Cubs sign Yu Darvish

[mse326]

2 hours ago, DirtyDez said:

I'm a little surprised how many people think this is a great deal.  Is it b/c Theo did it?

What do you think he should have got?

[DirtyDez]

25 minutes ago, mse326 said:

What do you think he should have got?

I'm afraid to say considering the team I root for gave 32 year old Zach Greinke over 200m.  Although he had zero injury concerns and was arguably coming off the best season of his career.  

[mse326]

17 minutes ago, DirtyDez said:

I'm afraid to say considering the team I root for gave 32 year old Zach Greinke over 200m.  Although he had zero injury concerns and was arguably coming off the best season of his career.  

I mean it's hard for us to value contracts since as we've seen the "value" of a win isn't necessarily consistent. Recently, however, it's been about $8M a win. That would mean he needs to be worth only 15 wins (or 2.5 per season). That is certainly doable for him even with injury concerns. When he's pitched he is still at it's lowest right now a 3.5 WAR pitcher. So it would hardly be surprising for him to be able to say produce 9 WAR over the first 3 seasons and 6 WAR of the last 3 and be worth the contract.

While the market this year seems like it is trying to correct lower there are other factors that would increase it in this situation. The Cubs seam to be in that max marginal win area where a win is worth more than normal. They also look to be a potential/likely playoff team where a good/great pitcher has more value. The Cubs can also carry a higher pay roll than most so can afford to slightly overpay if necessary for the best SP on the market without it really hurting their ability to spend elsewhere.

This isn't a great deal in terms of value, though does have the potential to be. But it isn't bad either. It seems to be exactly where it should be where neither party won or lost. But that makes it's a good deal in a more general sense as you got a TOR without having to significantly overpay. It also is only paying based on a what can be said to be a bit on the conservative side of value. He could easily outplay it which would make it great value. And while injuries are a concern it's hard to imagine him falling significantly short of the production necessary. So when you consider that it makes it a great deal to me.

[hrubes20]

Cubs 2018 motto: “If you can’t beat them, take their 2nd best reliever and 2nd best SP!”

[hrubes20]

Also, his opt out is after 2019. 

[hrubes20]

4 hours ago, ramssuperbowl99 said:

That's not how opt-outs work. They're never a benefit for the team - the player only opts out if the back end of the contract is an underpay.

I would specify that the opt out is never a benefit SOLELY to the team. It can easily be a big mutual benefit though. Take Yu’s for instance; he could stay healthy, ball out to the tune of 10 WAR the next 2 years and opt out. Darvish secures more years, more money, or both. Cubs get off the hook from paying Darvish in his mid-30’s, gain a draft pick when he declines arbitration, and get the benefit of the ample surplus value in those 2 years.

[ramssuperbowl99]

15 hours ago, hrubes20 said:

I would specify that the opt out is never a benefit SOLELY to the team. It can easily be a big mutual benefit though. Take Yu’s for instance; he could stay healthy, ball out to the tune of 10 WAR the next 2 years and opt out. Darvish secures more years, more money, or both. Cubs get off the hook from paying Darvish in his mid-30’s, gain a draft pick when he declines arbitration, and get the benefit of the ample surplus value in those 2 years.

Losing a below market paid player isn't a benefit. Theoretically, without that opt out, the Cubs could trade Darvish for more than the draft pick compensation.

[hrubes20]

38 minutes ago, ramssuperbowl99 said:

Losing a below market paid player isn't a benefit. Theoretically, without that opt out, the Cubs could trade Darvish for more than the draft pick compensation.

No trade protection, so that’s unlikely. But the whole premise is that Darvish would no longer be paid below market on the deal. The surplus is likely to come almost exclusively in the first 2-3 years. Cubs could theoretically get all the surplus in this deal and a draft pick to boot. Obviously the Cubs had to go into this deal with the thought that Darvish doesn’t opt out. The deal is still solid enough over the life of the contract to provide plenty of value, but it would be huge for the Cubs if they didn’t have to pay Darvish for his mid-30’s seasons; which would also be 6 years removed from TJS.

[mission27]

rams I think you are theoretically right but there are market dynamics.  Its not as easy to trade a player, from a practical or fan / PR standpoint, than to simply let the player opt out and get overpaid elsewhere.  A competitive team shopping a 33 year old starting pitcher raises a lot of red flags and artificially suppresses that players market value.  Its also always possible for a player to mistakenly exercise an option by misjudging the market. 

