Yu Darvish- Posting fee?

[awy]

those are big numbers, but considering that mlb teams are pretty risk averse, and the posting fee does not count against cap, it is reasonable to believe that had darvish been a MLB pitcher, he would be more expensive.


although, the blind bid process is the most bidder unfriendly set up imaginable outside of actually putting a gun to nolan ryan's head

of course, what the yankees chose is to spend their prospecty capital instead of cash. a pineda + FA combo is going to be cheaper than darvish

[yankee82093]

What is the point of the "what if Darvish was an MLB pitcher" hypothetical?

We're talking about if Darvish was cheap, compared to his MLB peers. He wasn't. Some hypothetical version of him is irrelevant.

[False1]

never said they were unwilling to spend, i am just preferring them to make the darvish investment. not very complicated

You said

i am also preferring an ownership with a preference profile that is more willing to spend

More willing than the most willing team in all of baseball? Whether I use the pretty straightforward interpretation of your initial comment, or this modified one, you're ignoring reality when you say things like you don't care about a $50MM one time outlay, which then gets followed up by 6 years at $10MM per.

darvish is not only a great pitcher, he is also cheaper than most great pitchers on the FA market given the way lux tax breaks down and risk aversion by most teams

Darvish has the potential to be a great pitcher. The odds appear to be pretty good that he will anchor that rotation for the immediate future. We'll see what happens. Yes, there are luxury tax advantages specifically for a team like the Yankees with this type of deal, but paying $52MM up front has a cost too. If the Yankees earned 5% on that ~$52MM year 1, $43MM year 2, and so forth across the 6 years that's roughly $9MM. By not having that ~$52MM factored into the AAV for lux tax purposes they'd save about $20MM over the course of the 6 years. So giving Darvish 6/$60MM + the $52MM fee versus giving a FA a 6/$112MM would save the Yankees about $11MM. That's good money, but if he isn't the goods and the Yankees want to be competitive they'd have to shovel ANOTHER huge contract on a FA pitcher anyway, and then whatever you saved here is peanuts in comparison.

I have no idea what "risk aversion by most teams" has to do with this.

[awy]

as a % of revenue, present and expected? i don't think the yankees are the most willing to spend. they are bogged down by revenue sharing etc too.

still, that is totally irrelevant to my point, which is simply that i wanted them to go for darvish and put more money on the field. i don't think this is all that unfair from a paying fan's perspective.

now obviously words like 'expensive' etc are relative in this conversation. in saying they should spend more etc i am not calling them cheap and so on.

the risk aversion by most teams bit is to say that the demand for darvish is distorted by the difficulty of translating him into the majors. not every team even have scouts on darvish in the first place, so you face less competition for his services. as a general rule this makes his eventual price lower than the theoretical, more accessible information, regular risk preferences universe darvish price.

[awy]

What is the point of the "what if Darvish was an MLB pitcher" hypothetical?

We're talking about if Darvish was cheap, compared to his MLB peers. He wasn't. Some hypothetical version of him is irrelevant.

the hypothetical mlb darvish is also a peer. this version of darvish is more expensive because of more information and less uncertainty, which teams care a lot about.

so we are talking about relative price, whether darvish being from japan makes him cheaper or not. it is not some sort of absolute cheapness. of course he is not cheap

[False1]

as a % of revenue, present and expected? i don't think the yankees are the most willing to spend. they are bogged down by revenue sharing etc too.

still, that is totally irrelevant to my point, which is simply that i wanted them to go for darvish and put more money on the field. i don't think this is all that unfair from a paying fan's perspective.

now obviously words like 'expensive' etc are relative in this conversation. in saying they should spend more etc i am not calling them cheap and so on.

the risk aversion by most teams bit is to say that the demand for darvish is distorted by the difficulty of translating him into the majors. not every team even have scouts on darvish in the first place, so you face less competition for his services. as a general rule this makes his eventual price lower than the theoretical, more accessible information, regular risk preferences universe darvish price.

Well, clearly your general rule didn't pan out here because the eventual price for Darvish makes him one of the most expensive pitchers in the game.

[awy]

i'd attribute that to rangers being very lusty after him with the posting fee.

still, a darvish without that japan -> mlb uncertainty of translation is going to get more money, over and above a linear valuation of that risk.

everything here is moot though because teh yankees showed that they did not seriously want to pursue darvish, probably didn't want to commit the 100m to get him.

[JL25and3]

Although the AAV for lux tax purposes is only $10M per year.

What mystifies me is how a team that was basically bankrupt two years ago and used part of the Yankee lux tax to obtain Cliff Lee is suddenly so good and so flush with cash? It's as big a mystery to me as having George Mitchell (a Red Sox owner) run the steroid investigation, and it smells just as bad.

Luxury tax money doesn't go to other teams.

