What Darvish Needs To Do To Earn The Money
With a total commitment of around $111 million, Yu Darvish certainly didn’t come cheap for the Texas Rangers. While the team may expect to recoup some of that investment through generating revenues associated with having him on the team, it’s not very easy to plan a trip over from Japan to watch a starting pitcher, so we should be careful projecting large attendance gains based on having Darvish on the roster. And, while some may argue that the $51 million posting fee was a separate expense than player payroll, it’s still money the organization no longer will have access to that was a direct cost of having Darvish on the roster. Regardless of how the Rangers account for it in their ledger, it’s part of his expense, and needs to be considered when evaluating just how well Darvish needs to pitch in order to justify the Rangers decision.
So, how good does he need to be in order to accumulate approximately $110 million of value over the next six years? At $5 million per win with five percent annual inflation, the Rangers would be paying for +19.7 WAR during the life of the contract. If you think inflation’s going to be a little less than that, then you’ll come in around +21 WAR, a little more and you’ll be closer to +18 WAR. Most reasonable assumptions in terms of the current and expected future market for wins will lead you to somewhere in the general range of +20 WAR as Darvish’s target.
So, how reasonable is it for the Rangers to expect +20 wins of value from Darvish over the next six years. To answer that question, I decided to look at rolling six year windows over the last 10 years to see just how many pitchers have generally been able to perform at that kind of level. Here are the totals for each six year window since 2002:
2002-2007: 24 pitchers, Roy Halladay (+34.8) to Jake Peavy (+20.8)
2003-2008: 24 pitchers, Johan Santana (+34.8) to Jason Schmidt (+20.3)
2004-2009: 23 pitchers, Johan Santana (+34.6) to Zack Greinke (+20.1)
2005-2010: 20 pitchers, Roy Halladay (+37.0) to Derek Lowe (+20.7)
2006-2011: 22 pitchers, Roy Halladay (+40.7) to Chris Carpenter (+20.0)
The data is pretty steady – beyond just pointing out how great Mr. Halladay has been, there are about two dozen starting pitchers in any six year window that rack up +20 wins of value. It’s perhaps a more inclusive group than you would think in order to justify the seventh largest acquisition cost ever for a pitcher, but you have to keep inflation in mind – $111 million today is a lot less than $121 million was when the Rockies gave Mike Hampton his mega-contract. So, while the list of $100M pitchers is a bit of a scary one, we need to keep those rising costs of wins in mind, and realize that less is being asked of Darvish at this price than other big ticket pitchers from the past.
So, what does +20 WAR over six years from a starting pitcher look like. Well, it comes in various shapes and sizes, as a starter can accumulate that kind of value either through excellence mixed with injuries or something lower quality but backed up with high-end durability. Here are the lines from those pitchers who were worth almost exactly +20 WAR during their six year window, so you can get an idea of about different the paths Darvish can take to success:
| Name | Year | IP | BB% | K% | GB% | ERA- | FIP- | WAR |
|---|---|---|---|---|---|---|---|---|
| Jake Peavy | 2002-2007 | 1,087.1 | 7.7% | 24.2% | 41.8% | 83 | 86 | 20.8 |
| Jason Schmidt | 2003-2008 | 843.2 | 8.6% | 23.6% | 39.2% | 79 | 77 | 20.3 |
| Zack Greinke | 2004-2009 | 828.1 | 5.9% | 19.8% | 39.0% | 82 | 82 | 20.1 |
| Derek Lowe | 2005-2010 | 1,234.2 | 6.5% | 15.5% | 61.8% | 91 | 91 | 20.7 |
| Chris Carpenter | 2006-2011 | 907.0 | 5.5% | 19.1% | 51.3% | 77 | 81 | 20.0 |
These five pitchers represent something of a scale, showing what combinations of innings and run prevention will add to something in the +20 WAR range. At the low end of quantity, Greinke only managed 828 innings – just over 136 per year – but was so good when he was on the mound that he still managed to produce +20 WAR during that time frame. Carpenter is a similar story, and as these guys show, being the best pitcher in baseball in one season would go a long way towards helping Darvish earn his keep. He doesn’t necessarily have to be a workhorse in order to provide enough value, but if injuries become a problem, he’ll need to prevent runs at a rate near 20 percent better than average in order to get to this kind of level.
If solid workhorse is what you think Darvish might be, though, then Derek Lowe is your example. While he wasn’t an elite pitcher in terms of run prevention, he averaged 206 innings per season from 2005-2010, and showed just how valuable a durable innings eater can really be. This is probably not the scenario the Rangers are hoping for, as they acquired Darvish with the idea that he could be more ace than middle-of-the-rotation guy, but as Lowe shows, if he stays healthy for the next six years, he doesn’t have to pitch like a top-of-the-rotation starter in order to be worth the money.
Haren and Peavy represent something of a happy medium between those extremes, and probably the more likely path for Darvish to travel if he’s going to live up to the hype. They threw about 1,000 innings and prevented runs at a rate about 15 percent better than average – neither mark puts them among the league leaders in either quality or quantity, but the combination of being pretty good and staying fairly healthy added up to +20 WAR for each pitcher.