Lets say the Cubs only want to pay Yu Darvish for two years.  Darvish is not taking a 2 year deal.  A 6 year deal with an opt-out could be cleaner than a 6 year deal with a plan to trade him after year 2 and by providing the opt-out, you are giving Darvish extra value, which probably lowers the AAV.  For the Cubs that's a win-win even though they have to take on an asymmetric risk profile. 

[ramssuperbowl99]

18 hours ago, hrubes20 said:

No trade protection, so that’s unlikely. But the whole premise is that Darvish would no longer be paid below market on the deal. The surplus is likely to come almost exclusively in the first 2-3 years. Cubs could theoretically get all the surplus in this deal and a draft pick to boot. Obviously the Cubs had to go into this deal with the thought that Darvish doesn’t opt out. The deal is still solid enough over the life of the contract to provide plenty of value, but it would be huge for the Cubs if they didn’t have to pay Darvish for his mid-30’s seasons; which would also be 6 years removed from TJS.

If Darvish isn't paid below market, then he's not opting out. That's why, at least looking forward, opt outs aren't never a benefit to the team. The only way he opts out is if he's underpaid even after the draft pick, in which case the Cubs are losing value.

Here's what I'm trying to say:

if Darvish's value > (Draft pick + Contract), he opts out because some team will pay him more. The Cubs lose out on everything greater than the Draft pick + Contract, where everything could be Darvish's trade value or Darvish's performance.

If Darvish's value = (Draft pick + Contract), the Cubs break even.

If Darvish's value < (Draft pick + Contract), Darvish doesn't opt out. The Cubs lose out because they'd rather have the cash and the pick.

 

With hindsight, it might work out better for the Cubs if Darvish pitches well for 2 years, opt outs, gets them a draft pick, and promptly has his elbow blow up than if he had a clean 6 year deal. But we won't know that until after it happens. Based on what we know today about Darvish or anyone else who gets an opt-out, they don't benefit the team.

 

6 hours ago, mission27 said:

rams I think you are theoretically right but there are market dynamics.  Its not as easy to trade a player, from a practical or fan / PR standpoint, than to simply let the player opt out and get overpaid elsewhere.  A competitive team shopping a 33 year old starting pitcher raises a lot of red flags and artificially suppresses that players market value.  Its also always possible for a player to mistakenly exercise an option by misjudging the market. 

I agree the PR factor is real. If Darvish is wildly popular in Chicago it might not just be a baseball decision to keep him around. CC Sabathia is a pretty good example of a pitcher opting out despite not having that much leverage and the team basically needing to overpay him to stay.

Even if the Cubs decide not to trade him though, that doesn't mean the back end of Darvish's contract couldn't still be positive value whether they trade him or not. And yeah, he could overvalue his market, but we don't have any reason to suspect he would today.

6 hours ago, mission27 said:

Lets say the Cubs only want to pay Yu Darvish for two years.  Darvish is not taking a 2 year deal.  A 6 year deal with an opt-out could be cleaner than a 6 year deal with a plan to trade him after year 2 and by providing the opt-out, you are giving Darvish extra value, which probably lowers the AAV.  For the Cubs that's a win-win even though they have to take on an asymmetric risk profile. 

I mean what it comes down to is that the Cubs valued Darvish's opt out lower than he did. And it's not hard to come up with an explanation as to why.

Darvish's camp probably thinks 2 awful postseason starts and him tipping his pitches plus a weird free agent market cost him $20M plus, so by opting out they'd have a chance to recoup that $20M. The Cubs did the math and had Darvish's opt out at less than that, let's say $15M. So if you want to say that in the negotiations because the Cubs and Darvish settled on the opt out value at somewhere in the middle of that, and therefore each side thinks they came out ahead, so it's win-win, I'm good with that.

[ramssuperbowl99]

On 2/10/2018 at 2:48 PM, DirtyDez said:

I'm a little surprised how many people think this is a great deal.  Is it b/c Theo did it?

@hrubes20 and I each had him pegged for somewhere around 5/$125M. With the opt out and the bonuses, that's not too different from what he ended up getting, but I like it from the Cubs point of view because they spread it out over an extra year to help with the luxury tax and tied so much of it to incentives to help mitigate the opt-out risk.

I also think Darvish's market was artificially deflated (like everyone else's) with the luxury tax teams, so many teams tanking, and 2 really bad WS starts. Had none of those factors existed, I think he gets something like 6/$150M without the incentives. So it's not just a Theo move, even though his offseason has been tremendous again. I was probably going to be jealous of whoever signed Darvish because this free agent market is stupid.

