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KRIEGER: Rockies can get close to Holliday's demands

By Dave Krieger, Rocky Mountain News (Contact)

Published September 26, 2008 at 9:48 p.m.

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Now that Matt Holliday is on the record about his position in contract negotiations with the Rockies, it is possible to see a way out of the current impasse.

Whether that way out would actually get a deal done is another question entirely, given agent Scott Boras' history with high-profile players in the last year of their contracts.

But it's worth exploring anyway, if only so Rockies fans can figure out if they would make the deal if Holliday were, in fact, prepared to sign it.

According to Holliday, the offer the Rocks made last spring was for four years, with a fifth-year player option at roughly two-thirds the value of the other years. He didn't understand the presumed diminution of his value at age 34 and so considered this a four-year offer.

Given the recent, documented ability of premium free agents to command eight-year guarantees, he considers a four-year guarantee too much of a hometown discount. In our conversation, he suggested a six- or seven-year guarantee with a no-trade clause would get his serious consideration.

So let's say, hypothetically, the Rocks met the minimum condition of this suggestion - a six-year guarantee with a no-trade clause for the first four, after which Holliday would be a so-called "10 and 5" player - 10 years in the big leagues; five with one team - and would have the right to veto a trade anyway.

At an average of $18 million per year, which the Rocks acknowledge is his likely minimum market value, that's $108 million. Add to it the $13.5 million he is owed next season, his last before he becomes eligible for free agency, and you have a seven-year, $121.5 million commitment. Holliday would be 29 for the first of these seasons and 35 for the last.

Can the Rocks afford it? They will suggest the answer is no without actually pleading poverty. This is a wise move. Pleading poverty makes people want to look at your books. The Rocks don't want to go there.

In Forbes' most recent report on the business of baseball, in April of this year, it estimated the Rocks ranked 17th last year in revenues ($169 million), 21st in franchise value ($371 million) and eighth in operating income ($26.2 million), which represents profit before income taxes, depreciation and amortization.

When I divided Forbes' estimates of operating income by its estimates of revenues to get a rough idea of profit margin, the Rocks ranked sixth in baseball, at 15.5 percent. The only teams more profitable in relation to revenues were the Nationals, Marlins, Rays, Twins and White Sox.

You might consider this an aberration the year they went to the World Series, but Forbes also had them sixth in operating income the previous year, at $23.9 million.

Meanwhile, the Rocks began this season 20th in player payroll, at $68.7 million. That ranking is roughly commensurate with their franchise value, revenues and market size (18th Niel- sen market). But it is much lower than their profitability ranking, if Forbes is to be believed.

So, can they afford a seven-year, $121.5 million commitment to Holliday? Yes, from a purely financial point of view, it appears they can.

Is it a good idea? That's a much more difficult question. The long- term, nine-figure commitments they've made in the past - to Mike Hampton and Todd Helton - have convinced them it's not the way to go. They were paying off the Hampton debt - mostly through bloated contracts accepted in trade - for years after he was gone. Helton, facing back surgery after an unproductive year, is still owed a minimum of $56.9 million.

In fact, the Rocks argue they have only recently returned to financial health following the Hampton debacle and are finally in a position to invest in the team again. That doesn't mean they want to make the same mistakes all over again.

These days, big-league clubs commission statistical age-regression studies that show marked declines in player performance when they reach their mid- and late 30s. They suggest major investments beyond the age of 34 are something of a crapshoot.

And even if the Rocks have the money to fund such a contract for Holliday, the fact remains he won't reach 100 RBI this year. As marvelous a player as he is, whether he merits a quarter of the payroll is a fair question.

Last winter, San Diego ace Jake Peavy signed a three-year, $52 million extension with the Padres. He, too, could have gotten a longer guarantee on the open market. But Peavy, from a small town in Alabama, decided San Diego was where he wanted to be and, after all, $52 million is a lot of money.

Holliday was offered at least $72 million on top of the $23 million he was already guaranteed. That's not an insult. He has taken a more aggressive negotiating position than Peavy, which is certainly his right. It's also the Rocks' right to determine whether another long-term, nine-figure guarantee is wise.

A five-year guarantee with a no-trade clause on top of the year he has coming is about the best I can see the Rocks doing. And unless Holliday changes his mind, that's not enough to get a deal done.

Comments

  • September 27, 2008

    9:42 a.m.

    Suggest removal

    1somelikeithot writes:

    I hope a deal can be made to keep Holliday, but I won't hold my breath. Also, Jake Peavy didn't have Boras as an agent. Keep that in mind. Holliday and Boras will more than likely get what they want, just not with the Rockies.