The San Diego version of Jake Peavy was a pretty good starter with some injury problems. The Oakland version of Dan Haren was a very solid starting pitcher who hadn’t quite made the leap to elite pitcher. This is basically what the Texas Rangers just paid for – good production, reasonable health, a guy who pitches at a borderline All-Star level and doesn’t spend too many years on the DL.
Considering that Darvish has never pitched in Major League Baseball, it’s a pretty optimistic projection, but his performances in Japan suggest that he could live up to the contract. As with any pitcher, though, the deal obviously comes with enormous risks. Can he be the new Jake Peavy? The Rangers just bet $111 million that he can be.
Dave is the Managing Editor of FanGraphs.
What do I have to do to earn 1% of his money?
throw 86-88 with an average secondary pitch
Be an underwear model.
What do you have to do to make 1% of Darvish’s money? Make about $100K a year over the next six years.
as mathematical as these $/war calculations are, if the rangers get to the world series again, and Darvish gets some wins in the series (or just 1 if it’s a sweep), all these calculations go out the window. Rangers paid to have someone better than CJ Wilson head their staff, and that’s the only calculation that really matters.
This.
It is dark and cold outside and several weeks before ST cranks up. A guy has to grasp at every straw to sustain himself, and keep hope and optimism alive.
Their place in the win curve simply dictates that the Rangers should be more likely to make this kind of commitment now. It doesn’t really play into what they should spend it on, so the question still remains whether it was wise to spend $111 million on Darvish or on some other players. The potential value of the players they’re not signing with Darvish’s money has to be evaluated in the context of whether or not this was a good idea.
So, yes, $/WAR matters.
LMAO
This would be correct, if playing time doesn’t come into play. You only get 5 starting pitchers and 9 every day lineup slots. The Rangers could not have signed 4 starters who average 1 WAR per year for five million each to add 4 wins to their team.
If the Rangers did sign other players instead of Darvish, the question could be asked in reverse: was it wise to sign Player X (and Y etc) instead of Darvish. And I think the Rangers probably went through this exercise.
Playoff wins would add value to any player they signed, not just Darvish.
Still waiting for that to hold true with A-Rod… he must have closed that window.
2009?
I’m sick of the “if he gets you to the World Series” argument. If the team gets to the World Series, one player did not get them there, but about 25. Does that make each of them worth $100M?
As a fan, if they win it, it does. Its not my money.
First of all, your logic contradicts itself. At the end you say that as long as he’s better than CJ Wilson (presumably you meant what Wilson WILL BE as opposed to what he WAS), it’s a good contract. At the beginning of your comment, however, you say that it’s a good contract as long as the team gets to the World Series. So which is it? (the answer, by the way, is “neither”.) Is the Vernon Wells contract a good one if the Angels make it to the Series? Soriano and the Cubs? Those contracts are awful, period.
If Darvish blows out his arm tomorrow and never pitches an inning in the States, it’s a good contract if the others on the Rangers team get them to the Series? Or if he’s simply awful but the Rangers are really good despite his awful pitching? It would be a horrible contract.
Similarly, he could be better than Wilson and the team not make it to the Series…is that a good contract or not? The $/WAR matters. The team could be great despite his poor performance and it would be a bad contract. Or he could be great and everyone else get old before we thought and the team loses 100 games.
Is Felix Hernandez horrible b/c he played for a 95 loss team last year? That’s absolutely absurd.
Given their current roster, and the players they will likely extend / go to arbitration with, would that 111 million buy 20 wins over the next 6 years some other reasonable way? Some combination of other pitchers / position players readily available? If it’s reasonable to assume that gambling on Darvish to give those 20 wins is more likely to succeed than spreading them out over 2 – 4 other players over the next 6 years, then it’s a good deal…
The Rangers paid for Darvish as if he is an elite MLB pitcher. It is not surprising, then, that they expect him to pitch like an elite MLB pitcher. It’s also not surprising that the Rangers will be disappointed if Darvish does not pitch like an elite pitcher.
This
They’re paying for about +3.3 WAR per year. That’s not really an elite pitcher. That’s a pretty good arm, but not even really close to the best starters in baseball.
This is false. The Rangers are not paying for 3.3 WAR. They could care less about WAR. They care about real world wins and they care about wins in important games. They believe they are paying for an elite pitcher. They expect Darvish to be an elite pitcher. If it turns out that he is merely a “pretty good arm”, they will probably be ok with the deal, but they will still be disappointed.
Well, this comment is just not true, but hey, believe what you want.
I agree with you Dave when you consider the cost / win. However, if we were to flip the argument and say that the Rangers just shelled out $111m for a pitcher the assumption most would make is that the pitcher would be something better than a pretty good arm.
I don’t think that anyone is expecting Darvish to be the next Roy Halladay. However, if he pitches like Jackson (who over the past 3 years has exceeded the 3.3 WARs used in this article) I have a feeling that lots and lots of baseball fans will be extremely disappointed. More to the point, wouldn’t the Rangers have been better off spending about half the money and getting similar performance for a guy like Jackson or trading for guy like J Zimmerman (who is often used as a comp)?
We all believe what we want.