[awy]

whoa i did not make myself clear. the main issue here with the darvish posting money is not that it is not a sizable amount, it is just one of hte last remaining areas in which the yankees can exercise their advantage without being limited by increasingly strangulating league rules. if the well reported idea tha tthey want to get under 189 by 2014 is true, then that number is already a de facto salary cap. it is a real limit on payroll space as a resource, because most probably the yankees are better off spending past that limit.

thus in terms of effective payroll space usage, darvish's contract is definitely efficient as it is arranged.

[nnysiny]

maybe awy will someday get a job where he tells billion dollar empires how to spend their money. until then, we will hear about incessantly

[awy]

mmkay

[nnysiny]

mmkay

nice edit

[YankeeRLA1968]

it is relevant. i don't care about how much profit ownership interests are making. i care about the team's resources. lux tax cap is a sort of soft cap on the team's resources, while 'willingness to spend' has little sympathy from me.

Wow, let us know when you take over the decision making of a MLB team.

If I am reading your post correctly...you wouldn't care if the Yankees had a 300 million dollar payroll. I guess turning a profit like a well run company may or may not be something you care about. I will however assert that competitive balance will come into play eventually if payrolls don't start to calm down. What I mean is a real salary cap for starters. I agree the bar should be raised but many small market teams still can't approach a 100 million dollar payroll and the Yankees are over 200 million. I don't see MLB as a whole allowing the trend of competitive balance to continue.

Just my opinion.

[grizy]

The Steinbrenners are worth what... 2, 3 billion tops?

With so much of that concentrated in the Yankees franchise, it's probably best they run the team for (at least some) profit to make sure we have some margin for error. The worst thing that could possibly happen to us is forcing the Steinbrenners into selling the team to some of the jokers that own the Marlins or Pirates.

As unlikely as that sounds, as many have pointed out, all we need is a few bad years to nuke attendance. For a team that's as leveraged as the Yankees, that can have serious impact on profitability.

[awy]

okay okay

[PinstripeDynasty]

Do you really think so?

CC Sabathia will be getting $122MM for the next 5 years. My guess is Darvish's contract plus the posting fee comes in around $112MM for 6 years.

Just wanted to bump my own post from 12/22/11 to pat myself on the back.

[K-W]

YankeeRLA1968 & nnysiny

I can only assume you are replying to every post on this forum with that exact same response if you truly believe that fans shouldn't have opinions about the functioning of the organization. I am glad that Awy and other thoughtful posters share their opinions about the organization on this forum. If you don't want to read fan opinions don't.

[nnysiny]

YankeeRLA1968 & nnysiny

I can only assume you are replying to every post on this forum with that exact same response if you truly believe that fans shouldn't have opinions about the functioning of the organization. I am glad that Awy and other thoughtful posters share their opinions about the organization on this forum. If you don't want to read fan opinions don't.

i think you have it backwards. its the other poster(s) who basically do "copy and paste" on a daily basis. if i have an opinion on something, i will say, maybe more than once, but not hundreds (literally) of times

[Snatch Catch]

The counter argument that mitigates the Luxury Tax implications of the posting fee point is that the whole lump sum is due upfront. The $10,000,000 due in year 6 of the actual contract does not have the same value as the $10,000,000 he makes in year 1.

[False1]

The counter argument that mitigates the Luxury Tax implications of the posting fee point is that the whole lump sum is due upfront. The $10,000,000 due in year 6 of the actual contract does not have the same value as the $10,000,000 he makes in year 1.

Correct. I tried to make a similar point here.

http://forums.nyyfans.com/showthread...=1#post7430721

The luxury tax implications in a situation like this are by no means trivial, but really they can't sign these guys at these prices simply because it saves a few million on lux tax. They sign them because the risk/reward makes sense, and if they save those dollars to boot then it's a win/win.

[2JAY]

A very impressive performance by Darvish tonight as the Yankees took many an awkward swing off of him. It's too bad that the Yankees were not more intent on signing him because he would have really been a strong addition.

[kan_t]

Sigh....

[LIYanks]

A very impressive performance by Darvish tonight as the Yankees took many an awkward swing off of him. It's too bad that the Yankees were not more intent on signing him because he would have really been a strong addition.

Let me preface this post by saying that it is not a "I told you so" rant.

It's still early but Darvish has looked impressive this season. We will find out if he can handle the wear and tear of a 162-game season.

[DonnieTinoTex]

A very impressive performance by Darvish tonight as the Yankees took many an awkward swing off of him. It's too bad that the Yankees were not more intent on signing him because he would have really been a strong addition.

As a friend of mine texted during the game:

"If George were still alive we'd have Yu, Cespedes in LF and Montero hitting lasers to the right field seats."

Ugh.

[bomber999]

Yu looked phenomenal tonight. It's early, but he looks like the real deal. He should have been in pinstripes.