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Why Yu Darvish Will Be Cheaper Than Everyone Thinks

Posted by Andrew Thares , 14 January 2018 · 2,358 views

rounding third yu darvish pitching
Why Yu Darvish Will Be Cheaper Than Everyone Thinks This offseason has been nothing short of unprecedented. It started with the 23-year-old sensation Shohei Ohtani deciding to leave Japan for the MLB, two years before he was eligible to sign without the International Free Agency restrictions. Then it was followed up with two months of absolute standstill for many of the top free agents. So, how could this season’s free agent market potentially cause Yu Darvish to sign for a lot less money than the six years and $160MM that MLB Trade Rumors had originally predicted? Let’s take a look.

In years past, the available marquee free agents were almost exclusively signed by the richest teams in baseball. In fact, 9 of the 20 richest contracts in MLB history were signed by either the Yankees, Dodgers or Red Sox. However, as MLB front offices are starting to get smarter, they are starting to learn that these big time free agent contracts are almost never worth it in the long run. As a result, teams are starting to shift their focus towards lower tier free agents that they can sign to short term, and more reasonably priced contracts, like relievers.

Another factor that will cause Darvish’s value to drop is the luxury-tax system. While MLB does not have salary cap like many other U.S. sports leagues do, they do have a luxury-tax that disincentivizes teams from spending frivolous amounts of money on free agents. As teams go further and further above the luxury-tax threshold, and as the number of years they spend above the threshold increases, so to does the amount that the teams are taxed. This is causing many of the top spending teams, who have spent the last few years above the luxury-tax threshold, to want to cut back on spending and get below it in 2018. As a result, these teams are choosing to take a pass on players like Darvish.

Major League Baseball has seen a stretch of extreme parity over the past half-decade, with 26 of the 30 teams having made a playoff appearance since 2011, along with traditional bottom dwellers, like the Royals, becoming World Series contenders. However, over the past year or two, the MLB has seen a real shift from a league filled with parity, to apparent “super teams” atop each division. The reasons for this are many, and I won’t go into details why in this post. So how does all of this impact Yu Darvish? Well, I have already touched on why many of the teams at the top aren’t looking to add Darvish, but now with this power separation, many teams are opting to go with a rebuilding strategy as opposed to signing free agents. This takes even more teams out of the running, that might have otherwise made a run at competing in 2018, and thus looking to sign Darvish.

So, who does this all leave that would be interested in signing Darvish? Well, it was reported that Yu Darvish has narrowed his list of teams down to six. These teams are the Rangers, Cubs, Dodgers, Astros, Yankees and of course the Twins.

Let’s look at the five other teams remaining that are competing with the Twins for Yu Darvish’s services. Saturday night, the Astros made a trade to acquire Pirates starter Gerrit Cole. With this move, it all but fills out the Astros’ rotation with Dallas Keuchel, Justin Verlander, Gerrit Cole and Lance McCullers Jr. as their 1-4, followed by quality starters in Brad Peacock, Charlie Morton and Collin McHugh competing for the 5th spot. This all but takes them out of the running for Yu Darvish.

Additionally, the Dodgers and Yankees are teams that are looking to stay below the $197MM luxury-tax threshold in 2018. As it stands, their projected 2018 salaries are $191MM and $172MM respectively. This means that signing Darvish will put the Dodgers well beyond the luxury-tax, and limits the Yankees to less than $25MM in average annual value (AAV) on Darvish’s contract in order to stay below. Doing so would leave the Yankees with no margin to play with if they need to sign or trade for another player throughout the season, which means they are probably out unless his value drops down below $20MM in AAV. The Rangers are also a team that have said that they are looking to cut payroll in 2018. While their motives to do so might not be luxury-tax related, their desire to do so makes it hard to see Darvish making a reunion with the team that originally signed him out of Japan in 2012.

This just leaves the Chicago Cubs, who are looking to replace 2015 NL Cy Young Award winner Jake Arrieta. The Cubs have also expressed an interest in staying below the luxury-tax, but given their roughly $30MM in space to work with, and the fact that they were below the luxury-tax in 2017, their incentives to stay below aren’t as great as the Dodgers and Yankees are. This most likely makes the Cubs the greatest competition that the Twins have for Darvish. While the Cubs could easily get into a bidding war with the Twins, and push his salary closer to the $30MM AAV range, I don’t see them doing so for a couple of reasons. The first is this would leave them with little to no room to work with in 2018 for any other additions if they wish to stay below the luxury-tax. The second, is they have shown interest in a potential reunion with Arrieta. If the price for Darvish gets too high, they could easily put their focus on bringing back Arrieta.

