When Alex Rodriguez opted out of his record contract with the Yankees, club management was quick to point out that they would not be in the market to re-sign the star third baseman. The primary reason was that as a result of his actions the Yankees would lose a 21 million dollar subsidy that was due them from the Texas Rangers when the Yanks acquired Rodriguez from them.
My how quickly thier hurt feeling have healed as it is reported that Rodriguez by passed his agent Scott Boras and had executives from Goldman Sachs "reach out" to the Steinbrenner brothers to restart negotiations.
There is one and only one reason why Rodriguez is back with the Yankees and that is because Boras over played his hand. He was on the market just long enough to know that no body else in baseball was either stupid enough or had enough money to accede to minimum starting numbers of 350 million that Boras had allegedly floated to sign the biggest star in his stable.
A second look however may not treat Boras as badly. The reported deal is 275 million for 10 years along with a not yet released bonus and incentive package for the possible assault that Rodriguez will make on the new home run record held by Barry Bonds.
Listen to how Hank Steinbrenner described the role Boras played."Boras did a lot of good things for Alex through the years, and Alex knows that. I mean, obviously, he's going to look to Scott's advice on everything," Steinbrenner said. "That's not unusual today. It's not like he's the only one. And if an agent gets out of line or makes bad decisions, then that's going to hurt the player. And obviously, that's one of the things that happened."
Apparently Hank's analytical skills are some what lacking. Boras cost him 21 million in cash and then his client comes back hat in hand and the Yankees offer him what will likely be a 300 plus million dollar guaranteed deal and Hank is telling us how badly Boras operated for his client?
Of course only time will measure the economic or competitive wisdom of this deal. We can look in the past however as an indicator of the future. Rodriguez has been a fabulous regular season player for the Mariners, Rangers and Yankees. During his career his teams have been post season flops and his October performances have been mediocre to be charitable.
He certainly has additional revenue potential for the Yanks as he advances on the all time home run record. He is only 244 away from breaking the now tainted Bonds number. However, that is a long way away and he is mortal and there fore subject to the same potential for injury that has derailed many another career.
In the end this move may turn out to be a huge mistake for the Yankees. They have an aging pitching staff and outfield and now have invested a huge amount of their resources in one person who to date has not dramatically improved post season performances for any club he has played for. What this will do for the Yankee club house is also up for debate. It is safe to say the Rodriguez is no Derek Jeter.
We can say that he is a tremendous businessman. He is about to ink a record deal and he has Yankee management thinking that his agent has been embarassed. I am sure Boras will be laughing all the way to the bank with his huge chunk of Yankee money.
Friday, November 16, 2007
Monday, November 12, 2007
The writer's strike
A labor strike in my view is serious business. When workers leave their jobs and face the uncertainty of a period of time when they are not bringing home a paycheck to their families then I automatically think there are issues surrounding the action that are significant.
Over the years however, I have come to view some strikes with more sympathy than others. It is much easier to side with miners and agricultural workers than it is to side with baseball and hockey players.
In the last two instances of major sports strikes, the actions came back to haunt the strikers since it was years before the two industries returned to any semblance of their former prominence. In fact in the case of hockey, the damage done by the strike (or lockout depending or your side of the issue) is still being felt.
Just such a scenario might be developing in Hollywood over the writer's strike. The last strike was in 1988 and lasted a total of 22 weeks. A lot has happened since 1988 and most of it does not bode well for the writers or the studios. There are a lot more competing interests for viewers these days and many of those choices do not include unionized writers or Hollywood studios.
Cable in general and the web in particular have been grabbing off more and more of the the customers available viewing hours and that is likely to increase if an extended run of repeats is all that network TV is likely to offer.
As in any action, there is always the law of unintended consequences. The consequences for the writers and for Hollywood in general is that viewers may find that a few extra hours with a good book or a hobby or even quality time with the family might be a significantly more enjoyable couple of hours than that same time spent in front of the benign time waster called television.
