Should the Texas Rangers re-sign Yu Darvish?

Since joining the Texas Rangers in 2012, Yu Darvish has been an enigma. When he’s healthy, he’s one of the most electric pitchers in the game. However, he hasn’t put together a healthy season since 2013.

With free agency and a huge payday looming, the Rangers have a tough decision to make. