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    Darvish Down To The Studs


    Ted Schwerzler
    Image courtesy of © Mark J. Rebilas-USA TODAY Sports

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    The Minnesota Twins, and really baseball as a whole, continue to be in a standoff with free agents across the sport. While some players are balking at long-term deals (yes, you Eric Hosmer) or wanting unrealistic sums of money (yes, you J.D. Martinez and Jake Arrieta), the reality is that players still should end up being signed. For the hometown team no unsigned player is more important than Yu Darvish.

    At this point there’s been so much written about the fit between the two sides. Jay Jaffe recently noted that Darvish makes too much sense for Minnesota, and MLB.com’s Richard Justice put the Twins atop the list of teams needing to make a move (with Darvish being the suggestion). If Darvish to the Twins were to fall into the “beating a dead horse” category, we would’ve entered the sick and twisted level of punishment a long time ago.

    So, what’s the hang up?

    On his latest version of The Scoop podcast, Darren Wolfson noted the Twins have made Darvish a formal offer. The belief is that it’s of the four or five year variety, and that they aren’t keen on the idea of going to a sixth year (more on that in a minute). Also, while Chris Gimenez is now trying to recruit Darvish to Chicago, Mike Napoli believes it’s a matter of when (not if) he’ll be with Minnesota. The former Rangers teammate is playing an active role in recruiting the star pitcher to Thad Levine’s new club.

    Now back to that sixth year and Darvish bit. Twins Daily’s Tom Froemming had a couple of noteworthy comments regarding Yu recently on Twitter. First and foremost, if the sixth year is what would get the deal done for the Twins and they decide to forego that opportunity, it would be a huge egg-on-face scenario. Despite lacking the ability to play in the big boy pool a vast majority of the time, Minnesota finds itself with a prime opportunity. Positioning themselves to offer something competitors can/will not in order to get a monumental deal done would like a big whiff.

    Looking at what the market has to offer, Tom delves a bit deeper. A year from now, the free agent pitching crop isn’t going to yield much more than what Minnesota currently has in front of them. While Clayton Kershaw should headline that class, he’s going to be nowhere within the Twins means (especially with Los Angeles and New York attempting to position for a big spend). That leaves a group headlined by Dallas Keuchel, and rounded out by names like Patrick Corbin and Garret Richards.

    Finally and maybe most importantly given the factors at play, Mr. Froemming quips “If the Twins just want to be a cute little small market team that builds from within that's fine. That's actually smart. But then you need to do things like trade away Brian Dozier.” This point makes a bunch of sense as well, and is akin to how the Tampa Bay Rays have operated. In flipping names like David Price, they’ve recouped controllable talent and tried to win outside of free agency. However, the crossroads for the Twins to pick a side is right in front of them.

    As has been dissected plenty this offseason, Minnesota views a perfect storm for Darvish to end up in the Twin Cities. A bad division, prospects graduated to regulars, and a payroll begging to be expanded upon. If the Twins are not ready or able to take the plunge on Darvish at this juncture, there’s probably never going to be a time in which they are willing to make this sort of leap. There are only a few times in an organization's cycle of competitiveness that point directly at a certain line of decision-making. For Minnesota, this is it.

    As I outlined here recently, there’s no denying that clubs are backing away from long-term big-money deals. The reality is that the back end of those deals leaves you significant opportunity to be exposed when a player begins to fall off a cliff. That being said, it also has to be applied on a case-by-case basis. While there are any number of players available in a given offseason, top-of-the-rotation pitchers rarely hit the market surrounded by ideal circumstances.

    Should the Twins land Darvish on a six-year deal, it’s fair to assume that the final (and possibly even the fifth year) would be a wash. That being said, there are more than a few things in their corner here. First and foremost is the commodity that they’re starting with. Darvish is an elite level pitcher now. Assuming he falls off as time goes on, him going from a 3.70 ERA (16/17) to a 4.50 ERA and fifth starter at age 35-36 is hardly a massive failure. By starting with a higher talent level out of the gate, the expectation should be that the bottom wouldn’t drop out as deeply.

    Second, payroll being what it is now, and should continue to be, positions the move well. Although Minnesota hasn’t kept up with inflation for years, they also haven’t been in a scenario in which supplementing the internal roster with outside talent would’ve made much difference. Before the emergence of young and controllable talent hit the big leagues, spending would’ve been at a time to do little more than tread water. Now with the roster where it is, 2018 should represent an organizational record in payroll, and that should continue to hold strong for the next several years.

