Baseball for the Thinking Fan

Login | Register | Feedback

btf_logo
You are here > Home > Baseball Newsstand > Baseball Primer Newsblog > Discussion
Baseball Primer Newsblog
— The Best News Links from the Baseball Newsstand

Wednesday, January 22, 2014

Number Crunching the Yankees’ Signing of Masahiro Tanaka: The Yankees Got Beat

Essentially, the Yankees just signed Tanaka to a four year, $108 million deal with a unilateral player option for 3 more years at $67 million.

Granted, the Yankees have locked up Tanaka’s “prime” by having the four guaranteed years be his age 25 through 28 seasons.  However, the Yankees are paying $26 million per year for those four years, making it the second richest pitcher contract of all time, by average annual value (h/t River Ave: “Kershaw ($30.7M), Verlander ($25.7M), Felix ($25M), Greinke ($24.5M), Sabathia ($24.4M), Cole Hamels and Cliff Lee (both $24M), and Johan Santana ($22.9M)).

thetailor Posted: January 22, 2014 at 03:33 PM | 77 comment(s) Login to Bookmark
  Tags: masahiro tanaka, yankees

Reader Comments and Retorts

Go to end of page

Statements posted here are those of our readers and do not represent the BaseballThinkFactory. Names are provided by the poster and are not verified. We ask that posters follow our submission policy. Please report any inappropriate comments.

   1. Jim (jimmuscomp) Posted: January 22, 2014 at 07:35 PM (#4644686)
Yeah - I don't get these opt-out clauses for the team. If they suck, they would NEVER opt out. If they are killing it, they will opt out and you will have to renegotiate a bigger deal to keep them. IF there was a way to get language into the opt-out clause that protected the team from injury, I could see it. Like...

If the player misses 50% of one season (or 40% of two seasons) to injury during years 1-4, the player options become team options (or something like that....)

The team really just wants to be insulated from injury. All players have up and down years - that's just the cost of doing business - but injuries to pitchers should be expected and the team should be on the hook for the next three years because of a shoulder injury.

Or - just don't offer the contract in the first place.
   2. thetailor Posted: January 22, 2014 at 07:41 PM (#4644687)
Ah rats, I submitted this before we got into the real meat & potatoes of the deal in the other thread, so this is kind of a double-post now. Sorry.
   3. madvillain Posted: January 22, 2014 at 07:42 PM (#4644688)
Well of course the opt out clauses aren't good for the team, that uh, kinda the point of negotiating them from the players' perspective. It gives them the best of both world's: if they suck, they get the years guaranteed anyway, if they're awesome, they get to enjoy salary inflation and negotiate a better deal.

I have a feeling no other team, given the inherent risk of signing a pitcher with a lot of miles on his arm that's never pitched in MLB coupled with just plain old TINSSAAP, would agree to the opt out clause and that's why the Yankees got him.

What Paste said in the other thread is pretty much the gist of it: it's a huge risk and even for the Yankees it represents a bad gamble.
   4. John Northey Posted: January 22, 2014 at 08:02 PM (#4644694)
Seems to me that Tanaka's agent did a great job working the Yankees here. He knew the Yankees needed a good news story with ticket sales and TV ratings going down, the A-Rod saga, and Cano leaving. Not to mention being out of the playoffs. I suspect the opt-out was the final piece of the puzzle as most teams would resist that strongly. Especially such a big opt-out (3 years for $67 mil). I fully expect Tanaka to opt-out after 4 years as I suspect $25 mil+ deals for aces will become more common now (4 current pitchers have that deal now if you factor in posting fee).

Now, the big question, should the Yankees go nuts and sign more of the top starting pitchers out there? Right now Sabathia, Kuroda, and Tanaka are 3 very good pitchers followed by Nova (unpredictable) and Phelps (186 ML innings, 101 ERA+ but an 81 last year). Wouldn't be shocked to see Garza, Jimenez or Ervin Santana sign with the Yankees now allowing them to shift to a high cost/high end rotation.
   5. Dr. Vaux Posted: January 22, 2014 at 09:42 PM (#4644736)
On MLB Trade Rumors, a posting referred to an interview with Brian Cashman where he said that all the contract offers had opt-out clauses. He could have been lying or been lied to, of course.
   6. Dr. Vaux Posted: January 22, 2014 at 09:44 PM (#4644737)
Right now Sabathia, Kuroda, and Tanaka are 3 very good pitchers


Kuroda looked completely done at the end of last year, and Sabathia looked mostly done all year.
   7. Slivers of Maranville descends into chaos (SdeB) Posted: January 22, 2014 at 09:48 PM (#4644740)
If they suck, they would NEVER opt out. If they are killing it, they will opt out and you will have to renegotiate a bigger deal to keep them.


Well, presumably the team gets a break elsewhere to compensate. Moreover, it's important to remember that "suck" or "killing it" are not the only two possibilities. If there's a 20% chance he sucks, and a 30% chance he kills it, then half the time the Yankees don't suffer if he does or doesn't exercise the option, while still benefiting from the compensation.
   8. Russlan is fond of Dillon Gee Posted: January 22, 2014 at 10:12 PM (#4644756)
Kuroda looked completely done at the end of last year

Kuroda had a 2.33 ERA in his first 24 starts of last year. He had a rough stretch but still put up a nearly 3/1 k/bb ratio and struck out nearly 19% of the batters he faced during that stretch. I doubt he's done. Kuroda has been very good for the Yankees and I think he should be good for them again next year.
   9. KT's Pot Arb Posted: January 22, 2014 at 11:31 PM (#4644810)
Well, presumably the team gets a break elsewhere to compensate. Moreover, it's important to remember that "suck" or "killing it" are not the only two possibilities. If there's a 20% chance he sucks, and a 30% chance he kills it, then half the time the Yankees don't suffer if he does or doesn't exercise the option, while still benefiting from the compensation.


