The deal was closed, pending a physical, at a meeting in Los Angeles attended by Ramirez, his agents Scott Boras and Mike Fiore, Dodgers owner Frank McCourt, general manager Ned Colletti and manager Joe Torre, the latter duo both flying from Spring Training camp on Tuesday night for the session.Considering Manny and Boras went into the offseason seeking a four- or five-year deal at rates comparable to Alex Rodriguez ($27.5 million per year), this is a pretty huge win for the Dodgers, particularly on the emotional level; they get a great hitter, the best free agent of the offseason, they get him while screwing überagent Scott Boras fairly hard relative to those lofty initial expectations, and -- if the deferral info is accurate -- they get him at a dollar amount that's less than one of their recent, previous offers. Arguably, Manny bought himself the opt-out with that money, which doesn't bother me as much as it will some people. It's the cost of doing business, in this case.
Torre and Colletti were already winging their way back to Phoenix this morning and are expected to arrive in time for Wednesday's Cactus League game between the Dodgers and Giants at Camelback Ranch.
The manager was summoned back to Los Angeles along with Colletti for what turned out to be the final negotiating session in a 4 1/2-month effort to get the free agent to return to the Dodgers.
Ramirez accepted the same deal the Dodgers offered last Wednesday -- two years, $45 million ($25 million in 2009, $20 million in 2010), payment deferred over five years without interest, with an opt-out clause after one season paid at $10 million each for the first four years and $5 million for the fifth.
But both sides indicated Tuesday night that the deal could not be completed until all primary parties met face-to-face in Los Angeles Wednesday. Ramirez flew in from Florida Tuesday night for the meeting.
Assuming Ramirez were to exercise the 2010 player option for $20 million (I think he will because anyone who thinks the teams will be in any position to pay players more money next offseason is kidding themselves), he will have received a whopping $5 million more than he would have gotten if he had simply stayed in Boston and put up his big numbers (thereby assuring that the Red Sox would have picked up their two options on him).If the net present value of the contract is less than $45 mil, as it must be if those terms are right (my crash course in the Excel Net Present Value function yielded about $41.5 mil assuming a 3% discount rate), those gains are even smaller. As my financial guru over the lifespan it took to write this piece, Neil deMause, put it: "Basically you're trying to figure out the cost of Manny giving the Dodgers a no-interest loan. You could argue that the Dodgers are a safer place to keep your money than a bank, or your mattress."
Except he changed agents, and Boras now gets a commission for whatever deal Ramirez accepts. Everything I've read assumes Boras gets a 5 percent commission (though no one actually quotes Boras or a player saying this). Five percent of $45 million is $2.25 million -- leaving Ramirez a net profit of less than $3 million over staying in Boston. If Boras' commission is 10 percent, Manny would have agitated his way off the Red Sox for all of $500,000.
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