With all of that being said, this is great news for the Twins. Not only does it increase their chances of actually signing Yu Darvish, but they might be able to do so without having to break the bank. There is also a slight chance that they might be able to land Darvish on a five-year deal as opposed to a six or seven-year deal. This would be great for the Twins, as he would come off of the Twins books after his age 35 season. In the end, I see Darvish signing either a five or six-year deal, in the $115MM-$135MM range, a far cry from the six years and $160MM that was originally projected.

  • BigSkyTwinsFan, nicksaviking, brvama and 8 others like this



Yep. From all rumors and speculation, it sure seems the market is slow because, for the first time in a long time, teams are just being smarter about tossing out big and long term contracts. What else explains such a slow moving market for all but a few of the top FA? Hard as it is to believe, MLB teams seem to be flexing a bit of financial-mental muscle for the first time in a while. Payroll, payroll coming off the books soon, a slow market, this is the perfect time for the Twins to make a huge move. A move that will come at a cost, but a manageable cost, while still fulfilling Darvish with the security he desires. He should get 4 years, probably 5, at $24-26M per. Darvish is set for life, the Twins can afford it, and could even afford to front load the contact some to make it even more palatable down the road.
    • ToddlerHarmon likes this

I will believe the first point (teams avoiding megacontracts) when I see it. I think the second is largely the reason. Several of the big spending teams are out on big contracts this offseason to get below the luxury tax and also to save up for one of the superstars next offseason.

 

The typo (parody) is actually quite humorous.

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Andrew Thares
Jan 14 2018 11:04 PM

 

I will believe the first point (teams avoiding megacontracts) when I see it. I think the second is largely the reason. Several of the big spending teams are out on big contracts this offseason to get below the luxury tax and also to save up for one of the superstars next offseason.

 

The typo (parody) is actually quite humorous.

Haha, good catch. I posted this during the Vikings game, so I skimmed on the proofreading. 

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Tom Froemming
Jan 15 2018 12:53 PM

I enjoyed reading this. I don't have any more/better information that you would, but ...

 

If Darvish can't get more than $135 million, the MLBPA may want to consider filing a grievance. The game is in as good a place financially as it's ever been. If contracts for the top free agents suddenly start going down, I think there should be a real concern from the player's perspective. 

 

Again, I'm not saying there's no way Darvish signs in your predicted range, just that if he did it would be a pretty big red flag.

    • ToddlerHarmon likes this
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Andrew Thares
Jan 15 2018 01:09 PM

 

I enjoyed reading this. I don't have any more/better information that you would, but ...

 

If Darvish can't get more than $135 million, the MLBPA may want to consider filing a grievance. The game is in as good a place financially as it's ever been. If contracts for the top free agents suddenly start going down, I think there should be a real concern from the player's perspective. 

 

Again, I'm not saying there's no way Darvish signs in your predicted range, just that if he did it would be a pretty big red flag.

I see your point, but at the same time overall payroll is still going up throughout the league (except in Miami). This isn't as much of an issue of players not getting as much money, as much as it is teams realizing that they are better suited to disperse their assets all throughout their team, and not just on 1 or 2 players. 

 

As I touched on, the big thing that will cause Darvish from getting his full open market rate is the luxury-tax, because its preventing the Yankees and Dodgers from spending the money that they otherwise might have to get him. The problem with that for the MLBPA is they agreed to it in the collective bargaining agreement, so they might not have much of a case.

    • Sconnie and Bill Tanner like this

The OP touched on the recent reduction in parity recently, but I feel like this is an important direct contributor to the situation that should be fleshed out a bit more.

 

With the greater importance placed on taking advantage of the cyclical nature of compete and rebuild, it seems there are an inordinate number of rebuilding teams and a very select few win now teams.

 

2018 might actually be the year that breaks the growing payroll cycle. 2019 appears poised to put the MLB right back on track, but who knows. Tom could be on to something, maybe just a couple years early.

    • howieramone2 likes this
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Lee-The-Twins-Fan
Jan 15 2018 02:40 PM

 

2018 might actually be the year that breaks the growing payroll cycle. 2019 appears poised to put the MLB right back on track, but who knows. Tom could be on to something, maybe just a couple years early.

 

I doubt it. With the marquee names coming out as free agents after the 2018 season, the competition will be wild in the next offseason. 

 

MLB on track budget-wise after 2018? I'll believe it when I see it.

