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.