Signing A-ROD

Signing A-ROD - Signing AROD: AJUSTIFIABLE RISKYINVESTMENT,...

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Signing  A-ROD: A JUSTIFIABLE  RISKY INVESTMENT,  OR A POTENTIAL  FINANCIAL  MISTAKE?
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Alex Rodriguez became a free  agent in December of 2000 and  was able to negotiate with any  of the 30 teams in the MLB The Texas Rangers were  contemplating entering a fierce  bidding competition to sign A- Rod, the best player in baseball They wanted to offer a major  10-year contract that would be  accepted by A-Rod, yet could  be justified financially
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THE CONTRACT The contract offered by the  Rangers would have a value  of $252 million This would be a ground- breaking contract if it were  accepted by A-Rod To put it in comparison,  Southwest Sports Group  paid only $250 million for  the entire Ranger’s  franchise in 1998 The average yearly salary  for MLB players in 2000 was  $1,895,630 The Rangers felt this offer could be justified  financially because A-Rod was still very  young  a player of his caliber would bring in more  fans, help bring up the morale of the team,  motivate the other players, and add to the  visibility of the franchise and their ability to  negotiate future projects and free agent  signings
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SHOULD THE RANGERS SIGN A-ROD? FINANCIAL ANALYSIS: To determine if the Texas Rangers  could financially justify a $252  million contract for A-Rod, I  analyzed all of the cost and  revenues from 2001-2020 and  used an 8% discount rate to find  their present values In 2000, the Ranger’s attendance  was 71% of its stadium capacity.   This means that out of a possible  capacity of 49,200 they had an  average attendance of 35,002 per 
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Signing A-ROD - Signing AROD: AJUSTIFIABLE RISKYINVESTMENT,...

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