Just prior to the closing of the exclusive 30 day window for negotiations, the Texas Rangers and starting pitcher Yu Darvish have come to terms on a six year contract worth $60 million, with a player opt out clause after the fifth year. Combined with the $51.7 million posting fee that the Rangers bid to negotiate with him, it’s a considerable investment in a pitcher that has never competed at the Major League level.

However, it could be said that despite a number of core players coming up on free agency, the Texas Rangers are in a good place to take such a risk. In addition to a lucrative television deal with FOX set to begin in 2014, the Rangers have been to the World Series in both of the last two seasons with the 27th highest payroll in 2010 and the 13th highest payroll in 2011. Over those two years, they had the 14th highest attendance in 2010 and the tenth highest attendance in 2011, leading to a reported $22.6 million operating income in 2010.

So, will it be worth it, for the Rangers?

As I wrote after Texas initially won the negotiating rights, most arguments against large posting fees and expensive contracts for Japanese pitching begin by looking at the past. The history of these transactions is fraught with bad investments.

Six pitchers from the NPB have been signed by Major League teams after paying posting fees. Here’s the total amount that the team spent on the player (posting fee plus initial contract), and the value by WAR according to FanGraphs that they brought back to their organization based on what the same player would make in free agency:

  • Kazuhisa Ishii, LAD: $23.6 million cost; $2.5 million return + a negative $1.6 million return for one year of Jason Phillips (acquired in trade for Ishii).
  • Ramon Ramirez, NYY: $0.35 million cost; $0 return.
  • Akinori Otsuka, SDP: $1.8 million cost; $7.1 million return + additional return as part of trade that brought back Adrian Gonzalez, Terrmel Sledge and Chris Young.
  • Shinji Mori, TBR: $2.15 million cost; $0 return.
  • Daisuke Matsuzaka, BOS: $103 million cost; $44 million return.
  • Kei Igawa, NYY: $46 million cost; a negative $0.8 million return.

It’s not a racist exercise to compare Darvish to other pitchers from Japan because in most cases we’re talking about them all developing from a young age through a similar system. However, the 25 year old Darvish is unlike any of these other pitchers in that he’s risen through that similar system so quickly while still maintaining a reasonable work load.

He also possesses such a uniquely large repertoire of pitches, as we can see in the video below, which we’ve admittedly drooled over on this blog a couple of times, now:

While any pitcher’s strikeout highlights are bound to be impressive, it should be remembered that Darvish is using an assortment of different pitches with two strikes, all appearing to be swing and miss strikeout caliber.

According to Patrick Newman of NPBTracker.com, “Darvish’s repertoire is diverse, with six distinct pitches that he throws with excellent movement:”

  • 90-96 MPH 4-seam fastball
  • 90-93 MPH 2-seam fastball
  • 90-92 MPH cutter
  • 85-ish MPH horizontally breaking slider
  • Low 80s downward-breaking slider, which Newman says looks more like a power curve
  • 65-70 MPH curveball

However, let’s take what we see in that video with a grain of salt. These are Japanese batters that he’s making look foolish, and once again, we come back to the idea that the posting fee, plus a contract will be a lot of money for someone with no experience at the Major League level.

Using the idea that a each win above replacement will cost $5 million on the free agent market, while assuming an inflation rate of 5% per year, we can get a rough idea of how Darvish would have to perform in order to live up to the Rangers’ spending $111.7 million  in posting fees and the six year contract combined.

An argument could be made that the posting fee is similar to the cost of a trade with the Japanese team, and the contract is a separate entity, but the arrangement is far more comparable to a free agent signing than a trade and contract extension, in that you’re dealing solely in money. It’s also clear what amount of value you’re giving up to negotiate a contract with Darvish, unlike a trade where you’re dealing in projected returns from players in addition to previously signed contracts.

With this in mind, we see that Darvish would have to accumulate something close to 20 wins above replacement for that to work out. If we look at 2006 – 2011, we see that 21 pitchers offered their team that level of value. So, we can say that over the next six years, the Texas Rangers should be happy with their contract with Darvish if he’s able to be one of the top 20 pitchers in baseball. Of course, the whole idea of spending in baseball is to do better than break even, but let’s look at some of the pitchers that Texas would have to believe he will be as good as in order to justify the signing.

These are the pitchers with more than 20  wins above replacement (according to FanGraphs) over the last six years:

  • Derek Lowe;
  • Mark Buehrle;
  • James Shields;
  • Ubaldo Jimenez;
  • Jon Lester;
  • Johan Santana;
  • John Lackey;
  • Cole Hamels;
  • Matt Cain;
  • Roy Oswalt;
  • Jered Weaver;
  • Javier Vazquez;
  • Josh Beckett;
  • Zack Greinke;
  • Felix Hernandez;
  • Cliff Lee;
  • Dan Haren;
  • Tim Lincecum;
  • Justin Verlander;
  • C.C. Sabathia; and
  • Roy Halladay.

