Goldman brought A-Rod, Yanks back together
Published reports say star player used managing partners at Goldman Sachs to reach out to Yankees, restart talks that may result in record deal.
NEW YORK (CNNMoney.com) -- Goldman Sachs has helped bring about innumerable corporate deals, but published reports suggest it played an unusual role in a deal far outside its normal turf: the record-breaking contract expected to be signed soon between the New York Yankees and the team's star third baseman Alex Rodriguez.
Several newspapers, including The Wall Street Journal, The New York Times and New York Daily News, reported Friday that two managing partners for Goldman (Charts, Fortune 500) were pivotal in brining the player known as A-Rod and the Yankees back to the negotiating table when the team had vowed not to enter the bidding to sign their star to a new deal.
Goldman has a long-time business relationship with the team, including owning a substantial stake in the YES Network, the lucrative regional sports cable network that airs Yankees games and is estimated to be worth $3 billion or more.
The papers report that when A-Rod wanted to restart negotiations with the team, he decided to restart talks through a third party, rather than his agent. He chose to contact Goldman managing partner John Mallory, whom he knew from his hometown in Miami. Mallory, who is now based in Goldman's Los Angeles office, contacted Gerald Cardinale, who is based in Goldman's New York office and who serves on the board of the YES Network. Cardinale in turn contacted team president Randy Levine, according to the reports.
Published reports said that A-Rod and team officials reached an agreement Thursday after two days of talks on the outlines of a new 10-year, $275 million deal that would be the most lucrative ever signed by a U.S. athlete, breaking the record previously held by A-Rod when he signed a 10-year, $252 million contract before the 2001 season.
When A-Rod used a clause in his previous contract to opt out of the deal and become a free agent, Yankees management vowed not to enter into negotiations with him.
The team had been interested in offering Rodriguez a five-year contract extension on top of the three years remaining on his previous deal, three years during which the Yankees would have received $21.3 million from the Texas Rangers, which traded him to New York in 2004.
The team could have kept that money, worth $30 million once the league's luxury tax is factored in, if they had signed an extension. But when A-Rod opted out of the contract, the Yankees lost that subsidy.
After the Yankees lost in the first round of this year's playoffs, the team had asked to meet with A-Rod to discuss its contract offer. But A-Rod's agent, Scott Boras, did not allow a meeting between his client and the team to discuss its offer before opting out of the deal.
Boras let reporters know that A-Rod had opted out of the deal during the final game of this year's World Series, bringing criticism down upon him and his client for trying to upstage the game. A-Rod apparently wanted to return to the Yankees and was surprised when the team stuck to its vow not to negotiate with him. And Boras, who had argued his client was worth more than $30 million a year to a number of teams, apparently over-estimated the market when offers in that range were not forthcoming.