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LA VIkes Fan
Jan 15 2018 02:43 PM

I think baseball is going the way of the NBA and NFL when it comes to rebuilding.Teams are seeing that there isn't much value in being a middle of the pack team - no playoff monye, less favorable draft position, etc. As a result, teams are deciding if they really can contend, and being more realistic about that, and there are fewer teams looking for that one high priced guy to get them over the top. There is no percentage in signing a high priced pitcher to finish 2nd or 3rd instead of 4th or 5th in your division because you don't last long even ifyou do sneak into the playoffs as a Wild Card. This should lower the high end and make it even tougher on the middle, those guys who can help you but don't add enough wins to make you a real contender. Frankly, the mediocre middle is the last place you want to be unless you do it with a very young team. You either want to be elite or tear it down, go young and try to build yourself up to elite.  

    • birdwatcher, Sconnie and howieramone2 like this

 

I doubt it. With the marquee names coming out as free agents after the 2018 season, the competition will be wild in the next offseason. 

 

MLB on track budget-wise after 2018? I'll believe it when I see it.

the new spend this offseason for the 2018 baseball season, so far has to be the lowest in several years. The MLB opening day payroll will most likely grow the least in quite some time, and most of that I would imagine are escalators and options in existing contracts and arbitration.  

 

2018 off-season for the 2019 baseball season is predicted to be astronomical, but then in 2016, the 2017 off season was projected to be high as well. The scarcity in starting pitching was supposed to drive the price up. So far the market has not really reacted as such.

 

 

 

 

If Darvish can't get more than $135 million, the MLBPA may want to consider filing a grievance.

 

So how much should Kershaw get next off-season? Long term deals for pitchers over 30 are too risky.Ask Phil Hughes if you don't believe me.

 

I don't see Darvish getting more than 4 years and more than $22.5 AAV guaranteed.No problem with a couple of options at the end.

    • Bill Tanner likes this
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Tom Froemming
Jan 16 2018 08:25 AM

 

So how much should Kershaw get next off-season?  

Is there any reason why he shouldn't expect to beat Zack Greinke's 6y/$206.5 or David Price's 7y/$217m?

    • Sconnie likes this
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diehardtwinsfan
Jan 16 2018 03:29 PM

 I'm not sure a grievance would work. I would say though that Darvish is going to be the victim of demand in this case. That usually isn't the case with SPs, but with the major players all out, there's no one to drive up the price...

 

Side note, if the Cubs were serious, I think they'd have signed him already. That team can print money. I know a extra couple mil per year is a lot of money, but it's pocket change to these guys. They would have signed him if they really wanted him. I think Brian is right. The Twins probably have the best offer on the field, and the only reason why Darvish hasn't signed is that it is significantly less than what he was hoping for.

    • pbrezeasap likes this

"Additionally, the Dodgers and Yankees are teams that are looking to stay below the $197MM luxury-tax threshold in 2018. As it stands, their projected 2018 salaries are $191MM and $162MM respectively. This means that signing Darvish will put the Dodgers well beyond the luxury-tax, and limits the Yankees to less than $25MM in average annual value (AAV) on Darvish’s contract in order to stay below"

 

Pardon my math but wouldn't the Yankees be $35MM below the LT threshold?If they sign him for $30MM per year for 5, they would still be below the threshold.What am I missing?

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Andrew Thares
Jan 17 2018 04:41 PM

 

"Additionally, the Dodgers and Yankees are teams that are looking to stay below the $197MM luxury-tax threshold in 2018. As it stands, their projected 2018 salaries are $191MM and $162MM respectively. This means that signing Darvish will put the Dodgers well beyond the luxury-tax, and limits the Yankees to less than $25MM in average annual value (AAV) on Darvish’s contract in order to stay below"

 

Pardon my math but wouldn't the Yankees be $35MM below the LT threshold?If they sign him for $30MM per year for 5, they would still be below the threshold.What am I missing?

Sorry, that should have been $172M, which is approximately where their payroll sits for luxury-tax purposes. Their projected payroll for 2018 as of now is $162M, which is different than their luxury-tax payroll, because its not based on AAV, its just what are they paying their players this season.

 

I just forgot to go back and change that part of the post.

Maybe it's something simpler. Maybe all the statistical analysis used to managed results on the field has also crept into the management of team salaries. As noted team have seen that big contracts for one player rarely pays the length of the contract.

 

As we saw last year when the big boppers didn't get the contracts previously handed out to big homerun hitter. Stanton got his big contract a couple years back. But it doesn't appear he generated a lot of trade interest and so even at his young age trying to unload that contract was very difficult for the Marlins.