However, if he is on his way to pitching at this level, it’s difficult to imagine him not opting out after five years. This makes the deal significantly worse for the Rangers who then essentially end up paying out a large lump sum in their initial posting fee for only five years of what they hope to be an elite pitcher. Darvish opting out would essentially change the average annual value of his contract from $18.6 million to $20.4 million, and force him to move into the top 16 pitchers in the league over a five year period to make good on his overall cost.

Put simply, he has to be an elite pitcher for the deal to work out financially. In the history of baseball, these are the only pitchers in whom a team has decided to invest $100 million or more:

  • C.C. Sabathia;
  • Johan Santana;
  • Barry Zito;
  • Mike Hampton;
  • Cliff Lee;
  • Kevin Brown;
  • Daisuke Matsuzaka; and now
  • Yu Darvish.

Speaking of finances, there is something to be said for potential additions of corporate sponsorship from companies in Japan, but this simply isn’t as certain as might be imagined.

While Jeff Blair in the Globe & Mail suggests that Japanese imports Hideki Matsui and Ichiro! were worth millions of dollars to the New York Yankees and Seattle Mariners, Sam Kennedy, Chief Operating Officer of the Boston Red Sox replying to questions about Daisuke Matsuzaka’s off field value, said:

I know it hasn’t been a financial windfall that some people had predicted, but I do think it was always a baseball decision. There was a lot of made of the business aspect. Did we open some doors in Japan? Yes. Was it a windfall? No. Was it a good baseball move? You can debate that all day long.

From this, we can not only assume that Kennedy’s days are significantly shorter than ours, but that signing a Japanese pitcher doesn’t guarantee Japanese corporate sponsorship. Keeping in mind that international television rights and merchandise sales go to MLB before they’re split up between all teams, there’s no obvious money maker attached to Darvish.

In addition, Dave Cameron also brought up the point on a FanGraphs podcast that a pitcher is different from an everyday player when it comes to international attendance. It’s unlikely that Yu Darvish is going to make Arlington a tourist attraction for the Japanese, at as much as a regular member of the lineup might, considering the difference in frequency with which both would play.

I’m not sure if that difference might also carry some weight in terms of corporate sponsorship as well. Potential Japanese sponsors might ask: What’s the point in bothering to pay for advertisements at The Ballpark In Arlington if Japanese fans are only watching one in five games?

And also, let’s not begin propagating the myth that Darvish’s star attraction will bring out the local fans in droves. If we look, baseball history informs us that new additions to a lineup don’t bring greater attendance. Wins remain the only thing that brings bigger crowds to the ballpark.

So, yes, if everything goes well, Darvish will bring his share of those to Texas. However, it’s very possible that those wins could have been purchased with a far less costly investment than the one that has been made in Yu Darvish.

As for the roster, the Texas Rangers now have six MLB caliber starters in Darvish, Neftali Feliz, Alexi Ogando, Derek Holland, Matt Harrison and Colby Lewis, as well as two prospects in Martin Perez and Neil Ramirez that will soon be knocking on the door. There are many options for the team going forward, but the most likely scenario sees Ogando moving to the bullpen to start the season where he’ll help solidify it as one of the better relief corps and entire staffs in all of baseball.

Comments (14)

  1. 6 year 60 I hear…looks like I’m wrong again. Further reassuring that my choice to pursue other interests outside of sports was indeed the correct choice.

  2. I had read a couple of articles on Dice-K’s financial contributions to the Red Sox a while back. Basically they came to the conclusion that the biggest financial gain to the Sox came from making the playoffs. If Darvish can help them do that over for every year of the contract then that should help take some of the sting out such a hefty bite in their payroll.

  3. Still a great risk to take, I think. With the Rangers being as close as they are even adding a good starting pitcher could put them over the edge which would go a long way to soothing any sore feelings if Darvish blows out an elbow in year 4.

    Also, with regards to corporate advertising, isn’t part of the idea here that Darvish’s fans in Japan(where I hear he’s pretty popular) might actually become Rangers fans?

    • That’s fine if they do, it just doesn’t translate into dollars very visibly.

      • I think that’s a pretty big leap to take from one pretty vague statement from a Red Sox executive and whatever his definition of windfall might be. If a sizable chunk of Darvish’s fans do become Rangers fans there’ll be value there.

