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Jeter’s Predictable Predicament

Tyler Kepner, who covers baseball for The Times, has an excellent article on the contract negotiations between the Yankees and their Hall of Fame shortstop, Derek Jeter. Few players have had a more harmonious relationship with their employer than Mr. Jeter, who has rarely caused controversy in his 16 seasons with the Yankees. But the contract negotiations have turned ugly, as Mr. Kepner reports, with both Mr. Jeter’s representatives and Yankees management having provided their fair share of juicy quotes to the media.

Where I disagree with Mr. Kepner is in finding this development surprising. It seems to me, rather, that the course of Jeter’s negotiations are rather inevitable.

There are two things that virtually everyone can agree upon. First, Jeter, who will turn 37 next June — while still a valuable member of the Yankees — is no longer the player he once was. Second, his value to the Yankees exceeds what he produces on the field alone.

Last season, Jeter hit .270 (far below the .317 lifetime batting average he’d had entering the season) and had an on-base percentage of .340 (his lifetime figure had been .388). He hit just 10 home runs and his slugging percentage was .370, the lowest figure of his career.

Because Jeter plays shortstop, those figures are still decent. We’re a fair bit removed from the “golden age” of shortstops when players like Jeter, Nomar Garciaparra, Alex Rodriguez and Miguel Tejada were posting inflated numbers every year, and the average American League shortstop hit .258 and had a .312 on-base percentage last year, somewhat inferior to Jeter’s figures. Jeter also helped the Yankees in other ways: he played in 157 of 162 games, and he still runs the bases well.

Then there is the matter of his defense, which has long been a touchy subject. Jeter won a Gold Glove award — the fifth of his career — but virtually all statistical systems conclude that his performance in the field was well below average. There are arguments that these system underrate Jeter (although other analysts claim they’re actually quite generous to him). I tend to side with the statistical systems, of course, which are becoming more and more sophisticated — particularly given Jeter’s age: shortstop requires nimbleness and agility, which are usually among the first skills to deteriorate as a player enters his late 30s. But this is a subject that will still be debated long after Jeter retires.

Baseball Prospectus’ Pecota projection system — a system that I originally developed, although it has since undergone significant modifications — figured prior to last year that Jeter’s next three seasons are worth $22.5 million dollars in market value: that is, that the Yankees would have to invest $22.5 million over the next three years to acquire a player who would help them win as many ballgames as Jeter. But those projections were made after the 2009 season, which was a very good year for Jeter, and the valuation will presumably be lower once the numbers are tabulated again. On the other hand, Pecota tends to be quite pessimistic for aging players. Another projection system called Cairo, which has been updated with 2010 numbers, has a slightly more optimistic forecast that assumes that Jeter will be worth about $27 million over the next three years.

Both the Pecota and Cairo projections assume that Jeter’s defense will be below average: if one assumes that it would be average instead, that would tack on perhaps another $10 million or so to his value. Over all, any figure from about $15 million (that is, $5 million per year) to $35 million (about $12 million per year) could probably be defended in considering Jeter’s on-the-field contributions.

Instead, the Yankees have offered Jeter $45 million over three years — or $15 million per year. If Jeter were any other player, that would almost certainly be generous — and the Yankees might be excoriated in the press for lavishing all that money on an aging, 37-year-old shortstop instead of investing in a top-tier pitcher like Cliff Lee.

But Derek Jeter is Derek Jeter — and he carries a number of intangible benefits to the Yankees. Actually, “intangible” is the wrong word: because he is such a popular and identifiable member of the Yankees, and relates well to the media and to fans in a city where many athletes don’t, he helps the Yankees brand, which in turn puts more people in the seats (or the same number at higher ticket prices), directly improving the Yankees’ bottom line.

How much those off-the-field contributions are worth is hard to say. Baseball statisticians are just starting to get a handle on how to value on-the-field performance, and there has been little work done on the attendance and marketing premium provided by popular players. Vince Gennaro, a marketing consultant, told The Times that Jeter might be worth something like $10 million extra to the Yankees in 2011 based on his popularity, although he expects the “bonus” to diminish as Jeter’s skills atrophy. (Fans might be willing to give plenty of extra credit to a player who is hitting .270 or .280 — even if that isn’t quite as well as he were performing at his peak. But if Jeter’s batting average were to drop to, say, .240 instead, that goodwill might evaporate.) A reasonable range might be $15 million to $25 million over the course of the next three seasons.

If Jeter is worth somewhere between $15 and $35 million in on-the-field value over the next three seasons, and between $15 and $25 million in off-the-field value, that would produce fairly broad range of between $30 and $60 million overall. The Yankees’ $45 million over three years offer falls squarely in the middle of that.

Ordinarily, when there are disagreements about how much a player is worth, he will tend to receive somewhere toward the high end of the range, since he will receive competitive offers and need only accept the high one. (This phenomenon is sometimes known as the Winner’s curse). So even if the Yankees’ $45 million offer is reasonable on its surface, the player would be quite justified in holding out for something better.

Jeter’s problem, however, is that this is not a competitive bidding situation. The $15 or $25 million “bonus” that he provides to the Yankees in off-the-field value is for the most part expressly contingent on the fact that he remains a Yankee, the franchise that he is identified with. Fans in Pittsburgh or San Francisco or Boston feel no particular loyalty to Jeter, and while he would surely still be a good ambassador for those clubs, he might not generate many more season ticket sales for them above and beyond what any other decent shortstop would. (The New York Mets might represent something of a middle ground, but they already have an All-Star shortstop in Jose Reyes.)

The Yankees’ general manager, Brian Cashman, has challenged Jeter to test the market, knowing that he is unlikely to receive another offer as generous as the one the Yankees made. Mr. Cashman is probably right about that; so much of Jeter’s value is tied up in being a New York Yankee that he does not have very much flexibility in exploring the market.

But that doesn’t mean that the process won’t be frustrating for Jeter, or that there won’t be a few hurt feelings along the way. That is inevitably what happens when one side — the Yankees in this case — has most of the leverage, and is willing to use it.

Nate Silver is the founder and editor in chief of FiveThirtyEight.