Economics General Red Sox

Oh, That Manny

Maybe the Dodgers will eventually sign Manny Ramirez on his terms (whatever those are). Maybe the Giants or some other team will swoop in and sign him. But it's hard to imagine Ramirez receiving any more than the $45 million, two-year deal he rejected this week, and if that's all he gets, consider this:

Assuming Ramirez were to exercise the 2010 player option for $20 million (I think he will because anyone who thinks the teams will be in any position to pay players more money next offseason is kidding themselves), he will have received a whopping $5 million more than he would have gotten if he had simply stayed in Boston and put up his big numbers (thereby assuring that the Red Sox would have picked up their two options on him). 

Except he changed agents, and Boras now gets a commission for whatever deal Ramirez accepts. Everything I've read assumes Boras gets a 5 percent commission (though no one actually quotes Boras or a player saying this). Five percent of $45 million is $2.25 million — leaving Ramirez a net profit of less than $3 million over staying in Boston. If Boras' commission is 10 percent, Manny would have agitated his way off the Red Sox for all of $500,000.

No wonder Ramirez is holding out for more money — no matter how slim his actual chances of getting it are.

4 replies on “Oh, That Manny”

uh just curious about the math paul…are you suggesting that the previous agent would get nothing if the sox exercised the 2 options?…assuming that the previous agent got the same 5 or 10% of the total value of the sox contract, including the option years if exercised, the net gain is back to $5m…chump change for a guy like manny maybe, but $5m is $5m…no?…and lot’s better than the beating varitek got for listening to boras…

Count me among the giddily relieved that this drama is playing out very far away from Fenway Park.

I think dc has it right. Unless you assume that Manny’s former agent got a % based on the contract assuming the exercise of the options (a provision which would be foolish for any player to agree), then Boras’ cut is roughly the same as Manny would have paid his former agent upon each exercised year.
Isn’t the real tension here the lack of guarantees further out? Manny “won” his battle with the Bosox over the issue of having 2009 and 2010 guaranteed by getting out of town and getting those option years voided. I’m sure Boras promised him a retirement deal with guaranteed money through 2012. Instead, all he’s won is the guarantee of 2009 and 2010.

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