Transaction Analysis

Rangers sign Alex Rodriguez for 10 years, $252 million

The wait is over, and the numbers are even bigger than we imagined.  Let's look at the two sides of this - the Rangers got perhaps the best player in baseball, who could be one of the best in history - but they spent a ton of money doing it.  The question is what else could the Rangers have done with this money?  Is Alex Rodriguez more valuable than Mike Hampton and Rick Reed?  Are Rodriguez and Andres Galarraga more valuable than Mike Mussina and Mike Hampton (obviously, Galarraga is only signed for this season, but the total amount of money given to A-Rod and the Big Cat in 2001 will be about the same as what Mussina and Hampton are getting).

These are tough questions, and certainly the Rangers couldn't have necessarily gotten Mussina and Hampton if they had wanted to.  Obviously, at some point a franchise player isn't worth the money - A-Rod isn't worth $50 million a year if you could spend that money on other players.  Did the Rangers cross that line with this deal?  Well, Alex Rodriguez is worth about 10 wins a year over a replacement shortstop - probably 8 wins a year over a guy like Royce Clayton. Teams normally spend $2-$3 million for each extra win, so this contract falls into that range.

Another question is to ask is would the Rangers have spent this money on other players?  I doubt it.  The Rangers were willing to "break the bank" to sign Rodriguez, but had this signing not occurred, the money would have most likely not been used for payroll.  So in that sense the deal is a good one, assuming we don't care about how much money Rangers owner Tom Hicks has, which I assume few of us do.

The Rangers have been making a lot of "quick fix" moves this off-season - trading and signing older players to short contracts.  Signing Alex Rodriguez is huge step up now, and will most likely be a good deal 9 years from now.  It's hard to go wrong signing the greatest young player in the game.