I’ve written a lot of articles about Masahiro Tanaka. Scouting report, here. First season projection, here. Tanaka’s deadline to sign with a MLB team is Friday, January 24th at 5:00 PM. Yesterday, we learned that ‘at least five teams have submitted formal offers, nearly all of them worth more than $100 million over six years.’ Based on Japanese reports, which haven’t been totally reliable, those five teams were the Yankees, Dodgers, Cubs, Diamondbacks, and White Sox. Tanaka gave teams a ‘self-imposed’ deadline of January 16th to submit offers.
On the surface, giving at least $100 million to pitcher who has never thrown a MLB pitch is insane. However, as we’ve seen with most free agent contracts so far, teams are flush with cash and ready to spend big on impact players. Tanaka, who is only 25-years-old and was dominant last season in JPL play, is the type of player MLB teams won’t shy away from. I’ll walk through a valuation exercise to give you an idea of what teams are expecting and some comps to consider.
So far, we’ve heard a few different contract offers float around, but the consensus seems to be that most teams are willing to spend between $100 to $120 million over six years to ink Tanaka. If we do a simple valuation exercise that individual player wins are worth $6 million and inflation is expected to rise by five percent per year, I’ll show conservative and optimistic outlooks for Tanaka. Based on this article, I used a WAR of at least 4.0 :
Table 1: Conservative
Table 2: Optimistic
Last season, the following pitchers had WARs between 4.0 and 5.0, which is starting point for the valuation:
Table 3: Potential Comps
Wins and losses are more arbitrary and have less predictive value, but let’s use Tanaka’s fellow countrymen as a measuring stick to see whether its reasonable to assume Tanaka falls into this group of pitchers:
Masahiro Tanaka (25-years-old when entering MLB)
- Japan: 1.44 ERA, 8.7 K/9, 1.1 BB/9, 0.3 HR/9
- MLB: TBD
Yu Darvish (25-years-old)
- Japan: 1.64 ERA, 9.7 K/9, 1.9 BB/9, 0.3 HR/9
- MLB: 3.34 ERA, 11.2 K/9, 3.2 BB/9, 1.5 HR/9
Daisuke Matsuzaka (26-years-old)
- Japan: 2.40 ERA, 9.1 K/9, 2.1 BB/9, 0.5 HR/9
- MLB: 4.00 ERA, 8.5 K/9, 4.3 BB/9, 1.0 HR/9
Hiroki Kuroda (33-years-old)
- Japan: 2.86 ERA, 6.7 K/9, 1.8 BB/9, 0.8 HR/9
- MLB: 3.60 ERA, 6.6 K/9, 2.9 BB/9, 1.7 HR/9
As shown, the strikeout rates seem to translate over from JPL to MLB, which is an encouraging sign. Home run rates definitely spiked by at least 0.5 HR/9, so we should expect Tanaka to surrender more than 0.8 HR/9. Same story for ERA. Tanaka registering a 3.20 ERA in his first full season is optimistic.
Based on the information shown in Tables 1 and 2, teams are expecting Tanaka to return at least 17 to 19 wins over the course of six seasons. To put this into perspective, over the last six seasons, only six pitchers have return total WARs of 30.0 and over. Those pitchers are Cliff Lee (37.1), Justin Verlander (37), CC Sabathia (32.1), Felix Hernandez (31.8), Roy Halladay (30.0), and Zack Greinke (30.0). I’ll expand the sample size to include pitchers who have returned between 18 and 22 WAR.
|James Shields||TB, KC||28-33||1343||82||66||3.68||7.8||1.1||21.9|
|Max Scherzer||ARI, DET||24-29||1019||73||45||3.67||9.4||1.0||21.5|
|Josh Johnson||MIA, TOR||24-29||813||46||35||3.38||8.4||0.7||19.2|
|Mark Buerhle||CWS, MIA||29-34||1253||79||67||3.90||5.2||1.0||19.1|
|Hiroki Kuroda||LAD, NYY||33-38||1120||68||70||3.40||6.8||0.9||19.1|
|Ricky Nolasco||MIA, LAD||25-30||1151||77||62||4.30||7.6||1.0||19|
|Anibal Sanchez*||MIA, DET||25-29||906||50||55||3.59||8.4||0.8||18.8|
|Ryan Dempster||CHC, BOS||31-36||1168||73||58||3.86||8.2||1.0||18.2|
David Price and Anibal Sanchez only have four full years of data in the sample set, so they probably aren’t the best comps. Outside of Josh Johnson, this grouping proves that durability, a modest ERA, strikeout, and home run rate will provide the biggest returns on investments. We’re looking at a split between AL and NL pitchers, so there isn’t a bias towards the NL.
In terms of contracts, Matt Cain, at Age 27, signed a six-year, $127.5 million extension in 2012. Cain was coming off a Top-8 Cy Young finish in 2011 and turned in a Top-6 Cy Young finish in 2012. Zack Greinke, who didn’t appear on this table, posted a WAR of 30.0 over the last season seasons. In early 2013, Grienke signed a six-year extension that put his total contract at $159 million. Greinke, the 2009 Cy Young Award winner, has been used as a benchmark for Tanaka’s contract negotiations. Any team that uses Greinke’s performance as a benchmark for Tanaka is foolish.
After completing this valuation exercise, in the context of a rumor six-year deal, teams are expecting between 1,050 and 1,200 innings, an ERA between 3.40 and 3.70, a strike out rate between 7.5 and 8.0, and less than one home run per nine innings. Over the course of a six-year contract, these numbers appear very reasonable. However, I think it’s safe to assume that Tanaka will not come over and dominate right away. Alike Yu Darvish, he may need a year or so to acclimate himself to the MLB. Expect some struggles early on, but I think he should easily hit value on a contract in the six-year, $120 million range. Anything over that valuation may difficult to derive value from.