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Wednesday, November 15, 2006
What Price Matsuzaka?
UPDATE: Nov 15, 2006
Posting bid was 51 million$.
This is what’s going to happen: Matsuzaka is going to tell Seibu that they have to kick back almost 30 million$ back to him. Why is that? Because Mastsuzaka sees how much he’s worth, and therefore, he’d be better off waiting two years, and become a bonafide free agent, and not share the money.
The 51 fee, plus the likely 60/6 year deal means he’s worth 111 million$ for 6 years (18.3 per year). If he holds out for two years at say 9 million$ total with Seibu, he’d sign an 80/4 deal, for a total of 89 over 6 years.
For him to sign a 60/6 deal means that he’s shortchanging himself 29 million$. Look for Seibu to buyout Matsuzaka for that amount of money.
Original: Nov 10, 2006
This is how it works.
1. Sealed bids for right to negotiate with Matsuzaka
2. Players negotiates with winning team, and accepts or rejects contract
3. If player rejects, he sticks one more year with team, at which point he can ask for re-post. But, if he sticks two more years, he’s a free agent. For all intents and purposes, if a player rejects in #2, then he sticks in Japan for 2 years, and then is a free agent.
So, what to do?
The considerations are:
a. How much money is in play?
b. What are the chances of injury curtailing his payday? i.e., when do you exercise your stock options, if you work at a high-risk tech company?
Suppose we have a 30 million$ posting fee, and then a team offers a 60 million$/6 yr deal. To the team, that’s 90 million$ to pay out for 6 years of pitching (15 million/yr). He may balk.
So, Matsuzaka goes back to Japan for two years, where he is now two years older, and now may only get a 4 year deal, but (in present-day dollars) of 17 million$ / yr for 68 million$.
But, what if he gets hurt, or loses his effectiveness? If he’s only 75% sure of getting his payday in 2 years, 75% of 68 million is 51 million$. Assume he signs with Seibu for the next two years at 9 million$ (he currently makes 3 million/yr). That’s 60 million$ in his pocket (which is the same as the other option).
It seems to me that if his true market rate (in present-day dollars) in 2 years is 17 mill/yr, then what should happen is that he needs to get a 60/6 yr by the winning team. And such a team should post a 30 million$ fee. If they were to post more, or sign him for more, that just means they want to overpay him. Or, 17 / yr in 2 years is not the market rate.
Let’s see how this plays out…