My belief is based on that fact that I think the Rangers have a pretty smart front office. Do you seriously believe the Rangers invested $111 Million in a guy with the expectation that he will perform at the break even point?! The Rangers clearly believe Darvish’s ability is well above the break even point. Surely the Rangers place the low end of the expected range around the break even point. Otherwise they are just playing roulette and placing all of their money on even.
“My belief is based on that fact that I think the Rangers have a pretty smart front office. Do you seriously believe the Rangers invested $111 Million in a guy with the expectation that he will perform at the break even point?!”
This is not much of an argument. In part because it’s natural counterargument is equally compelling (and equally vacuous): “I think Yu Darvish has pretty smart representatives, including the bright and experienced Arn Tellem. Do you seriously believe they signed a contract with the expectation they weren’t getting what Darvish was worth?!”
@Joe D
I agree with you to an extent. I think a lot of arguments on Darvish (and most things) will have a natural counterargument. But I think his point was more that the Rangers probably went through the same (and probably more intensive and thorough) exercise Dave provided here (which is great BTW). And they probably concluded that Darvish was worth more in their WAR scheme (or whatever they use) than other FA they could add with that money.
Joe D,
What you provided is not a counterargument at all, because both can (and very well may be) true. Darvish believing he got a good deal does not negate the possibility of the Rangers believing they also got a good deal. Indeed, this is generally required to some extent for two parties to come to agreement.
Further, Darvish’s evaluation of whether he got a good deal has nothing to do with how he performs on the field going forward at all. Darvish’s only consideration is how this deal compares to his alternatives.
doesn’t the fact that two dozen pitchers match his expectations (less than one per team on average) point to them expecting him to be elite?
If I may play devil’s advocate for a moment. While it’s true that 111M over six years works out to approx 3.3 WAR per season, and 3.3 WAR isn’t really “elite”, it’s also true that 111M is the forth most any team currently has wrapped in a starting pitcher. Only Sabathia, Santana, Zito and Lee (among ongoing deals) have demanded a bigger investment from a team. Compared to other FA starting pitcher contracts, 111M seems to represent the expectation of elite performance.
Two things can be equally true here: 1) a team spending 111M on a pitcher is expecting an elite player. 2) the injury risks inherent in pitching are such that elite pitchers are substantially discounted.
I believe I read somewhere that league average is 2 WAR. so 1.3 is about 1.3 WAR above average.
Last year 43 pitchers had a WAR above 3.3.
I’m pretty sure that Daisuke’s 10.6 WAR ended up below $/war for what the red sox spent. Is there a site that keeps yearly $/WAR calculations or are you able to provide an analysis of Daisuke’s contract similar to the above.
You can view Matsuzaka’s value on his player card here on the site.
http://www.fangraphs.com/statss.aspx?playerid=7775&position=P
Isn’t that only based on his contract value? I’d think you’d need to take into account the amount that was spent on the posting fee as well. It’s not like that money is irrelevant.
Dave pointed that out in the article, it’s a slippery slope, though.
I am not sure why this guy’s “signing bonus” and development costs get included in his annual contract and Matt Wieters’s do not, or looked at more broadly why Weiter’s entire Orioles draft class costs are not associated to him, Jake Arrieta and Matt Engle.
Neal…. “I am not sure why this guy’s “signing bonus” and development costs get included in his annual contract and Matt Wieters’s do not”
The conclusion that you should be drawing from this is that they should be looked at for Weiters and all other players, not that it should be ignored for Darvish.
You’re correct. Fangraphs doesn’t include any player aquisition cost on their player pages, just salaries. That doesn’t mean that they’re not allowed to talk about them, but it is disengenous to talk about the value of a pre-arb players ad nauseum, like they do, without factoring the devlopmental costs for those players, which they never do, except Dave is suddenly doing it here.
Really makes you wonder why they throw huge money at an unknown quantity when there were ML pitchers availible for a lot less money? Even highly touted rookies or prosepcts don’t get that kind of money because the risk is so high.
I also think there is a statistical history that shows the majority of Japanese stars that play in the US don’t become stars here.
Statistical history based on a handful of players is not much more insightful than just saying ZOMG Hideki Irabu! Rangers have no doubt scouted him heavily and are making the decision based on more than reading the two words “Japanese” and “Pitcher,” which many fangraph readers seem to be doing.
Well, I don’t think it really tells us anything to look at what kind of money prospects get. Their value is held artificially low. If Strasberg was a free agent right out of college, he would have made a lot more money then he got.
Your first point on the other hand could be argued. Look at Edwin Jackson for example. He’s got 14.2 WAR over the last six years (and was only a full time player five of those years), is only two years older then Darvish, and could probably been had for the same amount as Darvish, minus the posting fee. Would that have been the better choice? Maybe, but the upside is certainly a lot lower.
What’s wrong with Nomo as a comparable?
Because Nomo and Darvish has nothing in similarity beyond the fact that they are Japanese and played in the Japanese league before making their leap to the bigs? We don’t compare Dominican, Venezuelan, or Canadian players to other players of the same nationality just because they are from the same country. Each of them are different and unique players and must be assessed accordingly.
The analogy is not quite correct. We do compare triple A players to triple A players. There is no reason not to compare Japanese League players to Japanese League players.
