Tuesday, January 3, 2012

Why the Rangers Can’t Lowball Yu Darvish

Last night Kevin Goldstein briefly responded to several questions that basically asked, “Why don’t the Rangers just lowball Yu Darvish since they are the only MLB team with which he can negotiate?”  Goldstein’s succinct (and accurate) reply was that doing so would be “dumb.” 

There are many reasons doing so would be dumb.  For example, the Rangers would risk alienating a premier player and hurting their relationship with future Japanese imports (as well as American free agents).

One important reason that is often ignored is that Darvish was making significant money in Japan.  We in America tend to operate on this assumption that Japanese baseball players do not make much money, but this claim is certainly false as it pertains to Darvish.  He has earned the following salaries over the past five years (converted from Yen to USD using today’s exchange rates):

  •                 2011: $6.4MM
  •                 2010: $4.2MM
  •                 2009: $3.5MM
  •                 2008: $2.6MM
  •                 2007: $0.92MM

Now, if Darvish and the Rangers cannot agree to a deal, he will become a free agent after the 2013 season.  Given his historical increases in salary, Darvish is likely to make about $8-9MM in 2012 and $10-12MM in 2013.  Using the low end of the estimates, he can expect to make $18MM over the next two years.  After that, he would become a true free agent.  There would be no posting fee given to the Nippon Ham Fighters, and he could negotiate with all 30 teams.  That’s a quite enviable spot for a 27-year-old to be in.

So, for those who believe that the Rangers should lowball Darvish, how low do you mean?  Darvish is two years away from a $100MM contract anyways.  In the meantime, he will make at least $18MM.  How low could a lowball offer go?  If the Rangers offered Darvish $80MM over five years, he would easily pass.  He would likely prefer a 5/100 deal for 2014 and beyond (a fairly low estimate for Darvish on the open market), combined with his expected salary over the next two years, which would give him $78MM over the next five years, with two guaranteed years for another $40MM.

Simply put, Darvish has much more leverage than most assume, because he makes significant money in Japan.  Plus, he is two years away from true free agency where his agent can play large bids off of each other.  If the Rangers do not offer $100MM (and perhaps significantly more), Darvish has good reason to pass up the offer.

So, yes, Goldstein is right.  Attempting to lowball Darvish is definitely “dumb.”

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