From the other thread the Yankees would have been far better off offering $175m/7 years with no opt out to Tanaka, maybe more. As done, by your numbers

20% of the time Tanaka is terrible and costs the Yankees $175m over 7 years (with posting fee).

50% of the time he is okay, but isn't worth $22m a year (or he would opt out to get that or more over a longer deal) and costs $the Yankees $25m a year with posting fee

30% of the time he's worth more than $22m a year, so he opts out and Yankees spent $27m a year to get 4 years of a guy who was worth a tiny bit more (Kershaw might have been worth 35m a year over last 4 years).

Dies this team ever do long term planning beyond lunch? They have misspent a huge amount of resources this offseason in very puzzling ways, yet refused to budge on a lowball offer to the most important player on their team, Cano.
   10. madvillain Posted: January 22, 2014 at 11:42 PM (#4644819)
Thank you Pot Arb for artfully explaining, in ways I apparently have failed in the other thread, that opt-out clauses are bad for teams and that it would be better to just offer the straight years.
   11. Pasta-diving Jeter (jmac66) Posted: January 22, 2014 at 11:52 PM (#4644823)
But they won the press conference and the back pages of the tabloids
   12. McCoy Posted: January 22, 2014 at 11:55 PM (#4644827)
I'm sure the Yankees would have also liked to offer Tanaka 7 years at 100 million but that is besides the point. The Yankees in all likelihood would have had to pay to remove the optout clause. How much does one think they would have had to pay? I would think Tanaka and his agent would ask for more years and more money. A 7 year deal is buying up all of his prime and leaving very little left on the table for him to offer the next set of bidders when he hits free agency. So what do the Yankees then have to pay? 10/280?
   13. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: January 22, 2014 at 11:57 PM (#4644828)
Thank you Pot Arb for artfully explaining, in ways I apparently have failed in the other thread, that opt-out clauses are bad for teams and that it would be better to just offer the straight years.


You can do that, as long as you don't mind not signing the player. Because someone else is going to give him the player option. 7/155 with the last three years as a player option is a MUCH better deal for Tanaka than a straight 7/175. That player option is worth much more than $20 million to him.

I can understand and respect the opposing point of view to mine, which is: Do you want this player, or not? If you want him you have to give him the player option, or you won't get him. It's not like the Yankees are, or at any future point will be, strapped for cash. What they're strapped for is starting pitchers.

I would never give a pitcher an opt-out, but then there are a lot of things I would do differently from how the Yankees are doing them.
   14. McCoy Posted: January 23, 2014 at 12:05 AM (#4644835)
The only issue I have with the Tanaka contract is with the fact that Tanaka gets paid the exact same amount for every single year except the last one. If I were the Yankees I would have tried to backload it at least a bit. At least get 5 to 10 million shaved off the first 4 years. Perhaps they wanted to do that but the other teams weren't going for that or at the very least the Yankees believed the other teams weren't doing that.
   15. madvillain Posted: January 23, 2014 at 01:40 AM (#4644867)
I can understand and respect the opposing point of view to mine, which is: Do you want this player, or not?


For sure, maybe the Yankees will be well served by this deal, but it will be despite the opt out clause not because of it. It's just a really poor long term strategy imo to basically forfeit any sort of market friendly value on a long term deal. The Yankees FO is getting paid quite a bit of money to make good decisions and that they were unwilling to trade short term for long term with Cano but do it with Tanaka is completely puzzling.

The Yankees in all likelihood would have had to pay to remove the optout clause.


In the range of outcomes, they might end up paying for it quite a bit, just not in explicit AAV terms.
   16. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: January 23, 2014 at 09:52 AM (#4644938)
The Yankee FO was probably also operating under a mandate from their employer to sign Tanaka or else.

By "probably" I mean "definitely."
   17. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 11:51 AM (#4645004)
For sure, maybe the Yankees will be well served by this deal, but it will be despite the opt out clause not because of it. It's just a really poor long term strategy imo to basically forfeit any sort of market friendly value on a long term deal. The Yankees FO is getting paid quite a bit of money to make good decisions and that they were unwilling to trade short term for long term with Cano but do it with Tanaka is completely puzzling.

I think we have to move past the idea that the Yankees are in any way constrained by money.

Over a 10 year period, they'd rather average a 93 win team that costs $230M, than average 88 wins that costs $180M.

It may offend you that they're willing to pay $10M for a marginal win, but it probably makes perfect sense given their revenue opportunities.
   18. Jose Can Still Seabiscuit Posted: January 23, 2014 at 12:07 PM (#4645015)


For sure, maybe the Yankees will be well served by this deal, but it will be despite the opt out clause not because of it. It's just a really poor long term strategy imo to basically forfeit any sort of market friendly value on a long term deal.


What makes you think the last three years of this deal are likely to be team friendly? If the Yankees had let A-Rod walk after 2007 they'd be better off, so far they would be better off if they had let Sabathia walk...how many big deals wind up as good or better in the last few years than the first few years?
   19. Nasty Nate Posted: January 23, 2014 at 12:20 PM (#4645027)
If the Yankees had let A-Rod walk after 2007 they'd be better off, so far they would be better off if they had let Sabathia walk...how many big deals wind up as good or better in the last few years than the first few years?