Think about this some more.
We don’t project a triple A player based on how one other triple A player did in the majors. That would be lunacy.
Actually, that is exactly how we project AAA players
It is. There are mounds and mounds of data that demonstrate that X performance at the AAA level at a certain age correlates with Y performance at the ML level.
Bill James went through all this data to develop MLEs (Major League Equivalents).
One of the big aspects of say, Prince Fielder, was that he hit very well in a pitcher’s league and that had a very high correlation to MLB success … as compared to say hitting very well in the PCL, which features more of a “mixed bag” of MLB success.
“Actually, that is exactly how we project AAA players”
I don’t think so. Imagine that Prince Fielder just got the call-up to the majors and people are saying that he can never be successful because James Loney was at best a serviceable first basemen, and first basemen from AAA just don’t do that well in the majors. That’s what you statistically-minded geniuses are doing.
We compare like players. The more similar, the better. My example is always Jason Heyward and Brian McCann. Both played high school ball in the same state (as did Darvish and Dice K, well, same small country) and were brought up in the same system (as did Dice K and Darvish). However, much like McCann and Heyward, the ONLY things Darvish and Dice K have in common are those two things and their nationality. Heyward is black, McCann is white. Darvish is half persian, Dice K is all Japanese (to the best of my knowledge). Darvish is taller and throws harder and threw much less as an amateur. Compare Darvish to other tall flame throwers who dominated AAA and ate up innings while striking out a lot of guys and not walking many.
Jeff,
What would happen is that someone would look at AAA stats for 23yo players. They would examine the data and notice things like (made up numbers), that players at that age that OPS’s XYZ in AAA all turned out to be very good MLB hitters.
They might also note that players that had over X% strikeout rate as batters struggled in MLB.
Like I said, Prince Fielder dominated the Florida State league like few hitters ever have (it’s a pitcher’s league), and the guys that hit very well, but less than Fielder, all did pretty well in MLB. So, it was a reasonable conclusion/projection that Prince would hit well in MLB.
James Loney and Prince Fielder were both 19 in single-A. They had very different seasons. Loney only OPS’s over .900 1 time. Prince did it 3 times in the minors and only missed it when he OPS .839.
Just looking at their minor league ISO, one could have a reasonable conclusion that Prince is a far better hitter than Loney.
Not surprisingly, while both players were MLB starters at 23, Fielder was much better at the same level at the same age … just like he was 4 years before.
James Loney and Prince Fielder, actually, is a great example of you CAN look at MiLB performance and make projections at their MLB future. Almost by accident you made the best point to refute your comments.
I think the point can be made that Fielder dominated non-PCL MiLB levels just like he has in MLB.
IMHO, every since his performance in A as a 19yo, Prince has been viewed as a “sure thing”.
James Loney OPS’d .150 in the PCL, which probably isn’t that great. In a league known for home runs and teams having ERA’s in 6’s, Loney hit 8 HR in 406 PA.
err, “ISO’d” ~.150 in the PCL, not “OPS’d”.
There’s nothing wrong at all with Nomo, Dice-K, etc. as comps. In fact, Darvish will turn 26, the same age Nomo played his “rookie” year for the Dodgers.
FWIW, no Japanese pitcher has ever produced 20+ WAR in a six season stretch.
The numbers you’re producing are trivia numbers, not analysis numbers. Nomo isn’t a good comp. Compare Dice K to a tall, hard thrower who dominated a AAA or AAA equivalent. Up until Ichiro, no Japanese player had won a batting title either. Had absolutely no predictive value because that’s trivia, not actual analysis. A human being had never ran a 4 minute mile (in competition) up until about a century ago. Guess what, now it’s pretty standard for elite runners. I can’t wrap my head around the idea that some of you seriously say “well this Japanese pitcher didn’t perform well, thus, Darvish won’t”.
And I can’t wrap my head around your inability to understand such a simple idea. So now you’re trivializing career WAR into a ‘trivia question’? Seriously? How is it you evaluate players? For God’s sake, just ANY sort of number from you at this point would be nice. I haven’t heard anyone say, ‘well this Japanese pitcher didn’t perform well, thus Darvish won’t.’ All I’ve said is that looking at the pitchers who have tried to convert from the Japanese Leagues and have come over here with the hype to replicate that success have not done so YET. That is worth a mention. And by replicate that success I mean pitch like an ace or at least 3.3 WAR for six seasons. It hasn’t been done yet. And why are you bringing Ichiro into the conversation? Because he’s Japanese? Wrap your head around that.
The population of Georgia is about 10 million. The population of Japan, the 10th most populated country in teh world, is about 128 million.
“but you have to keep inflation in mind – $111 million today is a lot less than $121 million was when the Rockies gave Mike Hampton his mega-contract.”
Is this true though? The biggest single purchase he will make is a home, and home prices have actually fallen in that time. Would you rather have 120 million at the peak of the market or 111 million now? I’m not sure, but I think it might be closer than we tend to think.
The baseball economy has behaved quite a bit differently than the US economy over the last decade. The price of wins has increased dramatically since then.