Back a number of years ago I made a vow that under no circumstances would I spend any time in front of the television watching programs having anything to do with cops, doctors or lawyers. My thinking was that everything in those categories have been done and over done. There are only so many times you can see an actor trying to do his imitation of Jack Webb of Dragnet fame.
The end result is that I have substituted a number of very enjoyable pursuits in place of sitting on the sofa watching network TV. The writers and the studios better get this over quick so that TV watching Americans don't look for more interesting and personally productive alternatives.
Over the years however, I have come to view some strikes with more sympathy than others. It is much easier to side with miners and agricultural workers than it is to side with baseball and hockey players.
In the last two instances of major sports strikes, the actions came back to haunt the strikers since it was years before the two industries returned to any semblance of their former prominence. In fact in the case of hockey, the damage done by the strike (or lockout depending or your side of the issue) is still being felt.
Just such a scenario might be developing in Hollywood over the writer's strike. The last strike was in 1988 and lasted a total of 22 weeks. A lot has happened since 1988 and most of it does not bode well for the writers or the studios. There are a lot more competing interests for viewers these days and many of those choices do not include unionized writers or Hollywood studios.
Cable in general and the web in particular have been grabbing off more and more of the the customers available viewing hours and that is likely to increase if an extended run of repeats is all that network TV is likely to offer.
As in any action, there is always the law of unintended consequences. The consequences for the writers and for Hollywood in general is that viewers may find that a few extra hours with a good book or a hobby or even quality time with the family might be a significantly more enjoyable couple of hours than that same time spent in front of the benign time waster called television.
Back a number of years ago I made a vow that under no circumstances would I spend any time in front of the television watching programs having anything to do with cops, doctors or lawyers. My thinking was that everything in those categories have been done and over done. There are only so many times you can see an actor trying to do his imitation of Jack Webb of Dragnet fame.
The end result is that I have substituted a number of very enjoyable pursuits in place of sitting on the sofa watching network TV. The writers and the studios better get this over quick so that TV watching Americans don't look for more interesting and personally productive alternatives.
Saturday, November 03, 2007
Release the Strategic Petroleum Reserve
The Strategic Petroleum Reserve was authorized by congress to prevent a repeat of the domestic economic disruption as a result of the 1973 Arab oil embargo. The idea of a reserve had been bandied about for many years before the Energy Policy and Conservation Act was signed into law by President Ford in 1975. The first major Middle East crisis at the Suez Canal in 1956 resulted in President Eisenhower's call for such legislation.
The physical location of the reserve is in hollowed out salt domes in Texas and Louisiana. The capacity of the reserve is 727 million barrels and its current inventory as of November 2 stands at 694.1 million barrels. http://www.spr.doe.gov/dir/dir.html
On August 8, 2005, the President signed the Energy Policy Act of 2005 (P.L. 109-58). The act permanently authorized the reserve and required, “as expeditiously as practicable,” expansion of the SPR to its approved maximum of 1 billion barrels.
"The Energy Policy and Conservation Act authorizes draw down of the Reserve
upon a finding by the President that there is a “severe energy supply interruption.”
This is deemed by the statute to exist if three conditions are joined: If “(a) an emergency situation exists and there is a significant reduction in supply which is of significant scope and duration; (b) a severe increase in the price of petroleum products has resulted from such emergency situation; and (c) such price increase is likely to cause a major adverse impact on the national economy."
Authorized draw downs of the reserve have occurred on a number of occasions most recently after the damage done to refining and production facilities by Hurricane Katrina in 2005 (11 million barrels). Other events include Desert Storm (21 million barrels 1991), deficit reduction in
1996 (28 million barrels as well as two test sales occurring in 1985 and 1990. There has also been as many as 12 exchanges and loans to various oil companies that were dealing with such things as pipeline and shipping channels blockages and other hurricane events.
The Unites States has the largest reserve closely followed by Japan with a 550 million barrel capacity million capacity, Germany has Europe's largest reserve of many at over 500 million barrels and China has continued to fill its 150 million barrel capacity.
