod's super agent, Scott Boras, is an expert at getting maximum value.  Forget $27-8 million that Steve has him getting with the Red Sox, think closer to $32 million and possibly as high as $35-36 million per year.  If you flipped burgers for a living and wanted to jump from MacDonald's to Burger King, Boras is so good that he would get you six figures instead of minimum wage.  Granted, a slight exaggeration but not much.
 
If A-Rod doesn't stay in pinstripes, he'll end up in the following places in decreasing order of probability:
 
(a) Chicago Cubs: Lou Pinella is like a father to him.
(b) Anaheim Angels: A-Rod's mom lives in SoCal so he could move there to be closer to her.  If A-Rod's marital issues continue, this option may increase in probability.
(c) Boston Red Sox: The Red Sox may get involved but only to drive up the price on the Yankees.  The Red Sox already pay the highest ticket prices in the league and owner John W. Henry would be hard pressed to jack them up again for baseball and possibly personal reasons.  You think Yankee tickets were expensive.  In May 2002, a face value bleacher's ticket at Fenway was $20 while only $8 at the Stadium.  This was before the Red Sox did the unthinkable and unwriteable in 2004 and increased prices again. 
 
Furthermore, Mr. Henry is a hedge fund billionaire but is taking it on the chin like many of contemporaries if you have been following the recent financial news.  According to a review of his funds recent statements, his Financial and Metals Portfolio is down 11.18% Est 2007 or Year To Date (YTD), Strategic Allocation Program is down 8.64% YTD, International Foreign Exchange Program is down 15% YTD, Global Diversified is down 18.53% YTD, JWH GlobalAnalytics is down 6.41% YTD, respectively.  (Source: JWH Investment Programs and Performance, please click on "View Program Details" and "Performance Data".  Though Mr. Henry is a hero of mine for being a Missouri farm boy made good, I am not an investor in any of Mr. Henry's funds.)
 
Bottom Line: Billionaires stay billionaires by using Other Peoples Money (OPM).  In this case, it's ticket and other baseball revenue, NOT their own money.  Mr. Henry would not be the first hedge fund baseball owner to run into difficulties in the A-Rod sweepstakes.  This all started when Rangers owner Tom Hicks who took a bath in Latin America a few years ago and he had to unload A-Rod to cut expenses.  The Red Sox already spent $52+ million to negotiate the Matsuzaka's contract before this season.  Instead of going after A-Rod, expect the Red Sox to go after Miguel Tejada if the Orioles have a fire sale and/or if Tejada really wants out.  Tejada is 14 months younger and millions cheaper.  That's music to any billionaire's ears. 
 
Posted by the Tank in NY.




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