Even the US economy has averaged about 2.5% inflation since 2001, so not only in baseball dollars is $111 million now a lot less then in 2001, but in real dollars too.
Actual inflation is understated by CPI by about 1/2.
So basically if you can play baseball well and are in the market for a house, you are in luck 🙂
the single biggest purchase some of these players make is their support staff. agent, accountant, lawyer, real estate folk perhaps, personal trainer/nutritionist… that price didn’t go down. nor did food or transportation. although, hampton didn’t reap the entirety of the bush tax cuts
Dave,
If the posting fee is a bus exp write off why are you treating it as salary for Yu Darvish? He will not see the money and I do not believe the Rangers payroll was altered as a result of it. If it was and I missed it I apologize in advance but I believe his value should only be compared to what HE is being paid.
On Tuesday, the Rangers had $51 million more than they have today. It doesn’t really matter what account they take it out of – it is assets lost by the organization. It has to be viewed in that light. You don’t ignore signing bonus for a top prospect and simply view his annual salary as the cost of acquiring him. In this case, the posting fee is just a really big signing bonus that doesn’t go to the player.
Yes but they can essentially write it off can they not? so if it is a total tax write off where do they lose?
Money. A write-off is not the same thing as not having to pay for something – it simply lowers your tax burden by a fraction of the cost of the thing that you bought.
And, to be clear, it’s not certain that the Rangers will even be able to write off the posting fee. It’s been speculated about, but you’d need a CPA with access to the organization’s accounting ledgers in order to determine the value of any potential write-off.
“Tax write off” does not mean free or fully refundable.
It bears mentioning that the $$ going to the Ham Fighters does not count against the team’s payroll, and therefore does not get them any closer to the salary cap or a possible luxury tax situation. So,at least in my eyes, it does matter to some degree which account the money came out of, especially if they do in fact get some tax relief in the process.
Reminds me of the Seinfeld episode where Kramer gets Jerry to claim something was damaged in mail during transit. It was OK to make a false claim because it was a “write off”.
You are 100% correct in including his total cost in your calculation. Red Sox fans tried to justify Dice-K the same way. It just doesn’t work. There might be some minimal tax advantages but they are that – minimal.
How much money has having Ichiro on their roster generated for the Mariners?
If you are going to debit Darvish for the posting fee, then you have to credit him for any additional revenue streams he brings.
Hmmm, isn’t theoretical increased (or at least not decreased) revenue what they are paying any player for in the first place? How can they count as additional value.
The Rangers had $206M in Revenue last year, with an operating income of $22.6M, so expenses of $183.4M. So let’s compare what those numbers would be with Wilson vs. Darvish, and assume a 35% tax rate. We’ll keep revenue flat, make expenses minus $7M for Wilson last plus the new contracts, and use average annual value for the contracts.
Darvish – Operating Income $19.6M, Amortization $8.57M, Taxable Income $11.03M, Taxes $3.86M, Net Income $15.74
$15.74 x 6 years = $94.43M cash on hand at the end of the contract ($78.69M after year 5)
Wilson – Operating Income $14.1M, Taxable Income $14.1M, Taxes $4.94M, Net Income $9.17M
$9.17M x 5 years = $45.85M + $51M = $96.83M cash on hand at the end of the contract.
This is obviously a fairly crude method. They’re most likely not going to be hoarding cash, and if they were, they’d also see gains on investment. Revenues and expenses will change. An actual CPA would probably be beneficial, especially for a site that attempts to provide the most accurate data on player value.
does the posting fee have to be paid in a lump sum? if it does thats a lot more money than paying it out over the life of the contract considering the time value of money.
Baltar they play players for production so on that front they are paying Darvish 10 million per year over the next six years. Dave is insisting that Darvish must make up on the field for the 50 million dollar posting fee.
The unique thing about signing Darvish is that most players don’t have immense popularity in two overseas markets(Japan, Iran) popularity that should make Darvish marketable in a way most players can never be.
All that I am arguing is that if we are expecting Darvish to live up to a 100+ million dollar contract we should be accounting for all the different ways that Darvish will bring revenues in to the Rangers coffers.
It bears no mentioning that the posting fee doesn’t count toward the luxury tax, because the Rangers are nowhere near the luxury tax threshold…. yet people continue to bring this up.
For the Yankees, Red Sox, maybe the Phillies it is a consideration… for pretty much everyone else a complete non-factor.
Kramer: “Well, just write it off!!!”
Jerry: “You have no idea what a write off is, do you”
Dave hinted at this above (“so the question still remains whether it was wise to spend $111 million on Darvish or on some other players”)… Yu’s posting fee counts as part of the “opportunity cost”, money that can’t be spent elsewhere on anything else.
True but given that the Rangers are coming off back to back WS appearances with payroll’s in the lower half of the league, I imagine their capital account is doing well.
The Rangers are now running at a deficit until 2015.
http://sportsblogs.star-telegram.com/foul_territory/2012/01/rangers-owner-bob-simpson-on-clubs-finances-prince-fielder.html
How many free agent $5 million wins can, say, a $100 million payroll team realistically afford to buy?
Depends. How much do they have committed next year, and the following years? What are their revenue projections and how are they projected in the next few years? Is the team winning now, on the way up, on the way down? You need a lot more info to really answer that question.
