We’re a Month From Ohtani Changing the Landscape of Baseball

Shohei Ohtani does not yet belong to a major-league team. No one really knows where he’s going to go, and he hasn’t even been actually posted. There are still some remaining hurdles to jump, but they’re only getting smaller and smaller. Ohtani will play in the majors in 2018. The odds of that are effectively 100%. It’s felt that way for a while, but as of later Tuesday, it’s almost official.

You probably read about how the players union wasn’t thrilled with the various proposed posting agreements between MLB and Nippon Professional Baseball. The union has its own interests, and it also had a place at the table, so it held out until it was satisfied. An eventual agreement nevertheless felt inevitable, and you can read about the terms right here. All that’s left is MLB owner approval, which will come on December 1. Ohtani will then be free to be posted. Teams will have about three weeks to negotiate. Of course, those negotiations will involve comically insufficient sums of money, but Ohtani is okay with that. This is what he’s chosen to do. It looks like he’ll have a contract by Christmas.

From the union’s perspective, it’s happy that this won’t drag out too long. The market won’t be paralyzed all winter. But no one’s reading this because they care about the union. It’s all about Ohtani, and about the team that he selects. We know with virtual certainty that he’s coming. He’ll report to a big-league camp in the middle of February. No one knows how good he’ll actually be, but when he chooses a team, baseball is going to be different. Ohtani can change an entire league’s outlook.

It’ll be nice to have this wrapped up in December. In the end, the market does always sort itself out, but there’s no harm in speeding things along. Hisashi Iwakuma didn’t sign with the Mariners until January 5. Kenta Maeda didn’t sign with the Dodgers until January 7. Masato Yoshii, January 13. Nori Aoki, January 17. Yu Darvish, January 18. Masahiro Tanaka, January 22. Tadahito Iguchi, January 27. So Taguchi, January 29. Kazuhisa Ishii, February 28. This is good for the speed of the market. This is good for our collective sanity. We’ve already waited too long. All we want is resolution.

Real resolution, naturally, won’t come until we know what Ohtani really is. Until we know how valuable he is, until we know how durable he is. What we have for now is a scouting report, and Japanese statistics, which are relevant statistics, but still non-major-league statistics. Shohei Ohtani is a prospect. But he’s a major-league-ready prospect, and he would appear to be one of the most valuable players in the sport.

It’s easy to allow the hype to spiral out of control, and it’s almost unavoidable when you’ve had people drooling over a player for years. Ohtani might reasonably qualify as the Japanese Babe Ruth, but that doesn’t mean he’ll perform like the major-league Babe Ruth. Expectations need to be kept in check. Ohtani should be good. Could easily be great. Might not be the greatest. Probably won’t be the greatest. There are already a lot of very good baseball players.

Yet even accepting that, there’s no getting around the other truth: Some team is about to get impossibly lucky. And so much of it is going to be luck. Teams can’t really flash their money, and it’s presently unclear what Ohtani prefers. How much does he want to hit? Does he want to play for a good team or for a bad team? Does he want a Japanese teammate, or does he want to go it alone? Ohtani is a winning lottery ticket, lying on the ground. The team that gets him can believe that it made the best pitch, but there’s little for teams to do to stand out. Ohtani will select who gets to use his arm and his bat. In so doing, he will alter a franchise.

Ohtani’s value comes from his skills, but, of course, it also comes from the reality that he’ll get paid very little. Situations like this never happen, which is by definition what makes this so exceptional, so extraordinary. Let me lay this out as simply as I can. Whoever signs Ohtani will pay a $20-million posting fee to Hokkaido. Ohtani will then earn the league minimum. In the following two years, he’ll earn something close to the league minimum. The record contract for a starting pitcher in year one of arbitration is $7.25 million. For year two of arbitration, $10.7 million. For year three of arbitration, $15.64 million. Let’s say Ohtani reaches those marks. That would mean a team would be making a six-year commitment worth about $56 million. More than a third of that is something other than salary. Ohtani’s actual six years would cost about $36 million.

Obviously, you could argue that up. Salaries are rising. Ohtani could pull $40 million, or $45 million. But there’s just a big huge enormous gap between what Ohtani will earn, and what he could earn. I know that “surplus value” reads like the unsexy language of wonks, but surplus value is the key to success. Surplus value, in a sense, is value. Baseball is, in truth, more complicated than that, but if you understand surplus value, you understand what makes a player or a franchise valuable.

