Baseball Mastermind Retro: The Daisuke Matsuzaka Contract Negotiation
Posted by Alan Hull on May 15th, 2008
Following yesterday’s piece on Yu Darvish, I got the this comment from Sox Addict writer Michael Christopher, regarding the possibility of the Red Sox pursuing another Japanese pitcher through posting, a la Daisuke Matsuzaka:
In a way, I would love to see that happen [Darvish being posted] but to watch the Red Sox throw another 50 mil away just to speak to someone would make me sick to my stomach. That is a LOT of money.
Those are sentiments I understand, that spending $51 million just to speak with Dice-K was a lot of money, but at the time, I was completely blown away by Theo Epstein and the Red Sox throughout the whole process and I will explain why:
The Posting: $51.1111… Million
The posting fee was the first bit of genuis, albeit a subtle one. The Red Sox bid $51,111,111.11 just in case any teams went as high as $50 million, which is a minor point and the Sox wound up out-bidding the next highest team, the New York Mets and the New York Yankees by a wide margin as the Mets bid $39 million and the Yankees $33 million.
At the time, many fans were shocked that the team would spend that much money just to get the chance to speak with Matsukaza, but remember: posting rules state that if a deal cannot be made with the pitcher, he cannot negotiate with any other team and Dice-K would have had to return to Japan for another season and the Red Sox would have gotten their money back. All the pressure was on Matsuzaka to complete a deal because the Red Sox had nothing to lose.
In addition to that, from an organizational stand-point, the $51 million really was a one-time only cost that the ownership group may simply have seen as an investment in the international market of baseball. The fee does not count towards payroll and thus, does not count against the Red Sox luxury tax, where they have maintained a payroll just past the threshold.
The Contract
Once the bid was made and the Red Sox won their exclusive negotiating rights, the talks out of the Matsuzaka camp, led by Scott Boras, were that Matsuzaka would seek a contract in the $100 million range, comparable to what leading free agent Barry Zito was expected to receive that same off-season. Matsukaza was 26 at the time, Zito 28.
However, Theo Epstein refused to offer that much and the gap was said to have been very wide, the Red Sox pointing to a lack of precedent for a Japanese player to receive that much money. In the zero hour, as the negotiating window was winding down, the Red Sox offered Matsuzaka the richest contract ever for a Japanese player, a six-year $52 million deal with incentives that could raise the total value to $60 million. Matsuzaka, in his strong desire to pitch in the United States, wasn’t going to hold the hard line over money only to return to Japan for another year.
In the end, the Red Sox guaranteed less than $1 million more than the posting fee (it only makes sense that the player should receive more than his parent club), while signing a pitcher who was clearly better than Barry Zito (and I’m not just saying that now, it was painfully obvious even then) with one fewer guaranteed year and $23 million less total contract, even when the posting fee is considered, though it really shouldn’t be.
Pure genuis from an organizational standpoint.
Applying this to Yu Darvish
The situation is a little different as it stands now, as Darvish is only 21 years old and has yet to be posted. Depending on how and if he continues to develop this season and when he is posted, Darvish’s parent club, the Nippon Ham Fighters, would probably receive more than $51 million. Consider this: if a big market club could sign a ready-now pitching prospect on par with Clay Buchholz, Joba Chamberlain or David Price without needing to draft or develop them, they wouldn’t hesitate to do so. Is Darvish that good? I don’t know, but Jim Callis seems to think so and he’s a better player evaluator than I and he seems to think so.
The big question will be if Darvish is posted in the 2009 off-season or beyond. We may see some ridiculous numbers thrown around by teams like the Red Sox, Yankees, Cubs and Mets among others.
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