20, unless they sign a team of vernon wellses, in which case it’s about 1.4
Great article!
Still I wonder if the WAR calculation is a bit too highly revered. No single statistic can perfectly describe performance and this article seems to over rely on this one number to determine a player’s worth. It is true that the number is specifically derived to allow such comparisons however it is also true that it is imperfect. I have no problem with an analyst suggesting equal value for Derek Lowe and Chris Carpenter over a five year period. I respectfully disagree. These assessments become even more suspect when we look at different positions and eras.
Did you not notice that Lowe achieved that same value by pitching 300 more innings? That’s a big deal. No one things Derek Lowe has been as good as Chris Carpenter, least of all WAR.
Again, great article. Just one question: how come you didn’t evaluate as 5 yrs @ $101M? If he lives up to expectations or even comes close, he’s opting out for another big contract, right? Taking the posting fee into account, this changes his annual salary quite a bit from $18.5M/year to $20.2M/year and significantly boosts the performance benchmarks he’ll need to hit in order to justify the contract.
According to Jon Daniels, the opt-out requirements are apparently something like:
A) win the Cy Young one year, and finish in the top five a second year; or
B) finish 2nd in the Cy Young on year, and in the top five in two other years.
Given Darvish’s potential $10M in incentives, if he reached the opt-out conditions, it’s likely the contract would then be for 5 years and something like $70 million — so 5/$121M, or about $24M per year.
If we’re working with Dave’s estimates, that means 25-26 WAR total to “break even.”
I haven’t done the grunt work, but I’m guessing that condition A puts Darvish at 12-17 WAR, and condition B at about the same. Which would mean that for his remaining three years, Darvish would need to rack up 8-14 WAR total, or an average of 2.67-4.67.
That’s a wide range, but still: if Darvish is good enough to meet the opt-out conditions, it’s a decent bet he’s good enough for what the Rangers paid.
Ah, much appreciated, was unaware of the hurdles that he’ll need to jump to be eligible to opt out, thanks! Agreed that if he hits either one of those, justifying his contract will likely be a foregone conclusion.
The Rangers paid for potential ace performances during the postseason. They felt Darvish was much more likely to provide them with dominant starts in the playoffs than CJ.Wilson.
Obviously what happens in the regular season determines whether it’s even a possibility, but I truly feel that’s why they signed Darvish.
Teams like Texas, NYY, Boston and other high payroll teams will overpay for elite talent because the WAR for their players should be figured differently. When the Yankees sign a player to a monster contract, that player is not chosen over a replacement level player, but is chosen over a solid player that they would have instead. These teams with huge payrolls will always pay big money for potentially elite players in the prime of their career.
This just isn’t really true. Go look at what guys like Sabathia and Lee sign for – it’s basically right around the market price for wins.
Dave,
For this not to be true, you’d have to show that small market teams pay the same as large market teams. It may or may not be the case, but your argument of two players, both on large payroll teams is not informative.
This claim, of course, rests on the assumption that FIP is more or less an accurate assessment of pitcher value.
Not really. rWar backs it up too
Jason, the issue is that small market teams don’t get to buy elite free agent pitchers because they can’t afford them. It’s not like the Yankees and Phillies are going out and paying $5 million per win for 5 win players, but the A’s get to buy 5 win players for less…they just don’t get to buy those types of players because the cost is too high. They have to rely on underpaid guys that are under team control.
JayT,
I agree. I was really only commenting on the silliness of Dave Cameron’s argument that Sabathia and Lee are evidence that teams don’t overpay. He could have very well cited Burnett and Lackey and made the opposite argument based on his handpicked sample.
If I had to guess the results if you were to actually do the study, I would predict that losing teams actually overpay for free agents most often. The Yankees offer a player a lot of additional benefits besides paycheck to play for them (NYC, yearly playoffs, increased sponsorship opportunities, etc.). The Nationals better give a lot of money to a free agent to get him to sign (Werth).
The Yankees signed Burnett for 5/82.5 – 16.5 mil/year. Projecting him as a 3-4 win starter for the life of the contract means they didn’t ‘overpay’ him at all. He averaged nearly 4 wins per year for the three years with the Blue Jays. He also pitched a tougher schedule with Toronto, as he had to face the Yankees powerhouse lineup instead of Toronto’s weaker one.
You are confusing when a player doesn’t perform up to his contract as an overpayment. Burnett has underperformed, but that doesn’t mean the Yankees overpaid.
Do you really think, though, that teams like the Yankees and the Red Sox — those who anticipate playing in the postseason — don’t calculate potential postseason performance when assessing how well, say, Sabathia will pitch in his next 5 years in pinstripes?
In other words, don’t you think that Cashman and his people estimate that, over 5 years — the length of Sabathia’s contract — they’ll play in 30-40 postseason games. That’s the median estimate (for example). So he would make 10 postseason starts over those 5 years. They would figure he would be worth x wins (WAR) over those 10 starts. And those are postseason wins which, presumably, are worth more than regular season wins. Don’t you think teams factor something along those lines into their calculus when determining what a potential acquisition would be worth?