Imagine that Ohtani were a true free agent. Six years ago, the Rangers paid $108 million for six years of Darvish, and they had all the leverage, under the old posting system. Four years ago, the Yankees paid $175 million for seven years of Tanaka, and they included an opt-out clause. Some reports have speculated that Ohtani could sign a contract worth $150 million. Other reports have gone up to $200 million. This is, they say, the money Ohtani is turning down by not waiting another two years to come to MLB. Not that long ago, David Price signed for seven years and $217 million, with an opt-out clause. Zack Greinke signed for six years and $206.5 million. Johnny Cueto signed for six years and $130 million, with an opt-out clause. Jordan Zimmermann signed for five years and $110 million. Even Mike Leake signed for five years and $80 million, and Wei-Yin Chen signed for the same terms, but also with an opt-out clause. Veteran number-three starters pulled $16-million salaries. Ohtani is a 23-year-old who hits home runs and throws 100 miles per hour. It’s hard to imagine that Ohtani couldn’t get $200 million.

Let’s try a different approach. Let’s say you project Ohtani to be worth 18 WAR over the next six years, distributed evenly. We can set a market rate of $9 million per WAR, building in 5% inflation. That would make Ohtani worth about $182 million. Let’s say instead that you project Ohtani to be worth 24 WAR. That bumps the value up to about $243 million. And now let’s say you project Ohtani to perform like the last six years of Madison Bumgarner, a good pitcher who is also an atypically good hitter. That bumps the value up to about $273 million. That’s at 4.5 WAR per year. There’s all kinds of downside, but there’s also further upside. You can imagine where the numbers might go if Ohtani were legitimately, demonstrably outstanding.

Time to simplify again. $200 million. We can just say true-free-agent Ohtani would sign for six years and $200 million. If his salaries end up worth a combined $40 million, that gives him a surplus value of $160 million. This ignores the posting fee, which is just the cost of doing business. It’s nothing that could or would be transferred to another club. Now let’s reflect on Dave’s trade-value series. Corey Kluber was the highest-ranking pitcher. He projects to have a surplus value of about $118 million over the next four years. Carlos Correa, meanwhile, was the highest-ranking player. He projects to have a surplus value of about $191 million over the next four years. These are estimates, obviously, and nothing is perfect. Projected performances aren’t perfect, and projected values and salaries aren’t perfect. But these numbers, at least, get you in the ballpark. And they reveal that Ohtani instantly becomes one of the very most valuable players in the game. Perhaps he will ultimately under-perform, but all that matters for now is how players project. A projection is the average of all expected outcomes. Ohtani could also fairly easily over-perform. He might become the most valuable pitcher. He might become the most valuable player.

It cannot be overstated what that would mean. Ohtani is going to fall in somebody’s lap, and then, all of a sudden, everything will be different. Sure, if Ohtani goes to, say, the Yankees or the Dodgers, you could say it’s just the rich getting richer. Those are already very good and valuable teams. But imagine that, instead, Ohtani goes to the Mariners, or the Rangers, or even, I don’t know, the Orioles? The franchise outlook changes instantly. Those are clubs that might be a half-season away from rebuilding. Ohtani could conceivably turn that around. Were Ohtani to want the ultimate challenge, and if he signed with some team already in the basement, that team’s rebuild would be given an unprecedented jolt. We’ve seen how Mike Trout has almost singlehandedly kept the Angels afloat. Ohtani might be valuable in a different way, but this really is a lottery ticket. I know I already used that term, but Ohtani could change a franchise’s standard of living, so to speak. All thanks to incredible talent and a remarkable decision observers still are failing to understand. Ohtani is great, and he isn’t motivated by money. Okay.

Maybe you’ve grown tired of reading about Shohei Ohtani. Maybe you haven’t at all! No matter the case, this is all finally evolving. At last, Ohtani is close to signing with a team. An unknown team, playing in the major leagues. Could be, Ohtani will bust. No way to know. The most likely outcome, though, is that Ohtani is at least pretty good. And that’ll make him one of the most valuable baseball players in the world. In general, it’s safe to say this’ll be good for the game. More specifically, this’ll be fantastic for one franchise, and unfortunate for all of its rivals.