Published in: Forbes.com
Author: Tom Van Riper
Description: The confession by Alex Rodriguez that he took steroids could mean the loss of a big investment by the New York Yankees. Forbes.com came to Webster University economics professor Patrick Rishe for insight on how much A-Rodís actions will cost the teamís bottom line.
What if Alex Rodriguez breaks the all-time home run record and nobody cares? It could mean that the New York Yankees latest contract with him will go down as a $300 million mistake.
With news of A-Rod's positive steroids test in 2003, the marketing bonanza that was supposed to surround his record-breaking year of 2012 or 2013 is fast becoming a dud.
"It certainly takes some luster off it," says Patrick Rishe, an economics professor at Webster University in St. Louis who runs the sports business Web site sportsimpacts.net. How much luster, though, largely depends on how Rodriquez handles himself going forward. Rodriguez's admission Monday to ESPN that he used performance-enhancing drugs in Texas from 2001 to 2003 because he felt pressure to perform under a big contract, was a good start, even as it renders his 2007 televised denial to Katie Couric a lie.
Yankee fans, whose complaints with A-Rod have more to do with his failure to deliver a championship than with steroid use, aren't likely to care about what he did in Texas. And given that his 2004 arrival in the Bronx coincided with the public airing of baseball's steroid laundry, it's feasible to think he's been clean since then.
While the public has always considered A-Rod a bit phony and image conscious, he doesn't have the ornery disposition that fans associate with Barry Bonds or Roger Clemens. So admitting and explaining his steroid use, which Bonds and Clemens haven't done, could go a long way toward saving him from the degree of negative public opinion they've suffered, Rishe thinks.
Rishe figures that Rodriquez will lose some of his $6 million endorsement portfolio, though those deals are a relative pittance compared to what he makes on the field.
For all his personal dramas, A-Rod was set up perfectly as the game's historic hope. After the steroid controversy that's surrounded Mark McGwire, Sammy Sosa and the current home run champ, Bonds, what could be better for baseball than seeing the sacred career home run record broken by a superstar not linked to the Mitchell Report?
The Yankees certainly saw the potential, signing him last winter to a 10-year, $275 million contract after he opted out of his prior deal, a move designed to keep him in pinstripes until he's 42. A big part of the rationale: The club saw big marketing potential in having one of their own break baseball's vaunted record.
With 553 career homers, A-Rod is projected to break Bonds' record of 762 within five years. Succeeding would push the team's commitment to him past $300 million, thanks to appearances, memorabilia signings and an expected jump in TV viewership as he bears down on the record. Not that the lack of a bounty around the record-breaking homer renders Rodriguez's contract a complete waste. He'll still be in the lineup every day, putting up big numbers and helping the Yankees win games and draw crowds. But given both the annual raise and the bonus potential from his old contract, it could be reasonably concluded that team officials valued the home run record at $50 million. That's doesn't look like a sound investment right now.
"The Yankees must be feeling that the likelihood of the return on their investment is less than what is was before this information came out," Rishe says. A Yankee spokesman didn't return a message seeking comment.
Crisis management experts believe that a silver lining for Rodriguez and the Yankees is the chance to get out in front of the steroids controversy, to head off future investigations by fessing up and explaining the era and its pressures once and for all.
"They could be the first to come and lay it all out," says Cindy Rakowitz of BR Public Relations, a boutique PR firm in Encino, Calif., specializing in crisis management.
The fact that the 2003 tests were supposed to be secret--used for survey purposes to see if random testing would be appropriate--is just the problem, Rakowitz notes. The implicit assurance of privacy gave players an excuse to keep mum. The result has been a steady series of investigations that seem to drag on forever, highlighted by public ridicule over events like McGwire's, "I'm not here to talk about the past" fiasco in front of Congress a few years ago. Maybe the latest accused star will score some points with the public by coming clean and explaining the juice era once and for all.
"They can set a precedent for baseball going forward, that it's time to put this controversy to rest," Rakowitz says.
Fans may still place mental asterisks next to his numbers, but honesty points count for something. It's about the best A-Rod can do right now. And if the atmosphere of punitive hysteria over steroids gradually dies down as time brings more perspective, his home run feat will recover some value. But it still won't be worth what the Yankees are paying him for it.
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