Dave, shouldn´t we consider that the Rangers are paying 60+ million this year when we calculate the inflation. You always (correctly) argue that money now is more than money then.
This an extremely frontloaded deal because of the posting fee. Good thing for the Japanese team, ok for Yu, bad for Texas
They may have taken out a loan for the posting fee though, in which case the cost may be spread out over several years.
But unless they find an extremely altruistic bank, they would have to pay interest on the loan. They have to pay $51million in NPV.
Obviously they would have to pay interest, but even with that it would mean that they aren’t paying $60+ million for Darvish this year. Sure, it would be the cheapest option in the long run, but we don’t know whether or not Texas has the cash in hand right now.
If they loan the money, the point is the same. we are considering that wins will be more expensive in years to come, therefore he can perform worse to earn the same money in the first year. this isn´t true if theres an interest
You guys are all crazy. He doesn’t need to perform extremely well to earn the money, he just needs to show up.
This is, of course, correct. As long as Darvish does not refuse to pitch he will fulfill the obligations of his contract and earn his money. The question shouldn’t be whether Darvish will earn his money, as the title wrongly suggests, but whether the Rangers made a wise decision in offering him such an amount to pitch for them.
“The question shouldn’t be whether Darvish will EARN his money, as the title wrongly suggests…”
Collins English Dictionary: “Earn”
1) To gain or be paid in return for work or service
2) To acquire, merit, or “DESERVE THROUGH BEHAVIOUR” or action
I think Dave did just fine in his “title making”…semantics Jason…semantics
This article is a good way to estimate what he needs to do to be worth it. I think there are two points that aren’t included though.
1). Right now is the time for the Rangers. They want a 4 or 5 win guy in the next few years and would be glad to pay at the back end. 4 years of a 5 win pitcher and then he gets hit by a bus is better than 3.3 wins for 6 years.
2). Since the monetary risk is so high shouldn’t he have to perform at a high level to seem worth it? If they get Derek Lowe and he gets hammered in the playoffs I think they will be disappointed.
As usual, Dave, you have totally ignored risk in your calculations. You are comparing Darvish to pitchers who pitched for at least 6 years and, thus, are an elite few.
Darvish could achieve 0 WAR (or less).
I agree. Don’t forget Barry Zito had about 24 WAR for the six years before he signed the big SF contract, to include a 5 WAR season the year before. He is a bust in every estimation now, but much less of a risk than Darvish who only has to show up now, even though he has never proven a thing in MLB.
That doesn’t mean he ignored risk in his calculations. It just means that the personal analysis following his calculations is optimistic about Darvish. Risk doesn’t change the question of what caliber of results will justify the paycheck.
That is an extremely good point. What would be interesting to know is his “true talent”, and then see what other pitchers of the same true talent did over their first 6 seasons.
But, I think the basis of the article was coming up with a MLB example of how good Darvish would need to be in order to earn his contract (not whether he would or not).
As you pointed out there is risk. But that’s more of a probability type discussion.
If he’s going to miss a season or two due to injury, then his talent level needs to be that much higher, like maybe in the Adam Wainwright range.
If he’s durable, then his true talent can be lower.
It’s hard to project Japanese pitchers because of the sample size. Nomo was very durable, but other pitchers have struggled with it.
Nomo wasn’t all that durable in his first six years. He only started 28 games total in years 4 and 5 combined, suppressing his bWAR total to 13.7 for his first six years.
Good point Circle. I will also add, that we should not consider ’12 thru ’17 comparable to other pitchers “first” 6 seasons. 1) he is 25 and 2) he has pitched against MLB players (in the WBC).
I think that most pitchers have less maturity in their “first” 6 seasons then this guy does.
Exactly. That’s why Nomo is such a good comp for Darvish.(entering rookie season at age 25)
>As usual, Dave, you have totally ignored risk in your calculations. You > are comparing Darvish to pitchers who pitched for at least 6 years
> and, thus,are an elite few.
>Darvish could achieve 0 WAR (or less).
Let’s make something clear: Dave most certainly did not compare Darvish to those pitchers, at least in the way you are making it sound. He did not say, “Here is where Darvish’s talent level is.”
He said, “Here is what Darvish *will have to do* in order to make the deal a break-even proposition for the Rangers from a player value perspective.
I don’t see your point reflecting anything Dave actually said in the article. In fact, I’d argue that in showing how only a couple dozen pitchers (out of the possible several hundred starters) over a given five-year period were able to get to 20 WAR, there’s a pretty significant nod to the downside risk of the contract.
By the by, I made clear “from a player value perspective” in order to specify on-field value. The Rangers are going to see some non-zero value in terms of buzz, fannies in the seats, picking up new fans abroad, etc…because Darvish-mania is pretty prevalent in Japan. That’s not being taken into account here, as that wasn’t the purpose of the piece.
One big thing people aren’t taking into account: the Rangers will certainly have added revenue from the Japanese market for Darvish. I don’t pretend I know how much extra they will make from that, but anybody who says the money doesn’t exist at all is just being ridiculous.