The comparison is not between the last few years and the first few years, but between the last few years and nothing.
   20. Nasty Nate Posted: January 23, 2014 at 12:28 PM (#4645031)
I think we have to move past the idea that the Yankees are in any way constrained by money.


Why not keep Cano in that case?

Are they going to be constrained by money in 2024? If so, they could have set aside an extra $25m for the next few years to pay for his 2021-2024 salaries.
   21. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 12:39 PM (#4645043)
Why not keep Cano in that case?

Are they going to be constrained by money in 2024? If so, they could have set aside an extra $25m for the next few years to pay for his 2021-2024 salaries.


I think they have sworn off 10 year deals. They just won't do it after the ARod fiasco.

If Cano had been willing to settle at 7/190, I bet they would have done it.
   22. Nasty Nate Posted: January 23, 2014 at 12:54 PM (#4645053)
I think they have sworn off 10 year deals. They just won't do it after the ARod fiasco.

If Cano had been willing to settle at 7/190, I bet they would have done it.


But presumably they swore off 10-year deals ... because of money constraints. Simply having the player under contract in years 8,9, & 10 is not a problem - the problem is the money attached to those years.
   23. thetailor Posted: January 23, 2014 at 01:10 PM (#4645065)
Nasty Nate, I agree with you 100%

Although you could argue that McCann/Ellsbury is a better way to spend the $ than Cano is, I don't think anyone can make a good-faith argument that Tanaka > Cano. Cano is just a great, great player.

If the Yankees balked at signing Cano because of some strange concern about "the future" then that same concern should have precluded them from signing Tanaka, who they are drastically overpaying now and taking on risk of an albatross contract in years 5-6-7. The difference between Tanaka and Cano in years 5-6-7 is a total of 5 million dollars.

Essentially they traded away the liability of Cano's year 8-9-10 in exchange for paying Tanaka more in years 1-2-3-4 despite the fact that Cano is better than Tanaka. When you factor in the talk above about "marginal wins" being worth more to the Yankees, this decision becomes even more confusing.
   24. Gold Star - just Gold Star Posted: January 23, 2014 at 01:13 PM (#4645067)
Whatever happened to the mutual option?
   25. Nasty Nate Posted: January 23, 2014 at 01:26 PM (#4645079)
Nasty Nate, I agree with you 100%

Although you could argue that McCann/Ellsbury is a better way to spend the $ than Cano is, I don't think anyone can make a good-faith argument that Tanaka > Cano. Cano is just a great, great player.


I guess my main point was that if there are no looming money constraints, they should have signed McCann, Ellsbury, Tanaka AND Cano. They all play different positions.
   26. The District Attorney Posted: January 23, 2014 at 01:44 PM (#4645086)
I'd have tried to stay under $189M, but I'd have included Cano in that, plus sign Stephen Drew. That would probably mean that you sign one decent OF or DH (DeJesus? Nelson Cruz? Kendrys?) rather than Ellsbury and Beltran. Kind of sucks, but I think the infield problems under the current plan will be worse than the outfield problems under my proposal, and you're set up better going forward.

Admittedly, a little of this is 20/20 hindsight, since they didn't know how much A-Rod was going to cost them. I do think, though, that Beltran and especially Ellsbury could have been viewed as non-essential signings at the time they were done.
   27. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 01:50 PM (#4645090)
But presumably they swore off 10-year deals ... because of money constraints. Simply having the player under contract in years 8,9, & 10 is not a problem - the problem is the money attached to those years.

The problem is the dead money. They don't want to be paying $25M for 0 WAR, which is what the last 3 years of the Cano deal (and the ARod deal) will most likely be.

They're OK taking the risk on a guy who may put up 0 WAR in year 6 or 7 (but that's true in any year for any player), but may also be average or excellent.

I don't know if that's 100% rational, but it is probably a good way of constraining the GM from going all out now, and burdening his successor with a destroyed budget.
   28. Best Regards, President of Comfort, Esq. Posted: January 23, 2014 at 01:51 PM (#4645091)
If the Yankees balked at signing Cano because of some strange concern about "the future" then that same concern should have precluded them from signing Tanaka, who they are drastically overpaying now and taking on risk of an albatross contract in years 5-6-7. The difference between Tanaka and Cano in years 5-6-7 is a total of 5 million dollars.


I think that Tanaka will be a better player than Cano 4 years from now.
   29. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 02:00 PM (#4645096)
I think that Tanaka will be a better player than Cano 4 years from now.

Concur. The likelihood of getting totally valueless years has to be far, far lower for a 25 y.o. on a 7-year deal, than a 31 y.o. on a 10 year deal.

I mean, you're very lucky if you only get 3 effectively worthless years from Cano. Ther are 10 players all-time who have averaged even 2 WAR per season at 39-41, and only 42 who've managed 1 WAR per season.
   30. Nasty Nate Posted: January 23, 2014 at 02:15 PM (#4645105)
The problem is the dead money. They don't want to be paying $25M for 0 WAR, which is what the last 3 years of the Cano deal (and the ARod deal) will most likely be.


That dead money is just as dead as the portions of the deals for Tanaka, McCann, and Ellsbury, that are the "overpay" portions. Otherwise it ends up with the logic that a $240m/7 deal is somehow better for the team than a $240m/10 deal.

