Let’s Make Some Guesses at Structure of Darvish’s Contract

Photo of Evan Altman Evan AltmanFebruary 11, 2018

If there’s one big drawback to Yu Darvish signing with the Cubs, it’s that I don’t get to write two posts a day about how he might sign with the Cubs. Seriously, you’d be amazed how much people dig rumors and such. But since I need to slowly ween myself off of the speculation fix that has had me feeling dopesick since Saturday afternoon, I figured I’d get into some talk about the specifics of the contract Darvish signed.

We know most of the major points of the deal, the most obvious of which is that it’s for $126 million over six years. It’s also got up to $24 million in incentives, plus an opt-out and a degree of no-trade protection. How exactly those things are all structured, however, is still somewhat unknown. Take a look at the series of tweets that establish the basic framework of the new contract.

Okay, cool, that gives us a nice baseline from which to start. I’m going to make some educated guesses as to the remaining specifics of the deal so everyone can point and laugh at me when the real numbers are actually revealed.

Base contract

2018: $28M (full no-trade)
2019: $28M (full no-trade)
Player option
2020: $20M (partial no-trade)
2021: $20M (partial no-trade)
2022: $15M (partial no-trade)
2023: $15M (full no-trade via 5/10 rights)

Whatever the numbers actually come out to be, it stands to reason that the contract will be heavily front-loaded. How the money is allocated over time doesn’t matter for tax purposes, since it’s $21 million AAV no matter what. But by shifting the big money early, the Cubs not only pay more for what should theoretically be Darvish’s best years, they increase the likelihood that he’ll opt out.

But wait, isn’t that a bad thing? Why no, it’s actually the best thing. Should Darvish perform well enough to earn a new contract worth more than $17.5 million AAV over four years, the Cubs got some excellent performances from him and are then off the hook for his age-33 seasons and beyond. Even if he chooses to remain with the team, his raw payroll number drops enough that it’s not a drag on the raw payroll.

Now we turn to the matter of incentives, which are going to be difficult to achieve. As we see in Bob Nightengale’s tweet above, Darvish could earn as much as $12 million if he wins the Cy Young in each of the next six seasons, which is impossible. If he does, however, hell yeah. And he can still earn up to $6 million just by finishing in the top five each year, which, also hell yeah.

But that still leaves us with some more potential money out there, so let’s see if we can figure out how Darvish can max the deal out.

Incentives

Cy Young win – $2 million
Cy Young 2nd-5th – $1 million
200 IP – $2 million

Darvish hasn’t pitched more than 200 innings since 2013, his second MLB season, when he notched 209.2 innings for Texas. He did go over that mark in four of his last five seasons in Japan, though, so it’s far from unprecedented. Even so, it’s going to take a series of excellent efforts to reach those bonuses.

No-trade

This stuff is laid out pretty clearly in the tweets above, but it bears repeating here. Jason Heyward’s NTC goes from full to partial next offseason, assuming he opts back into his deal with the Cubs. The same is apparently true for Darvish, who will have full veto power for his first two seasons in Chicago. If and when he opts back into the deal, however, those rights are peeled back a bit.

And like Heyward, the partial no-trade business isn’t permanent. Should Darvish stick with the Cubs for five years, he’ll activate his 10/5 rights (10 years in league, five with same team) and will see his full no-trade power reinstated.

While the final details could certainly end up looking a little different, the Cubs figure to come out of this looking pretty good. They’re going to pay premium dollars for what should theoretically be the most productive seasons of the deal, after which they either watch Darvish walk for another big offer or they welcome him back at lower salary figures.

And because the competitive balance tax only cares about the average of the overall deal, the Cubs are on the hook for a mere $21 million AAV. That seems like a lot for us regular working-class folks, but it’s far less than anyone expected for the market’s top pitcher back when free agency opened some three years ago (or at least it feels that way).

Even if the incentives push that average value higher in a given year, it’ll be well worth it. After all, the Cubs will gladly kick in extra money for a guy who pitches 200 innings and/or finishes top five in Cy Young voting.

Now it’s your turn, dear reader. I want you to make your predictions for Darvish’s contract details, including annual salary figures, incentives, and so forth. I’ll even make it a contest. The person who comes closest to the actual details will win a Cubs Insider “Theo Is My President” t-shirt. In addition to being pretty darn comfortable, these shirts have received a thumbs-up from the man himself and are excellent conversation pieces.

So guess away, friends.

***Update***

According to Jon Heyman, the rewards for top 5 Cy Young finishes are the only escalators in the contract. But if that’s the case, the max value would only be $138 million and not the $150 million that has been widely reported. Unless the awards are actually higher, like $4 million for a win and then stair-step levels down for finishing 2-5.

***Update #2***

Wow, I was way off…

This really appears to be structured in a way to keep Darvish around, all things considered. He actually gets more in third and fourth years than in the second year, which is mildly surprising to me. And the full NTC going away going away after fourth year means there’s really only one year of partial trade availability.

This confirms that the opt-out follows the second year, though it also confirms what we’ve heard about the incentives. As such, it would appear that the max is $138 million and not the $150 million that was initially reported. If, that is, the Cy Young finishes are truly the only escalators.

Photo of Evan Altman Evan AltmanFebruary 11, 2018
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