Taylor's Twins Talk

Focusing on the Twins, with a few ramblings on other things that catch my attention

Sunday, December 10, 2006

More on Matsuzaka

UPDATE: I incorrectly stated that Matsuzaka would be a free agent after the 2007 season if he returned to Seibu for next season. I was corrected in the comments, but having seen conflicting information I was still hesitant to update the post. Now, Peter Gammons has stated that Matsuzaka wouldn't be a free agent until after 2008 - so I guess I'll take that as gospel. That doesn't change the majority of the analysis below, so I'm not going to adjust the post. Just beware that Matsuzaka would have to go through the posting system again next year if he didn't sign with the Red Sox in the next couple of days. Now, the original post:


Back on November 13, after the Red Sox won the bidding for Daisuke Matsuzaka, I posted my thoughts here. Essentially, I said that the Red Sox had no intention of actually getting Matsuzaka, but were making a ridiculous bid to ensure that the Yankees would not pick him up. Very few members of the media seemed to think along the same lines, although Buster Olney made a few mentions of the bidding that I'll discuss in a little bit. Now, ESPN is reporting that a source close to the negotiations suggests that the two sides are near a total break down in the process - and we're four days away from my being proved right, with Matsuzaka sent back to Japan.

This is a perfect storm type situation. You have the best pitcher in Japan trying to come to MLB. You have the nastiest, most delusional, most bulldog-like agent in the game with Scott Boras. You have a front office in Boston that thinks it's smarter than everybody else, and that provoked complaints from other front offices in how it handled the J.D. Drew and Julio Lugo signings (basically, they're very aggressive about skirting the rules). Add it all together and you get chaos.

So, let me refine my earlier analysis a little bit and suggest why this thing is going to fall through. First, there's the obvious issue of bargaining power. Scott Boras likes to get his clients top dollar, and he is suggesting that Matsuzaka deserves to be paid like a superstar based on his history in Japan. In other words, he's going to want somewhere in the neighborhood of $15 million a season for several years to make this deal work.

From the Red Sox perspective, that's outrageous. Imagine a three year contract at $15 million per. That would go on top of the $51.1 million the Sox paid (or would pay, if a deal was reached) to the Seibu Lions. That would make the total value of the deal about $96 million for 3 years, which means they would essentially be paying about $32 million/year for Matsuzaka. That isn't going to happen. To top it off, the Sox know that they have all the leverage. Matsuzaka wants to pitch in the US, and he'll be forced to go back to Japan, making about $3 million, if he doesn't sign a contract. As a result, offering a 2 or 3 year deal for about $8 million per makes more sense - it would still be a $75 million/3 year deal (which is roughly $25 million/per - still absurdly high, but a little more reasonable).

However - my understanding of the posting system is that Matsuzaka would be a free agent for the 2008 season if the Red Sox failed to sign him to a contract in the next four days. So let's look at this from Boras perspective, over the next 5 years or so. Obviously, much of this is speculative. First is the money that Matsuzaka would make each of the next five years if he accepted a Red Sox offer (which we'll assume to be on the high end at $8 million per for 3 years) and then received a solid free agent deal for the next two years from either the Red Sox or someone else, after becoming a free agent. Second, the numbers if Matsuzaka does not accept the Red Sox offer and becomes a free agent in time for 2008.

With Boston
2007 -
$8 million
2008 - $8 million
2009 - $8 million
2010 - $17 million
2011 - $17 million
Total - $58 million

Without Boston

2007 - $3 million
2008 - $17 million
2009 - $17 million
2010 - $17 million
2011 - $17 million
Total - $71 million


This is obviously making some assumptions - for one thing, I'm assuming that the demand for Matsuzaka would be very strong in free agency next year (I think that's a very safe bet), and also that Matsuzaka would be good enough in Boston to warrant a bidding frenzy when his initial contract was finished (a tougher bet - more on that in a bit). But, you can see that the numbers strongly suggest that Matsuzaka should not take a lowball offer from the Red Sox. He can do better financially by making less money this year.

Now, onto that second assumption - that demand for Matsuzaka is going to be high when his initial contract with Boston is up. It certainly might be - Matsuzaka might be everything we've heard he is, a brilliant, Cy Young caliber starter. But the fact is, nobody knows how he'll do in the MLB. By taking a low offer for him, Boras is removing the mystery and showing everybody exactly what his player can do over the next 3 years. He's much, much better off retaining the mystery and taking it to a full market.

So - essentially, this deal doesn't make sense from either side. Boston killed any possibility of a contract, in my mind, by making a bid so high that they need at least 3 years at a low dollar value in order to make a contract work, and from Matsuzaka's point of view accepting such a contract would be just plain foolish. The only way this deal happens is if Matsuzaka's desire to come to America is so strong that he ignores the business ramifications of signing with the Red Sox. But, if that were the case, would he really have signed Scott Boras???

I stand by what I said in November - Matsuzaka will not be pitching for the Red Sox in 2007.

2 Comments:

  • At Sun Dec 10, 12:41:00 PM , Anonymous Tim Daloisio said...

    Really good stuff, especially the breakdown of money that Matsuzaka could make. However I think Matsuzaka would have to clear the posting system next year as well and would be a free agent in two years (a year and a half to be exact).

     
  • At Sun Dec 10, 01:36:00 PM , Blogger JST said...

    Tim,

    Thanks for the comment. I keep seeing differing things on Matsuzaka and what would happen next year if he had to return to Seibu next season. I'll have to look into it more fully and try to find a definitive answer - if you have a source for the info, please let me know.

    Either way, I don't think Matsuzaka is going to end up in Boston this season. We'll find out in 4 days!

     

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