Yu Darvish, The Win Curve, And The Genius Of The Contract

Yu Darvish is now officially divorced, so, uh, look for him when you're out partying I guess.It began with rumblings that Yu Darvish was seeking something in the vicinity of C.J. Wilson money. Then, it was that he was looking for a five-year deal with an average annual value near $20 million. Then, it was talk of Darvish's people wanting at least $65 million over five years. And three months ago, a six-man collective of agents and executives predicted that Darvish would ultimately pull down a five- or six-year deal worth between $72-75 million. In the waning hours before the deadline, I finally decided that something along the lines of six years and $70 million made the most sense from the standpoint of satiating all involved parties.

Value-wise, the Rangers beat all of those projections. Some were admittedly easier to beat than others, but they beat them all in the end. They arguably even beat the Daisuke Matsuzaka contractual benchmark, in the sense that the amount of money needed to purchase one additional win through the open market has risen over the last five years -- though to be certain, this deal wasn't negotiated by means of the open market -- and in the sense that Darvish, by virtue of his stratospheric upside, has the potential to create more in the way of surplus value than Matsuzaka was projected to create at the outset of his own deal. On the grand spectrum of potential outcomes, this contract is about as close to the highly favorable end of the spectrum as any of us could have possibly hoped for.

There still appears to be some amount of disagreement between the national and local media types regarding the exact structure of the Darvish contract, but here is what I've pieced together thus far:

● The contract spans five guaranteed years and includes the potential for a sixth-year player option (which would allow Darvish the opportunity to opt out of his deal after five years or stick around for the full duration of the contract); however, this sixth-year player option can reportedly only be triggered by "multiple elite-level finishes [in the Cy Young balloting]," meaning that in order for Darvish to acquire the ability to opt out of his deal after five years, he would need to pitch at a very-to-exceptionally high level over the course of those five years (during which time he would no doubt produce gobs of surplus value for the Rangers); 

● The contract reportedly guarantees Darvish $56 million over those six years, with another $4 million taking the form of roster bonuses -- bringing the total commitment to that oft-cited $60 million figure -- and another lump sum being disbursed if Darvish should win a Cy Young Award; it's still not clear whether this CYA-related lump sum is the potential $10 million in bonus money that was cited in multiple Yahoo! Sports reports, but it's possible that they are both one and the same; 

● The $51.7 million posting fee is now payable in full to Hokkaido within five business days, but will be evenly apportioned such that only $8.6 million will count against the team's payroll during each of the six seasons that Darvish is expected to be under contract; and 

● The contract does not include any deferred money, which conforms with the Rangers' current averseness to deferred-money deals (which probably owes to the sting of owing guys like Alex Rodriguez nine figures in deferred money years after they've left town; as far as I'm aware, Michael Young is now the only current Ranger with deferred money built into his contract); 

[In case I haven't made it sufficiently clear yet, I really dig this deal on the surface; I'll wait until the year-by-year breakdown leaks before passing final initial judgment, though.]

With all of this in mind, the key figure for the total commitment is $111.7 million over six years, or a somewhat lesser amount -- probably somewhere between $95-100 million -- over five years in the event that Darvish turns out to be trans-Pacific dynamite, pitches like a monster, and bolts after the 2016 season. What makes this number especially interesting is that Dan Szymborski's median projection for Darvish had him producing 22.4 wins above replacement over the next five years, which, assuming a uniform annual growth rate of three percent over that period, also had Darvish's open-market worth being ... $112 million.

The only thing throwing a wrench into what would otherwise be a near-perfect match between contract and expected value is the inclusion of that sixth year; if Darvish does produce at an All-Star-to-elite level as Dan projects, he'll blow past that $112 million mark in the fifth or sixth year. Granted, the expected value itself is a wrench, because this is a high-beta player with a lot more variance in the range of expected outcomes than we see with most major league pitchers -- but, still the overarching point stands.

The other big things worth keeping in mind are the additional dollars created on the marketing front (Maury Brown previously speculated that additional sponsorship money alone could run into $20-30 million territory, while Evan Grant now speculates that the Rangers might only see $1 million extra per season from greater competition for in-stadium advertising), the abundant potential for increased ticket sales (adding wins does, after all, drive attendance), the fact that the Rangers will recoup a portion of their $51.7 million posting fee in the form of a tax break (meaning this isn't a true $111.7 million outlay) ... and a very positive impact on the Rangers' position relative to the win curve.

Ah, yes, the win curve. Embrace the win curve, because the win curve undoubtedly played a material role in compelling the Rangers to cross the finish line on Darvish. If the Rangers were projected to be downright lousy (<75 wins) or insanely good (96> wins) throughout the foreseeable future, making the single largest financial commitment to any right-handed pitcher in baseball history wouldn't make nearly as much sense, because adding Darvish wouldn't have a significant impact on the Rangers' post-season odds either way. Instead, we have the Rangers right in the thick of things in terms of post-season probability, with comparatively little separating them and the Angels.

That's where adding a couple of wins can make all of the difference. That's where it makes the most sense to pull the trigger on a signing like this. And if there's still any modicum of hope that the Rangers might find a deal that's mutually beneficial to both themselves and Prince Fielder, it's their position on the win curve that's going to help feed their desire to get something figured out.

One chapter ends, and the next begins. We just have to wait 2½ more months to get to it.