And in a scenario in which there are no financial constraints, dead money is not a problem.
   31. bigglou115 Posted: January 23, 2014 at 02:21 PM (#4645111)
Assuming the qualifying offer still exists in 4 years, would the Yankees be barred from making one if Tanaka opted out?
   32. KT's Pot Arb Posted: January 23, 2014 at 02:27 PM (#4645120)
I think that Tanaka will be a better player than Cano 4 years from now.


It's much more likely that Tanaka is worth zero WAR years 5-7 of this deal.

The Yanks could have offered 7 years $190m to Cano, and he might have accepted, but they didn't even try.

It's not a choice between a $180M 88 win team and $230m 93 win team, that's a false dichotomy. The Yanks should be able to field a $175m 93 win team every year, but they spend resources horrifically.

The 2nd A-Rod contract is obvious.

But signing Ellsbury when you have Gardner? While you create a huge hole by letting Cano walk?

The Tanaka contract is terrible if he's not one of the top ten pitchers in baseball over the next 4 years. Cano had 30 WAR the last four years, if he only has 25 WAR the next four he's still worth $150M to the Yankees, who cares about the back end of a 7 year $195M or $8 year $220m deal when he's almost a lock to give you over $150m of value in the first four or five years?

The reality is they haven't built a 93 win team for 2014 and probably not even an 88 win team with that infield. They let Cano walk to avoid spending money, then flip flopped and spent more money far less wisely. No one associated with Yankees management is likely to be dumb, but their structure has led them to a lot of really dumb decisions.
   33. Squash Posted: January 23, 2014 at 02:50 PM (#4645133)
If the Yankees balked at signing Cano because of some strange concern about "the future" then that same concern should have precluded them from signing Tanaka, who they are drastically overpaying now and taking on risk of an albatross contract in years 5-6-7.

It's also very possible that they didn't think they were going to lose Cano until they did (did anybody really think they were going to lose Cano until they did?), and now they're trying to make up for it. Or, as Zeth said, the dictum from the Steinbrenners was to sign Tanaka whatever it took.
   34. Avoid running at all times.-S. Paige Posted: January 23, 2014 at 02:59 PM (#4645140)
The Yanks could have offered 7 years $190m to Cano, and he might have accepted, but they didn't even try.


I have no idea if this is true. Not saying that it isn't but have the details of the negotiations come out?
   35. Ron J2 Posted: January 23, 2014 at 02:59 PM (#4645141)
#3 The nature of these types of auctions are such that winner's remorse will be a pretty common issue. Only a small percentage of free agent signings make objective financial sense. I need to check whether the rate of return on pitchers is actually lower than for position players or whether the market adjusts for the different level of risk.
   36. DL from MN Posted: January 23, 2014 at 03:03 PM (#4645143)
I'd rather have Garza's contract than Tanaka's contract.
   37. Fancy Pants Handles lap changes with class Posted: January 23, 2014 at 03:04 PM (#4645144)
It's also very possible that they didn't think they were going to lose Cano until they did (did anybody really think they were going to lose Cano until they did?)

I thought if they didn't go over their reported bid they were going to. The reason most people thought they would keep Cano, is because they figured they were going to blow away the competition, and sign him to whatever it takes. I assume the Yankees were aware that they were not going to do that, so yes, they should have expected to lose him.
   38. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 03:07 PM (#4645148)
It's much more likely that Tanaka is worth zero WAR years 5-7 of this deal.

That's very unlikely. How good do you think Cano is going to be at 35? 3 WAR? 4 if Seattle is very, very lucky.

I'd expect Tanaka to be better than that at 29.
   39. Avoid running at all times.-S. Paige Posted: January 23, 2014 at 03:08 PM (#4645149)
I'd rather have Garza's contract than Tanaka's contract.


I'm actually a little surprised that Garza didn't get more, but there are whispers about his health so maybe his medicals point to something.
   40. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 03:09 PM (#4645150)
That dead money is just as dead as the portions of the deals for Tanaka, McCann, and Ellsbury, that are the "overpay" portions. Otherwise it ends up with the logic that a $240m/7 deal is somehow better for the team than a $240m/10 deal.

No, I think $3-5M of dead money spread over 6 years has much less impact on a budget than $25M concentrated in one year.

That example is silly. The point is 7/190-195 is better for a team than 10/240.
   41. SouthSideRyan Posted: January 23, 2014 at 03:12 PM (#4645154)
[19] the comparison is between the last few years and having that money to spend on something else. Surely the Yankees could have found a better use for the money they paid arod when he opted out. Same with sabbath is. If tanaka opts out after 4 years, it's not entirely unlikely they find a better use for his money in the following 3 years.
   42. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 03:16 PM (#4645160)
I'd rather have Garza's contract than Tanaka's contract.

If Garza is healthy, I agree; it's a great contract in today's market. But, since no one would go more than 4/52, I think we have to assume the medical picture isn't exactly rosy.
   43. Karl from NY Posted: January 23, 2014 at 03:24 PM (#4645168)
IF there was a way to get language into the opt-out clause that protected the team from injury, I could see it.

That's a slippery slope down the road to the land of NFL nonguaranteed contracts. The players' union is always strongly against any deals where the player takes on any of the injury risk.
   44. Nasty Nate Posted: January 23, 2014 at 03:30 PM (#4645178)
No, I think $3-5M of dead money spread over 6 years has much less impact on a budget than $25M concentrated in one year.