        • Fans mean shit to the rangers though, as MLB divides up any increased merch sales or international tv rights. Only way to get it is through corporate sponsors and Parkes lays out the difference between appeal of every day player vs. pitcher.

          • Darvish Fans don’t mean a ton to the Rangers if they only watch the games Darvish pitches in, sure. But, and this is the whole point of my response, if they actually become Rangers fans they’ll watch other Rangers games which will contribute to the value of those advertising opportunities.

            I mean even the Dice-K worst case scenario where the pitcher ends up not being very good and barely plays is described as having value. Sure it’s “not a windfall” but that’s can mean something very different to the team with the 2nd highest revenues in all of baseball and who probably isn’t having any trouble selling advertising than it might to a team like the Rangers or, god forbid, the Blue Jays who are pulling in 70 or 55% of the revenues that the Red Sox are.

  4. That list of pitchers with 20+fWAR in the last six years is pretty intimidating…

    And then I scroll down a few names below the 20-WAR cutoff and see that over the same time period, A.J. Freaking Burnett put up 17.8 fWAR. And furthermore, that Andy Pettite and Adam Wainwright both narrowly missed the cutoff without even throwing a single pitch in 2011.

    The Rangers don’t need *everything* to go perfectly to get good free-agent value for money from this deal.

  5. Being one of the 20 best pitchers in the league for the length of that contract? That might be harder than one expects.

    I really think that Darvish will either live up to the expectations of the contract (dollar amounts) or exceed them (based on nothing). He looks like a different type of pitcher than Diasuke and has the build similar to some of the tall/giant pitchers of good ol’ American pitchers.

    Even if the Rangers make the post-season 4/6 years of Darvish’s contract, I’m sure the contract would justify itself (dollar amounts). It’s worth the gamble…for the Rangers any way. For the Jays, it probably wasn’t worth all that risk on paper.

  6. If Yu doesn’t materialize into a top 20 pitcher, and gets onto that list for the next five or six seasons, won’t the Rangers be in a great spot to trade him? I mean, if we assume that he doesn’t completely suck, a starting pitcher who is this highly touted is likely to be worth 2 WAR/season, which is what $10 Mil/year tends to equal out to, and this is what his contract will be worth.

    Sure, the Rangers will have sunk $50+ MM into getting him, but if he’s a 3 WAR/season guy, a lot of teams would gladly have him as a 3rd or 4th starter for $10 MM/year.

    This seems like a good price to pay for this contract because he will remain an attractive asset to the other 29 teams.

  7. Also, and I hope this doesn’t come off as overly critical as I’m a fan and I mainly agree with the points you’re making here, I think you’re being a little bit unfair with regards to attendance issues. For starters, the links you provide actually show that attendance can surge upwards in a year after a free agent signings. In the seven examples given, although they’re kind of arbitrary at only looking at 100+ million dollar players, the teams had, on average, an increase of just under 140,000 fans a year. At a major league average ticket price that works out to around 3.7 million dollars in revenue even assuming none of them drop any dough at concessions or parking. That’s not the world, no, but it’s not nothing. Whether those are fans coming out because a signing is playing well and helping the team win or just to gawk at the attraction it’s still significant money. I think it’s far more fair to say that the effect on attendance a big FA signing has is overblown, not that it doesn’t exist.

    But also, it kind of ignores the bigger issue in regards to Darvish. Part of the argument in scouting Japan for that first big superstar has always been that if you found that guy you’d be broadening your fan base and drawing in people who wouldn’t ordinarily be going to games regardless of how your team is doing. Holding Darvish up to Jayson Werth and trying to draw that line isn’t going to be terribly useful unless we’re equating the draw Darvish might have with two separate under-represented ethnic groups and, I don’t know, mullet aficionados.

    The problem with trying to accurately gauge Darvish’s appeal in that sense is that among the Japanese stars who’ve shown up in the bigs there’s not a ton to use as a comparison. Dice-K and Matsui went to teams who were going to draw well regardless and while Ichiro’s Mariners had a big attendance spike their first year they also won 116 games. Even Nomo’s first year is a tricky one because attendance was down all over baseball after the strike.

    I think there’s some evidence for it’s value historically though. The Dodgers set all time attendance records in both Fernando Valenzuela’s first full season and Jackie Robinson’s first year. Likewise for the Tigers in Hank Greenberg’s first MVP year. None of those seasons were years where those teams set records in games won, either.

    Admittedly, I’m cherry picking a little there and none of the attendance surges were giant but my point is just that even including Ichiro I don’t know if we’ve seen the effect having an Asian superstar on a very successful ball club could be financially..

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