Also, you can’t tell me that the Rangers are paying Darvish like they expect him to be a ~3.3 WAR pitcher. The Rangers are paying Darvish like they expect a reasonable floor of a 3.3 WAR pitcher averaged out over the life of the contract. Show me the last time a team dished out over $110 million for someone like that and I’ll agree it’s a fair measuring stick. If every free agent you sign is getting paid $5 million per win, you’re probably a bad GM. The Rangers probably think Darvish is a 4-5 win player at least to pay so much for him.
Overseas revenue is split equally between all 30 teams. It’s going to be hard for Japanese tourists to plan in advance to see a pitcher as compared to a position player.
You mean, for when they fly 19 hours from Tokyo to Dallas for one game?
You’re right that they’re not going get a big increase in ticket sales from Japanese citizens, but if people did fly to the US for a game, they would stay for more than one day.
Good job Dave. I actually wrote a very similar email to my friends with a lot of the same research the other day. The one thing that I noticed is that it is actually hard to NOT earn 20 WAR over 6 years if healthy. Only Bronson Arroyo earned less than 20 WAR over the last years despite averaging over 200 innings per year. Darvish has averaged over 200 innings per year in MANY fewer starts than he will get here. He seems like a pretty solid bet to get 1200 innings over the next 6 years.
My conclusion was that health will be the key, but assuming health I think that 20 WAR is pretty likely.
This.
Really profound stuff, Dave. So glad that you know more about the Rangers organization as a whole, their budget, their revenue, and their scouting reports more and their front office. So glad.
more than**
What about Dave’s “earn” fiasco? How can you not menion that?
…replying to John
The $/WAR should be adjusted. Texas is more willing to spend per 1 win than say Oakland because each win generates more money to Texas. Of course, the free agent signings (big ones that dictate the market) are done by large market teams. Dallas is a pretty big market, so I guess in this article the $/WAR is accurate.
This might be the worst comments thread I’ve ever seen on this site. The conclusions in Dave’s article are thus:
– 111 million is worth about 3ish wins a year.
– Good pitchers can make it in different ways.
– Darvish might or might not make it.
That’s it. It’s not that complicated, and it’s correct. Anyone that argues anything else has obscenely poor reading comprehension and probably shouldn’t be sharing their views on this site or others.
The low point was the kvetchig about the word “earn”.
Heard Keith Law state that Darvish’s “floor” is a “very good #2”.
It was based on YD being so much more dominant than other pitchers have been in the Japan League.
For my own curiosity, I looked up his stats and compared them to another TEX pitcher that dominated the Japan League.
Since Colby Lewis only played 2 seasons in Japan, I just used rough averages of YD’s last 2 seasons in the JL.
STAT — Lewis – Darvish
————————–
K/9 — 9.4 – 9.0
BB/9 — 1.2 – 2.0
HR/9 — .65 – .47
Those are the DIPS stats.
STAT — Lewis – Darvish
————————–
H/9 — 7.7 – 6.0
WHIP — 1.0 – 0.90
ERA — 2.75 – 1.80
Circle, where are you getting those JL stats, if you don’t mind?
baseball cube
Thank you, sir.
Baseball Cube doesn’t have YD’s 2011 numbers. Try this:
http://bis.npb.or.jp/eng/players/61965110.html
The article mentions Dan Haren and the chart shows Jason Schmidt. Are the stats shown Haren’s or Schmidt’s?
It’s safe to point out that Greinke earned a massive chunk of his WAR (9.3) in one year. He was solid through out, but 2009 really made it possible.
Not sure I see Darvish having one of those “season’s for the ages.” At least not in that park. The biggest question mark might be health. Can he handle all of those hot and humid games in Arlington? We will see.
earn fiasco??
SG compared/translates Darvish’s NPB stats to those players who have also made the jump:
http://www.rlyw.net/index.php/RLYW/direct/all_darvish_all_the_time
Dave… why do you continue to insist of 11% inflation this winter?
Why not use a data driven method… if you are assuming 5% inflation in subsequent years, why not use 5% inflation this year?
4.5mil (or 5mil) is the PRICE of a win on the free agent market no? The value of a win is not necessarily the same as teams also get wins at discounted prices.
I know it’s semantics, but these free agent assessments are not really breakeven or did they earn it, it’s did we overpay or underpay on the free agent market.
To calculate the true value of 1 WAR, it should be totally payroll in MLB/total WAR, not merely free agent contacts. I suspect this # is below the 4.5mil that everyone quotes as “value” (when it should mean “price” on the open market)
There’s a very real off-field value to adding Darvish that this article completely ignores. I know every time Ichiro or Hideki came to Toronto that there were Japanese ads behind home plate. There could be a whole whack of revenues (advertising, jersey sales, Japanese TV contracts, tapping into the local Asian market, etc.) that bring the necessary WAR down by a full win per year.
It seems to me that the big performance issue revolves around the extent of risk of injury, given the transition from one pitching pattern in Japan to a different one here. Darvish did throw a lot of innings at a young age, too; I don’ want to profess which way that cuts.
There is (of course) a position between the one that only WAR, or some other win estimator, matters for salary purposes and the one that anything that gets you to a World Series is worth doing. It is well-known that there is a different $ value for a marginal win depending on where you are in the competitive cycle. This is, it seems to me, a valid consideration for the Rangers now.