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Home All Articles Could the Yankees Back Out of the "Historic" Clause in A-Rod's Contract?

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Could the Yankees Back Out of the "Historic" Clause in A-Rod's Contract? PDF Print E-mail
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Articles & Opinion
Written by Evan Nuckles   
Monday, 18 May 2009 13:13

A-Rod

Could the Yankees wiggle out of A-Rod's
"historic" milestone clause due to his
admitted use of PEDs?

The following is the first original article by staff member Evan Nuckles. Evan has done transaction reporting for BizofBaseball.com, and extensively at BizofFootball.com. - Maury Brown

Alex Rodriguez's dramatic walk-off home run yesterday put him at 555 for his career, inching him closer to the all-time MLB marks. In a recent article on ESPN.com, Jayson Stark raised some questions regarding the “historic milestone clause” in the 10-year, $275 million deal signed by the controversial Yankee Slugger in 2007. The clause would pay Rodriguez $6 million for each “historic “ home run record he breaks (Willie Mays’  660, Babe Ruth's’ 714, Hank Aaron's 755, Barry Bond's 762, and the record breaking 763rd), and the Yankees would market each accomplishment.

Stark writes:

Suppose, given his admission of steroid use and the other furor that has swirled around this man, the Yankees were to argue that he's no longer a "historic" figure? Wouldn't that mean that those milestones were no longer "historic" accomplishments? And wouldn't that then mean that they no longer would have to pay him his 30 million "historic" bucks -- or any portion thereof? These are not questions the Yankees are asking -- yet. But they're questions we have heard asked around baseball lately, as A-Rod's reputation, approval rating and marketability have plunged…"If I'm the Yankees," said an official of one team, "I think I'd be doing everything I could not to pay that money, and let him sue me for it." "I think the Yankees ought to challenge it and baseball ought to challenge it," said an executive of another club. "And then it's up to A-Rod and the union to determine how much they want to fight it. Does this guy really want to continue to go through this stuff? Does he really want to continue to explain himself?"…But now, isn't it fair to ask: What are they marketing? They're marketing a player who is viewed positively by exactly 17 percent of America's baseball fans, according to a February New York Times/CBS News poll. And even more relevant, they're marketing a player whose place in history seemingly has been obliterated by his admission that he took steroids, and by a book that suggests he may have taken them as early as high school ..."They could make an argument that there is a change in stature, or overall perception," one agent said. "They'd have a very strong argument that the public perception of him has changed, almost in whole, and now he's kind of Bonds-ish."... "It's not just $30 million," one baseball man said, "because they've got to pay [luxury] tax on it. Keep that in mind. So for the Yankees, it's not $30 million. It's 45 [million] -- at least under the current agreement. And that's a punishing number."

The question is whether or not this is something the Yankees would have a reasonable chance to void if they were so inclined in the future. I asked two former UCLA and University of San Diego law school graduates and current attorneys their thoughts on the matter, and the following is a sampling of their responses.

Jeffrey A. Estes of Stradling, Yocca, Carlson, & Rauth in Newport Beach, CA isn’t sure the Yankees would have a case. While conceding that an interpretation of contract law is difficult without seeing the actual definition of the word “historic” in the contract, Estes feels that it may be difficult to void a clause that is tied directly to a home run mark set by someone linked to steroids (Barry Bonds’ 762). “If the numbers were the only measure of “historic,” it would be a difficult argument for the Yankees to claim that the marks were no longer historic because he had used steroids... if they are using Bond's record as a measure of an historic milestone-- a mark that has the taint of steroids surrounding it-- it would be very difficult to claim that A-Rod's association with steroids now makes the record non-historic." Without getting too deep into legal jargon, Estes also mentioned the “parol evidence” rule in contract law which prevents a party to a contract from having a court look outside the ‘four corners” of the contract to interpret the provisions of the contract, which means external evidence not stated in the contract would be barred if this rule was applied by a court.

Attorney Frank R. Cruz of the Law Offices of Timothy C. Cronin in Tustin, CA agrees. “I think the Yankees would have a tough time voiding this part of the contract. The Yankees will argue that the historic milestones are of diminished value because of Rodriguez’s admission, but the language of the contract will control here.  Rodriguez will argue that he simply had to achieve these historic milestones…..which entitles him to the bonuses. If the market value of the records is not expressed in the contract then the parol evidence rule would block the Yankees from using it as a reason to negate the bonuses." Cruz feels that the best course of legal action for the Yankees would be to file a fraud claim against Rodriguez, but as Stark also stated, it is unlikely they would pursue this against their best player whose psyche has already come into some question.

At his current pace, Rodriguez should be approaching the first milestone (Mays' 660) sometime during the 2012 or 2013 season. A lot can happen between now and then, and with all of the steroid controversy currently focused on another historic slugger (Manny Ramirez), it will be interesting to see how all of this unfolds.

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