(A) There is no meaningful difference (especially when the concentrated $25m comes after the 6 years) for any organization run coherently. Otherwise, teams would want long contracts front-loaded so that any overpay portion is spread out. The desire for the salary of an individual year's salary within a long contract to match that individual year's performance is an irrational need.

(B) If there are no meaningful money constraints, neither has much of an impact on the budget (or the impact is unimportant).
   45. The District Attorney Posted: January 23, 2014 at 03:35 PM (#4645185)
Same with sabbath is.
There's less of him now, though.
   46. Nasty Nate Posted: January 23, 2014 at 03:36 PM (#4645187)
Surely the Yankees could have found a better use for the money they paid arod when he opted out. Same with sabbath is.


Better use than the remaining years under the original contracts? I don't think so. (Especially with Rodriguez. Because of the Texas money, they had something like $51m over 3 years remaining.)

Obviously with hindsight there were better options, but as the subsequent deals showed, the Yankees were willing to pay more than the remaining years on the original contracts.
   47. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 03:40 PM (#4645193)
(A) There is no meaningful difference (especially when the concentrated $25m comes after the 6 years) for any organization run coherently. Otherwise, teams would want long contracts front-loaded so that any overpay portion is spread out. The desire for the salary of an individual year's salary within a long contract to match that individual year's performance is an irrational need.

The Yankees did frontload ARod's deal. Obviously it means something to them.

Baseball teams, like most all other corporations, don't shift money willy-nilly from year to year. They have annual budgets and targets, and execs are expected to manage to them. There's not more than a handful of corporations out there where the CEO can say, "Ignore that $50M loss this year, we made $50M more than budgeted in 2012." and get away with it.

It may not be entirely rational, but there has to be a good reason every company works that way.
   48. DL from MN Posted: January 23, 2014 at 03:42 PM (#4645195)
there are whispers about his health


Garza hasn't been throwing 160 pitches a game with a large amount of forkballs. It's like the Yankees never heard of Roger Craig.
   49. SouthSideRyan Posted: January 23, 2014 at 03:42 PM (#4645196)
Well you're presenting a false choice, the opt out almost certainly lowers the total value of the contract. Remove the opt out and you're paying another 3m/year. But to answer your question, yes I think the Yankees would have been better off with sabathia walking away rather than him completing his "original" contract. Arod, not so much

The fact that the Yankees were willing to pay so much more after the opt out (a 30m extension for cc and a ludicrous 10 year deal for arod) leaves the error with the new contract, not the opt out. The opt out worked out perfectly for the Yankees in both instances it was their stupidity that followed that screwed things up
   50. Nasty Nate Posted: January 23, 2014 at 03:55 PM (#4645210)
But to answer your question, yes I think the Yankees would have been better off with sabathia walking away rather than him completing his "original" contract.


But that's with the knowledge of the last 2 years. But at the time, I think most people would have been ok with getting Sabathia on a $92m/4 year deal.

The opt out worked out perfectly for the Yankees in both instances it was their stupidity that followed that screwed things up


Well, even if they had let A-Rod go, they lost out on having him at $51m over 3 years.
   51. Nasty Nate Posted: January 23, 2014 at 04:00 PM (#4645212)
The Yankees did frontload ARod's deal. Obviously it means something to them.


It's very likely that A-Rod, not the Yankees, requested it be frontloaded because present dollars are more valuable than future dollars.

Baseball teams, like most all other corporations, don't shift money willy-nilly from year to year. They have annual budgets and targets, and execs are expected to manage to them. There's not more than a handful of corporations out there where the CEO can say, "Ignore that $50M loss this year, we made $50M more than budgeted in 2012." and get away with it.

It may not be entirely rational, but there has to be a good reason every company works that way.


Not every company works this way, and I doubt most baseball teams do. I would be shocked if teams don't do multi-year payroll budgeting.

But even if the Yankees did act this irrationally, it still doesn't address my point (B): if the Yankees don't have any reasonable money constraints, why is some dead money in a contract bad for them?
   52. SouthSideRyan Posted: January 23, 2014 at 04:18 PM (#4645226)
You keep comparing the actual dollars in the contract as if the opt out was just added in there to no reduction of the AAV or years
   53. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 04:25 PM (#4645233)
But even if the Yankees did act this irrationally, it still doesn't address my point (B): if the Yankees don't have any reasonable money constraints, why is some dead money in a contract bad for them?

Because for a given level of expenditure they'd rather have a better team than a worse team.

Right now they're getting killed by dead ARod and Teixeira money. They want to avoid this in the future. Maybe it's just a way of constraining the GM.

There's a huge principal/agent problem in GM making contract commitments that will likely span long beyond their termination dates. Annual budgeting, and limiting the total years allowed is a way to counter this.
   54. Nasty Nate Posted: January 23, 2014 at 04:26 PM (#4645234)
You keep comparing the actual dollars in the contract as if the opt out was just added in there to no reduction of the AAV


That's the scope introduced in #18 that I was responding to. I was discussing opt-outs being exercised versus not exercised in contracts that had the clauses, not opt-outs versus higher-AAV contracts without opt-outs.
   55. Nasty Nate Posted: January 23, 2014 at 04:29 PM (#4645237)
But even if the Yankees did act this irrationally, it still doesn't address my point (B): if the Yankees don't have any reasonable money constraints, why is some dead money in a contract bad for them?

