As I’m sure you’ve already heard if you’re on this site, Masahiro Tanaka signed with the Yankees for 7 years and $155 million dollars, with an opt out clause after four years. Now I, like so many others, will offer my current opinions on the deal. I am extremely high on Tanaka and I think he will be an excellent pitcher, but my initial reaction was to dislike the deal. Immediately, it looks like a lot of money per year for a relatively unproven player. Plus, the opt out clause means that if everything works out perfectly and he’s a fantastic player, it’s a four year deal for a lot of money, not even through his entire prime. If he gets injured, or things go poorly, then the Yankees are on the hook for seven years, and a lot of money. It seemed like the main opportunity with Tanaka was to lock up a young player through his entire prime, and bet on him being outstanding. The Yankee deal keeps the high dollar value, but doesn’t cover his full prime years.
But then I though about it more. Fangraphs has done a lot of work on the market value of a win, and expected win curves. To what degree is still uncertain, but there is little doubt the market value of a win is up this offseason. Additionally, I’ve read several articles that discuss the value of a win being significantly higher to a team that is on the playoff bubble. In terms of the win curve, the Yankees are firmly on the bubble. The estimated market rate for this offseason generally has fallen around $6~7 million per win. If that’s the case, then the Yankees are betting that Tanaka will be an excellent pitcher, roughly worth 3~4 wins. But that is certainly not unattainable. I expect Tanaka to be worth a little more than that, more in the 4~5 win range over the course of his dear. The other factor to take into consideration is that Masahiro Tanaka is operating on a wholly different market than most players. Whether it’s 4 or 7 years, Tanaka’s deal will likely not cover any decline years. The market rate, as calculated, is typically factoring in excellent players as they are nearing or entering their decline phases. With Tanaka, he is arguably more likely to improve as the deal goes on than he is to decline. How that changes the market rate in the eyes of a team (if at all), is uncertain.
Regardless, I think I like the deal for the Yankees. I’m confident that Tanaka will be worth at least market value over the life of his deal, if healthy. That would likely have him trigger the opt out clause, making it a four year deal for the Yankees. For a team that is firmly on the playoff bubble, where every win counts significantly, there are much worse things than a market rate (or even above market rate) deal for a player who is not in his decline phase. Would locking him up for his entire peak be preferable? Certainly. But given the bidding, it’s uncertain if that was a possibility. What is certain is that the Yankees do not need to have Tanaka for 7 years to maximize his value. The Yankees are on the playoff bubble, and most critical spot on the win curve, right now. In the immediate future is when wins are most valuable to the Yankees. A four year, market rate deal is a great deal for the Yankees as they stand right now.
We won’t be certain of how this deal shakes out for a few years, but as I think about it I think my initial reaction was incorrect. The number seems high, and the opt out clause seems less than ideal, but there are far more factors to consider. That opinion may change, but for now I think it’s a deal favorable to both parties.There is the potential with Tanaka for significant upside and significant downside, but barring a disastrous turn of events the Yankees did just fine. They locked up the (likely) best starter on the market, to a deal that I expect to be no worse than market rate and possibly much better, without having to give up a draft pick as compensation, and they did it while being on the most critical point on the win curve. There will be a lot of talk about Tanaka being unproven, and the fifth highest paid player in baseball as an unproven commodity, etc. But in my opinion, Tanaka is operating on a different market, and every other pitcher has just as much likelihood to implode. To sum up my current opinions as succinctly as possible: The Yankees needs wins now and in the near future to compete, Tanaka will likely be a very good player, paying market rate will not cost the Yankees, and he didn’t cost a draft pick. Once the sticker shock wears off, the Yankees did well. Now, I look forward as the time nears where we stop guessing and analyzing, and finally watch Tanaka play in the MLB.