At the close of business on Friday oil reached a record high $95.93 a barrel in New York. There is any number of reasons why the price has reached these levels. Potential conflict with Iran over its nuclear ambition and Turkish threats to invade the oil producing regions in Northern Iraq in pursuit of Kurdish rebels are some of the political reasons. The major economic reasons are growth by the Chinese and Indian economies as well as smaller events such as yesterday's news that continued job growth in the United States indicates that we may not be entering the recession many people think is just over the horizon. Speculation is also a major contributor since contracts traded have also increased to record levels.
Under these conditions and with the price at its highest it would make little sense to continue to fill international reserves when just the opposite course of action would bring a better result.
The one major benefit of high oil prices is that the American corporate and individual consumers (largest importer and consumer of energy) are now forced to accelerate efforts in both conservation of oil as well as conversion to alternative sources. This is happening now and is probably an irreversible trend.
This is not going to happen over night. In the mean time, the U.S. and world governments have the tools to moderate these prices as well as punishing oil speculators by releasing parts of their reserves or at the very least stop hoarding existing production by continuing to fill reserves with oil at these prices.
The oil price bubble will burst at some point just as all price run ups driven by fear and greed do. It is time for the U.S. to give a price decline a little momentum. Release a hundred million barrels or so from the Strategic Petroleum Reserve and use the profits on something like an investment for Social Security.
The physical location of the reserve is in hollowed out salt domes in Texas and Louisiana. The capacity of the reserve is 727 million barrels and its current inventory as of November 2 stands at 694.1 million barrels. http://www.spr.doe.gov/dir/dir.html
On August 8, 2005, the President signed the Energy Policy Act of 2005 (P.L. 109-58). The act permanently authorized the reserve and required, “as expeditiously as practicable,” expansion of the SPR to its approved maximum of 1 billion barrels.
"The Energy Policy and Conservation Act authorizes draw down of the Reserve
upon a finding by the President that there is a “severe energy supply interruption.”
This is deemed by the statute to exist if three conditions are joined: If “(a) an emergency situation exists and there is a significant reduction in supply which is of significant scope and duration; (b) a severe increase in the price of petroleum products has resulted from such emergency situation; and (c) such price increase is likely to cause a major adverse impact on the national economy."
Authorized draw downs of the reserve have occurred on a number of occasions most recently after the damage done to refining and production facilities by Hurricane Katrina in 2005 (11 million barrels). Other events include Desert Storm (21 million barrels 1991), deficit reduction in
1996 (28 million barrels as well as two test sales occurring in 1985 and 1990. There has also been as many as 12 exchanges and loans to various oil companies that were dealing with such things as pipeline and shipping channels blockages and other hurricane events.
The Unites States has the largest reserve closely followed by Japan with a 550 million barrel capacity million capacity, Germany has Europe's largest reserve of many at over 500 million barrels and China has continued to fill its 150 million barrel capacity.
At the close of business on Friday oil reached a record high $95.93 a barrel in New York. There is any number of reasons why the price has reached these levels. Potential conflict with Iran over its nuclear ambition and Turkish threats to invade the oil producing regions in Northern Iraq in pursuit of Kurdish rebels are some of the political reasons. The major economic reasons are growth by the Chinese and Indian economies as well as smaller events such as yesterday's news that continued job growth in the United States indicates that we may not be entering the recession many people think is just over the horizon. Speculation is also a major contributor since contracts traded have also increased to record levels.
Under these conditions and with the price at its highest it would make little sense to continue to fill international reserves when just the opposite course of action would bring a better result.
The one major benefit of high oil prices is that the American corporate and individual consumers (largest importer and consumer of energy) are now forced to accelerate efforts in both conservation of oil as well as conversion to alternative sources. This is happening now and is probably an irreversible trend.
This is not going to happen over night. In the mean time, the U.S. and world governments have the tools to moderate these prices as well as punishing oil speculators by releasing parts of their reserves or at the very least stop hoarding existing production by continuing to fill reserves with oil at these prices.
The oil price bubble will burst at some point just as all price run ups driven by fear and greed do. It is time for the U.S. to give a price decline a little momentum. Release a hundred million barrels or so from the Strategic Petroleum Reserve and use the profits on something like an investment for Social Security.
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