Because for a given level of expenditure they'd rather have a better team than a worse team.

Right now they're getting killed by dead ARod and Teixeira money. They want to avoid this in the future. Maybe it's just a way of constraining the GM.


But why is there a "given level of expenditure" if they don't have money constraints. They could just raise the level of expenditure.

The A-Rod and Teixeira money is killing them because they do have money constraints.
   56. Avoid running at all times.-S. Paige Posted: January 23, 2014 at 04:35 PM (#4645243)
Not that I think this doesn't make giving a player option costly to the team, but is there any evidence that players with opt-outs in the middle of their deals perform better in the early part of their deals than players who do not have them in long-term deals?

   57. snapper (history's 42nd greatest monster) Posted: January 23, 2014 at 04:38 PM (#4645246)
But why is there a "given level of expenditure" if they don't have money constraints. They could just raise the level of expenditure.

The A-Rod and Teixeira money is killing them because they do have money constraints.


They have a limit to what they want to spend, as long as the team is competitive. If the team looks to not be competitive that limit seems to cease to bind.
   58. Greg Pope thinks the Cubs are reeking havoc Posted: January 23, 2014 at 04:45 PM (#4645253)
IF there was a way to get language into the opt-out clause that protected the team from injury, I could see it.

Mutual option that changes to a player option if the player plays in X number of games?
   59. Walt Davis Posted: January 23, 2014 at 04:53 PM (#4645258)
That's very unlikely. How good do you think Cano is going to be at 35? 3 WAR? 4 if Seattle is very, very lucky.

I'd expect Tanaka to be better than that at 29.


I assume the original contract was referring to the opt-out. There's a very good chance that Tanaka years 5-7 is worth "0 WAR" to the Yankees. Either due to injury or due to opting out. Of course the Yanks would be the most likely team to sign him if he did opt out so technically he wouldn't be worth 0 WAR to them he would just cost them oodles.
   60. Digit Posted: January 23, 2014 at 04:55 PM (#4645260)
I don't think there's a money constraint killing the Yankees as much as there's a roster/position constraint. Each huge contract occupies a starting/roster spot. Players that good generally aren't apt to give up their spots. Generally players who're good enough to start for other teams are more likely to go play for other teams (See: Stephen Drew, who took less money from the Yankees to start at SS for the Red Sox...)

So you have things like Overbay and Nunez backing up A-Rod and Texieria. It also prevents you from, say, signing Cano and then eventually moving him to 1B, because you've got McCann who is ALSO projected to eventually move to 1B down the road... At some point, you run out of positions to hide all those aging DHs-types down the road with that many oversized contracts.
   61. The Yankee Clapper Posted: January 23, 2014 at 04:56 PM (#4645261)
Tanaka's opting out after 4 years probably means the Yankees get 4 darn good years of pitching from him. Win - Win. It's not as good a deal for the Yankees as having years 5-7 be team options, but you don't always get everything in your favor in a negotiation. Reasonable risk for possible big gain, and the suggestion that the money would have been better spent on Cano ignores the age difference, as well as the Yankees clear need for pitching.
   62. Walt Davis Posted: January 23, 2014 at 04:56 PM (#4645262)
And on injury and contracts, Magglio Ordonez's deal with the Tigers had a clause. It related to a specific previous injury (right knee?) and I think was limited to re-injury in the first year or first 2 years. Something like that. So there is some precedent but, no, I don't think protection against a generic injury would ever fly -- that's what insurance is for.
   63. Nasty Nate Posted: January 23, 2014 at 05:05 PM (#4645267)
So there is some precedent but, no, I don't think protection against a generic injury would ever fly -- that's what insurance is for.


There are clauses related to games played/pitched - aren't these de facto protections against generic injury?
   64. Nasty Nate Posted: January 23, 2014 at 05:11 PM (#4645275)
I don't think there's a money constraint killing the Yankees as much as there's a roster/position constraint. Each huge contract occupies a starting/roster spot. Players that good generally aren't apt to give up their spots. Generally players who're good enough to start for other teams are more likely to go play for other teams (See: Stephen Drew, who took less money from the Yankees to start at SS for the Red Sox...)

So you have things like Overbay and Nunez backing up A-Rod and Texieria. It also prevents you from, say, signing Cano and then eventually moving him to 1B, because you've got McCann who is ALSO projected to eventually move to 1B down the road... At some point, you run out of positions to hide all those aging DHs-types down the road with that many oversized contracts.


Good points. The roster space constraints really come into play with no-trade clauses. But there are money solutions for a lot of roster/position constraints.
   65. Pleasant Nate (Upgraded from 'Nate') Posted: January 23, 2014 at 05:21 PM (#4645285)
How many wins does Cano project as better than Tanaka over the next seven years? Snapper is implying an even higher $/WAR for the Yankees, throwing out $10M. Let's split the difference and call it $8M. Ignoring NPV and tax benefits from the posting fee, there's a $65M contract difference between the two. That's 8 wins. I would say that Cano projects worth well more than 8 wins better. The last three years of the deal are then free; cut him or trade him and eat most of the salary if you prefer.

Taking Tanaka over Cano seems like a definitely poor decision.

Edit: this also ignores inflation, so something less than 8 wins.
   66. KT's Pot Arb Posted: January 23, 2014 at 05:28 PM (#4645292)
Tanaka's opting out after 4 years probably means the Yankees get 4 darn good years of pitching from him. Win - Win. It's not as good a deal for the Yankees as having years 5-7 be team options, but you don't always get everything in your favor in a negotiation. Reasonable risk for possible big gain, and the suggestion that the money would have been better spent on Cano ignores the age difference, as well as the Yankees clear need for pitching.