    Finally, Minnesota has been waiting for this opportunity for years. No, not the opportunity to sign Darvish, but instead the ability to “go for it,” with names like Buxton and Sano already in place. After having a top farm system for a number of years, those prospects have graduated. If by the time Yu Darvish is 36 or 37, the Twins have yet to accomplish anything, they’ll also be watching both Sano and Buxton stare 30 in the face. At that point, they’ll be established veterans on a roster waiting on the emergence of players headlined by Royce Lewis. This current core of graduated prospects was what the Twins needed to supplement, and the time to do so is now.

    At the end of the day, Yu Darvish gives the Twins an opportunity to play in a space they so rarely have been able to. They can bring in an elite and necessary talent, while pushing them forward from a year in which they showed emergence. Seeing future salary relief in 2019 and beyond, Falvey and Levine should be able to continue to pump external talent into their established squad, and it could result in the best opportunity for a World Series run in years. It’s hard to suggest that any one offseason is defined solely on the shoulders of a singular player, but it’s equally hard to understate just how valuable the addition of the former Rangers ace would be.

    Four years, five years, or six years, find the competitive advantage necessary to get a "Yes" and take the plunge.


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    I have enjoyed reading this excellent analysis of why Darvish is going to sign with Minnesota. The authors have been beyond informative and thorough in their presentations. Except for the Super Bowl, this has been the story that all of Minnesota, and especially TD readers, have been salivating over. But do you actually think Darvish is going to spurn the “bright lights” of Los Angeles or Chicago for ................ the Minnesota Twins?

    Come on!

    I'm not sure what the point is of this post is....my point about Darvish, who is not from MN and probably wants to live where there are more Japanese (though we don't know that) and/or more diversity than you can find in MN.....is that MLB players don't actually spend that much time in their home cities. And, almost all the school year is not the MLB season.

    indeed, I guess the point was when you make millions per year and travel heavily you can choose where you live, and being close to the home office is not very important.

     

    People have many reasons to choose where to live, when cost and commute aren’t concerns it opens up a wide variety of options.

     

    If he wants to save on state income tax, FL is a reasonable choice with the 0 income tax and proximity to spring training facilities.

    indeed, I guess the point was when you make millions per year and travel heavily you can choose where you live, and being close to the home office is not very important.

     

    People have many reasons to choose where to live, when cost and commute aren’t concerns it opens up a wide variety of options.

     

    If he wants to save on state income tax, FL is a reasonable choice with the 0 income tax and proximity to spring training facilities.

    State income tax is paid where the money is earned, not where you live.

    indeed, I guess the point was when you make millions per year and travel heavily you can choose where you live, and being close to the home office is not very important.

     

    People have many reasons to choose where to live, when cost and commute aren’t concerns it opens up a wide variety of options.

     

    If he wants to save on state income tax, FL is a reasonable choice with the 0 income tax and proximity to spring training facilities.

    Someone correct me if I’m wrong but I thought pro ball players paid taxes based on where they play. Sixteen games in New York, you pay New York taxes on 10% of your salary. Eight games in Los Angeles, you pay California taxes on 5% of your salary.

     

    Is that not how it works?

    Someone correct me if I’m wrong but pro ball players pay taxes based on where they play. Sixteen games in New York, you pay New York taxes on 10% of your salary. Eight games in Los Angeles, you pay California taxes on 5% of your salary.

     

    Is that not how it works?

    i didn’t think of that! Do you think income tax is withheld on the game check?

     

    Someone correct me if I’m wrong but I thought pro ball players paid taxes based on where they play. Sixteen games in New York, you pay New York taxes on 10% of your salary. Eight games in Los Angeles, you pay California taxes on 5% of your salary.

    Is that not how it works?

    That's typically how it works. However...your home domicile plays a role too.  For instance, I believe Mauer is a Florida resident.  It makes a difference.

    How so? Not challenging you, I’m legitimately curious.

    what about bonuses, capital gains, and property taxes? None of those are in a game check.

     

    Also, in reading my Wisconsin income tax guide. I earn income in MN and have my tax withheld at the MN rate, but I get a very slight credit that appears to be a result of some kind of marry up with reconciling the two states. Not sure tho

    Edited by Sconnie

     

    Someone correct me if I’m wrong but I thought pro ball players paid taxes based on where they play. Sixteen games in New York, you pay New York taxes on 10% of your salary. Eight games in Los Angeles, you pay California taxes on 5% of your salary.

    Is that not how it works?