[THE DUKE]

I'm always leery of giving a pitcher over 30 more than 3-4 years, but the AAV is pretty good.  I highly doubt he opts out though, willingly giving up 4 guaranteed years north of $80 million to hit FA in your mid 30's doesn't sound very smart to me.  Especially for a pitcher who has already had elbow issues and questionable post season performance.

[hrubes20]

3 hours ago, ramssuperbowl99 said:

If Darvish isn't paid below market, then he's not opting out. That's why, at least looking forward, opt outs aren't never a benefit to the team. The only way he opts out is if he's underpaid even after the draft pick, in which case the Cubs are losing value.

Here's what I'm trying to say:

if Darvish's value > (Draft pick + Contract), he opts out because some team will pay him more. The Cubs lose out on everything greater than the Draft pick + Contract, where everything could be Darvish's trade value or Darvish's performance.

If Darvish's value = (Draft pick + Contract), the Cubs break even.

If Darvish's value < (Draft pick + Contract), Darvish doesn't opt out. The Cubs lose out because they'd rather have the cash and the pick.

 

With hindsight, it might work out better for the Cubs if Darvish pitches well for 2 years, opt outs, gets them a draft pick, and promptly has his elbow blow up than if he had a clean 6 year deal. But we won't know that until after it happens. Based on what we know today about Darvish or anyone else who gets an opt-out, they don't benefit the team.

It's all hindsight, unless Darvish gets hurt and/or is terrible the next 2 years, in which case your third scenario applies.  We won't know how he will perform in his age 33-36 years, regardless of how well he does these first 2.  History is littered with SPs that have lost velocity or effectiveness in their mid-30's.  There are also plenty of guys that have been fine, and continued to provide value.  The value to the Cubs, were Darvish to opt out, would be largely tied to risk mitigation in signing a SP who will be in his mid-30's for half of the contract, and who has already undergone TJS.  I of course have no way to know the value a team places on this potential risk mitigation, but it's certainly not insignificant.  

But just in your first scenario, there is quite the range of possibilities:

Darvish puts up 10 WAR in 2 years - He opts out, and proceeds to stay healthy the next 4+ years and would have outperformed the remainder of the Cubs' deal.  Cubs lose out on the additional value of years 3-6,  but they still get roughly $50 million in surplus value over 2 years where they are theoretically legitimate WS contenders, and they get a draft pick (although it will likely only be a 4th rounder as they will be going over the LT routinely at this time).  As I mentioned before, there is no lost trade value, as he has a no trade clause.

Darvish puts up 10 WAR in 2 years - He opts out, and does only so-so the next 4+ years and would have been worth roughly the remainder of the Cubs' deal.  Cubs don't lose out on any additional value, and still get roughly $50 million in surplus value over 2 years where they are theoretically legitimate WS contenders, and they get a draft pick.

Darvish puts up 10 WAR in 2 years - He opts out, and proceeds to suffer yet another torn UCL or other injury, after which he doesn't regain his stuff.  We'll say through missed time and ineffectiveness, he amasses only 4 WAR.  Cubs not only got the $50 million surplus, and the draft pick, but they also avoided having to pay $81 million for $36 million worth of production.

When it's spelled out, it's easy to see that there is potential benefit to the team in an opt out for a SP in his 30s.

 

 

 

[ramssuperbowl99]

2 hours ago, hrubes20 said:

It's all hindsight

But teams don't make decisions with the benefit of hindsight.

Sure, there are scenarios where Darvish does well, opts out, and then stinks. But the Cubs couldn't be counting on that when they originally offer the opt-out.

[hrubes20]

9 minutes ago, ramssuperbowl99 said:

But teams don't make decisions with the benefit of hindsight.

Sure, there are scenarios where Darvish does well, opts out, and then stinks. But the Cubs couldn't be counting on that when they originally offer the opt-out.

No, I'm pretty sure they were just counting on Darvish doing well and then exercising the opt out, relieving them of the stress and unknown of having a mid-30's SP with prior TJS getting paid $21 million each year.  Again, it's risk mitigation, and it's really, really smart when signing a pitcher in his 30's.  Cubs obviously have to make the deal figuring that Darvish would be there for the full 6/126.  But if you have the option of getting Darvish on a 2/42?  That's a freaking home run.