If Tanaka is better than an average MLB starter he will likely opt out to get a longer term deal and lock down more money. it's unlikely he will be one of the 10 most valuable pitchers in baseball over that 4 years, so he won't be worth $27m per year for those 4 years, especially with the $70m bonus he gets if he's hurt or pitching in Trenton.

I assume the original contract was referring to the opt-out. There's a very good chance that Tanaka years 5-7 is worth "0 WAR" to the Yankees. Either due to injury or due to opting out. Of course the Yanks would be the most likely team to sign him if he did opt out so technically he wouldn't be worth 0 WAR to them he would just cost them oodles.


I was actually referring to Matsuzaka
   67. The Yankee Clapper Posted: January 23, 2014 at 05:44 PM (#4645304)
If Tanaka is better than an average MLB starter he will likely opt out to get a longer term deal and lock down more money. it's unlikely he will be one of the 10 most valuable pitchers in baseball over that 4 years, so he won't be worth $27m per year for those 4 years . . .

There is considerable tension between the 1st & 2nd sentence there. Tanaka is going to pitch so well in years 1-4 that he will opt out and get even more money, but he still won't be worth what the Yankees paid for years 1-4? OK, maybe by some artificial formulas you could say that, but if Tanaka is the difference between making or not making the playoffs in some (or all) of those 4 seasons, he more than makes up for his salary. There's always the potential for an overpay in any free agent contract of significance.
   68. KT's Pot Arb Posted: January 23, 2014 at 05:50 PM (#4645309)
It's much more likely that Tanaka is worth zero WAR years 5-7 of this deal.

That's very unlikely. How good do you think Cano is going to be at 35? 3 WAR? 4 if Seattle is very, very lucky.

I'd expect Tanaka to be better than that at 29.


Cano has one of the highest peaks and best skill sets of any second baseman in history, he has the bat for first base and likely the arm/glove for third. It's very likely that he's worth 25-30 WAR the next 7 years, meaning even a $195M deal is almost never a disaster.

If Tanaka is a Matsuzaka (a 5 WAR pitcher his first two years), he is worth 10 WAR his first 4 years for a cost of $108M, then the Yankees then get the pleasure of paying another $70m for 3 years of sub replacement level pitching.
   69. thetailor Posted: January 23, 2014 at 05:52 PM (#4645310)
Are Nate and Nasty Nate the same person? Is a Nate without a modifier not nasty?

I think the analysis in #65 is right. I go bonkers every time I hear people complain about dead money at the end of the contract as if it is something being paid out of pocket out of laziness or stupidity rather than being something negotiated into the deal on purpose.

Seattle is giving Cano 10/240M, 24M AAV, but they are projected to get a lot more value from him than 24M per year for the first few years of the deal. If you wanted to give Cano a deal where you'd be paying him what he's projected to be worth every year, you're probably looking at 31-31-30-27-24-20-17-14 or something like that, along with an adjustment on the contract for the time-value of money.

The point is this: by all accounts, Cano is better than Tanaka. Paying Cano 3/72M at the end of the deal in years 8-9-10 is a cost, the same way that giving Tanaka an opt-out is a cost.

At the end of four years, if Tanaka is good, he will have been paid slightly more than Cano and produced a little worse. Then he opts out and becomes a free agent, and the Yankees have nothing, except the rights to negotiate with him and a little good will. Cano would still be owed 6/144, but maybe the Yankees have a World Series.

If Tanaka is bad, he'll take the extension, and the deal is a disaster for the Yankees. When Tanaka is done, at 7/175M, Cano would have only been paid $168M and have 3/72M left.

When you also factor in risk (Tanaka has never pitched in MLB, has pitched a ton of innings, is a pitcher, which is itself is a huge injury factor), and good will (Cano to be another lifetime Yankee Hall of Famer), and the likelihood that Cano might have taken less than 10/$240M to stay with NYY (something never discussed around here but probable, if not definite) you're looking at a clear winner and loser.
   70. Nasty Nate Posted: January 23, 2014 at 05:56 PM (#4645314)
There is considerable tension between the 1st & 2nd sentence there.


I agree. If we acknowledge that he won't have to be great to forgo 3/67m and opt-out, that goes along with acknowledging that he doesn't need to be that great to be worth $27m for the Yankees in the next few years.
   71. Nasty Nate Posted: January 23, 2014 at 05:59 PM (#4645316)
Are Nate and Nasty Nate the same person? Is a Nate without a modifier not nasty?


Different people, but the twist is I'm not nasty either.
   72. KT's Pot Arb Posted: January 23, 2014 at 06:09 PM (#4645323)
There is considerable tension between the 1st & 2nd sentence there. Tanaka is going to pitch so well in years 1-4 that he will opt out and get even more money, but he still won't be worth what the Yankees paid for years 1-4? OK, maybe by some artificial formulas you could say that, but if Tanaka is the difference between making or not making the playoffs in some (or all) of those 4 seasons, he more than makes up for his salary. There's always the potential for an overpay in any free agent contract of significance.


Not for Cano apparently.