    That's correct (states were smart about that), playing in a home state (50% of games) where there is 0% income tax comes into play, mostly you see it in the NBA or other leagues though with salary caps.

    The Yankees+Dodgers will always overpay and help 'make up' for those high state taxes.

    Players often 'claim' residency in tax friendly states (smartly I might add!) so they don't get as destroyed on all of their other sources of income:

    commercial, endorsements, 1099, investments etc etc

    Also why they all retire to those states as well (pension baby!)

     

    but I get a very slight credit that appears to be a result of some kind of marry up with reconciling the two states. Not sure tho

    Yeah they do that to prevent people from taking advantage of the system, we see it here in NYC, you can't get out of the city/state tax by just 'moving' to Jersey, as it all basically evens out more or less.

     

    Someone correct me if I’m wrong but I thought pro ball players paid taxes based on where they play. Sixteen games in New York, you pay New York taxes on 10% of your salary. Eight games in Los Angeles, you pay California taxes on 5% of your salary.

    Is that not how it works?

    Yes.  The problem is half a player's income is taxed in their home state, ie, Minnesota.  Our tax rate is what, 9%?  Texas is zero.  Half of $25,000,000 is $12,500,000.  9% of that is $1,137,500, or how much he would save signing in Texas vs. Minnesota.  California and New York would be as bad as Minnesota.  The real savings would be Florida, Texas or someplace like South Dakota. 

    Edited by rdehring

    I'm not a CPA but Mauer calling Florida home avoids paying MN income tax on his other earnings, I.e investment accounts, real estate income from other areas, outside income from advertising, etc., etc.

    Oh, sure. I knew that part, was wondering if there was something else.

     

    Thanks.

     

    Someone correct me if I’m wrong but I thought pro ball players paid taxes based on where they play. Sixteen games in New York, you pay New York taxes on 10% of your salary. Eight games in Los Angeles, you pay California taxes on 5% of your salary.

    Is that not how it works?

    Depends on the state to be honest. Some states have reciprocity agreements with other states (Wisconsin and Illinois are good examples). Some have clauses specifically written to tax professional athletes.

    I have been pouring over my Baseball Prospectus and trying to see justification for overpaying Darvish and I cannot.  I do not find it in the stats or comments on Darvish - found in the Los Angeles Dodgers section, or in the Percota projections at the end where I look to find him in the leader boards.  Yes he is there in a couple, but his rankings do not give me confidence that he is a true ace - I see him as a B+ pitcher, which is still good, but his projections are going down and a large multi-year contract certainly is not supported in this book which I just received yesterday.

    The tax on players is normally related to “duty” days. This article regarding a lawsuit against the city of Cleveland gives an overview.

     

    https://www.google.com/amp/www.chicagotribune.com/business/ct-cleveland-jock-tax-0501-biz-20150430-story,amp.html

     

    The situation kinds of reminds of a joke that I have heard many tell over my lifetime. I'm sure most of you have heard it... it goes like this: 

     

    A fellow was stuck on his rooftop in a flood. He was praying to God for help.

    Soon a man in a rowboat came by and the fellow shouted to the man on the roof, "Jump in, I can save you."

    The stranded fellow shouted back, "No, it's OK, I'm praying to God and he is going to save me."

    So the rowboat went on.

    Then a motorboat came by. "The fellow in the motorboat shouted, "Jump in, I can save you."

    To this the stranded man said, "No thanks, I'm praying to God and he is going to save me. I have faith."

    So the motorboat went on.

    Then a helicopter came by and the pilot shouted down, "Grab this rope and I will lift you to safety."

    To this the stranded man again replied, "No thanks, I'm praying to God and he is going to save me. I have faith."

    So the helicopter reluctantly flew away.

    Soon the water rose above the rooftop and the man drowned. He went to Heaven. He finally got his chance to discuss this whole situation with God, at which point he exclaimed, "I had faith in you but you didn't save me, you let me drown. I don't understand why!"

    To this God replied, "I sent you a rowboat and a motorboat and a helicopter. 

     

    Substitute "Rowboat", "Motorboat" and "Helicopter" with: 

     

    "Young Productive Core", "Weak AL Central", "Competitive Luxury Tax", "Rebuilding teams all over the landscape", "Manageable Budget Space", "Future Expiring Contracts" and " An Early Injury to Santana" 

     

    And it is easy to see that the Baseball Gods want Darvish in Minnesota!!!  :)

    Apparently we passed on the rowboat, motorboat and helicopter and will be waiting for a couple of the young guys to become Cy Young candidates.




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