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Manager - Owner Negotiations

I need help with this can you give me your opinion on this: Assume, New York Yankee Alex Rodriguez is still a free agent!

You are the Director of Risk Management for the New York Yankees.

George Steinbrenner, the owner comes up to you and tells you that Alex Rodriguez is now thinking of resigning with the Yankees as a free agent. The "rough" terms of an agreement have already been reached.

He wants to know what you can do to ensure that the contract is enforced in the future and that Alex is convinced that he has to stay and play for the Yankees for the next ten years once the new contract is signed.

George wants a contract as "air tight" as possible that will prevent Alex from even thinking about the possibility of escaping from the contract and joining another team. George looks at you in such a way as to communicate that your job will be on the line if Alex signs a ten year deal and then finds a basis to leave and join another team. He essentially tells you that he wants Alex to be in "contract handcuffs" once the new deal is inked.

What questions would you ask George to fully answer his questions?

What are some of the possible solutions, if any?

Question #2

You are the Director of Risk Management for the New York Yankees.

The chief scout for the Yankees comes up to you and says he needs to prepare an "airtight" contract for the number one Pitcher at the University of Texas who has verbally committed to joining the Yankees. He wants to know what you think are the five key provisions of a player contract for this recruit that will lock up his services for at least the next five years and encourage him to sign on the dotted line.

Your answer?

Solution Preview

Question 1.

I would start of with asking George what incentives are we offering that will keep Alex focused on Yankee-baseball instead of someplace else to play?

Will the contract be guaranteed? Can it be tiered with performance incentives? Can those incentives be tied to team performance?

One solution I see is to have a structured contract that awards him salary based on two things: performance and longevity. The longer he is with the Yankees the more he will make in longevity pay; the better he ...

Solution Summary

Negotiating Alex Rodriguez's contract with George Steinbrenner of the New York Yankees. This solution will work for any similar question.

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