If Tanaka is a 3-4 WAR pitcher (well above average but no where near top 10), he's worth $15M-$22M a year but Yankees pay him $27M. If he is at the bottom of that range he might take the 3 year 22.5M option, but most likely he opts out for another 7 year deal at $18m+..Usually the option only will be exercised if it's terrible for the Yankees, that's why I say it would have been better to give him another $30m for no option, you save $40m when he's a disappointment and you lock down 3 more years when he's good.

But most importantly, Tanaka is not the only pitcher the Yankees can ever acquire. If you think the Yankees were painted into a corner where Tanaka is the only option, the real question is how did they get here? The same short term thinking that led to the 2nd A-Rod contract has now led to the Tanaka contract, they keep painting themselves in ever tighter.
   73. Nasty Nate Posted: January 23, 2014 at 06:19 PM (#4645329)
that's why I say it would have been better to give him another $30m for no option, you save $40m when he's a disappointment and you lock down 3 more years when he's good.


I might be misunderstanding, but wouldn't it be they lose $30m when he's a disappointment (7/155 vs 7/185) but they lock down 3 more years if he's good.
   74. KT's Pot Arb Posted: January 23, 2014 at 06:39 PM (#4645351)
I might be misunderstanding, but wouldn't it be they lose $30m when he's a disappointment (7/155 vs 7/185) but they lock down 3 more years if he's good.


Yes, but they don't expect him to be a disappointment often (or why sign him at all). If he is terrible 30% of time and acceptable 70%, the $30m is well spent.
   75. thetailor Posted: January 23, 2014 at 06:43 PM (#4645355)
I wonder what the real dollar value is of the option to Tanaka.

You'd have to think that he's got his own projections and percentiles on how he'll perform and what the utility is to him being a free agent at 29. It sounded crazy at first but I think maybe you're right, it might be worth $30M to him.
   76. madvillain Posted: January 23, 2014 at 06:47 PM (#4645362)
Yes, but they don't expect him to be a disappointment often (or why sign him at all).


yep, this is key imo.

I wonder what the real dollar value is of the option to Tanaka.


In 4 years, given the inflationary climate in baseball a win on the FA market might be around 9m, so maybe 15-20% higher than now. I think it's a helluva negotiation by his team and 30 million might end up on the low side depending on performance.
   77. cercopithecus aethiops Posted: January 23, 2014 at 08:02 PM (#4645386)
Assuming the qualifying offer still exists in 4 years, would the Yankees be barred from making one if Tanaka opted out?


The qualifying offer doesn't exist for players with less than six years of MLB service time. If Tanaka opts out after 4 years of MLB service, he becomes arbitration eligible. The only way he actually becomes a FA by opting out is if the Yankees non-tender him, so there must be a clause in the contract that requires the Yankees to non-tender him if he opts out. It would be pretty strange if the CBA allowed you to essentially release a player and then make him a qualifying offer.

You must be Registered and Logged In to post comments.

 

 

<< Back to main

BBTF Partner

Support BBTF

donate

Thanks to
James Kannengieser
for his generous support.

Bookmarks

You must be logged in to view your Bookmarks.

Hot Topics

NewsblogOMNICHATTER 7-22-14
(9 - 9:21pm, Jul 22)
Last: Rafael Bellylard: Built like a Panda.

NewsblogThree Moves The Red Sox Should Make - Tony Massarotti - Boston.com
(31 - 9:19pm, Jul 22)
Last: Dale Sams

NewsblogOT: Monthly NBA Thread- July 2014
(820 - 9:12pm, Jul 22)
Last: PASTE Thinks This Trout Kid Might Be OK (Zeth)

NewsblogTony Oliva turns 76; Gardenhire: 'He should be in hall of fame'
(46 - 9:10pm, Jul 22)
Last: DavidFoss

NewsblogChase Headley traded to New York Yankees from San Diego Padres - ESPN New York
(79 - 9:05pm, Jul 22)
Last: shoewizard

NewsblogMLB: Astros telecasts catching on to advanced metrics
(10 - 9:02pm, Jul 22)
Last: Astroenteritis (tom)

NewsblogCowboy Monkey Rodeo taking the Minors by storm
(5 - 9:01pm, Jul 22)
Last: A big pile of nonsense (gef the talking mongoose)

NewsblogPoll: Does Citizens Bank Park really need metal detectors at the gates?
(28 - 8:56pm, Jul 22)
Last: RMc's desperate, often sordid world

NewsblogOTP - July 2014: Republicans Lose To Democrats For Sixth Straight Year In Congressional Baseball Game
(2714 - 8:47pm, Jul 22)
Last: Howie Menckel

NewsblogAs shifts suppress offense, time has come to consider a rule change
(19 - 8:47pm, Jul 22)
Last: Jose Can Still Seabiscuit

SABR - BBTF ChapterWho's going to SABR??
(38 - 8:29pm, Jul 22)
Last: Mike Emeigh

Hall of MeritMost Meritorious Player: 1956 Ballot
(6 - 7:33pm, Jul 22)
Last: Chris Fluit

Hall of MeritMost Meritorious Player: 1956 Discussion
(33 - 7:31pm, Jul 22)
Last: Chris Fluit

NewsblogPrimer Dugout (and link of the day) 7-22-2014
(16 - 7:16pm, Jul 22)
Last: Eric J can SABER all he wants to

NewsblogRangers' Yu Darvish Pushes for a Six-Man Pitching Rotation - NYTimes.com
(11 - 7:07pm, Jul 22)
Last: Srul Itza

Page rendered in 0.5578 seconds
52 querie(s) executed