Let’s Make Some Guesses at Structure of Darvish’s Contract
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.
Clarification: Darvish six-year guarantee with #Cubs is $126M with ability to get to $150M, according to sources.
— Ken Rosenthal (@Ken_Rosenthal) February 10, 2018
Go to bed in Korea. Wake up and Yu Darvish is a Cub. I can add this bit of news: Darvish’s opt-out comes after the second season of his six-year, $126 million contract, source familiar with it tells Yahoo Sports. @Ken_Rosenthal had the deal first.
— Jeff Passan (@JeffPassan) February 10, 2018
Yu Darvish’s $126 million deal with #Cubs includes escalators throughout that will pay him an extra $2 million a year by winning the Cy Young award and $1 million a year finishing 2-5th. He has almost full no trade clause. He can opt out after 2019. Should be official by Tuesday
— Bob Nightengale (@BNightengale) February 11, 2018
source: yu darvish has a no-trade clause like jason heyward's. full no-trade for part of the deal, then switches to 12-team list. #cubs
— Jon Heyman (@JonHeyman) February 11, 2018
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.
2018: $28M (full no-trade)
2019: $28M (full no-trade)
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.
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.
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.
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.
darvish has escalators based on winning the cy young or finishing 2nd-5th but no other performance incentives in $126M, 6-year deal. #cubs
— Jon Heyman (@JonHeyman) February 12, 2018
Wow, I was way off…
Yu Darvish $126 million contract: $25 million in 2018; $20M in 2019; $22 M in 2020; $22 M in 2021; $19 million in 2022 and $18 million in 2023 He also has full no trade clause in first four years of deal. #Cubs
— Bob Nightengale (@BNightengale) February 13, 2018
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.
Yu Darvish has opt out after 2019 and Cy Young escalators that pay him $2 million for winning Cy Young and $1 million for finishing 2-5th. #Cubs
— Bob Nightengale (@BNightengale) February 13, 2018
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.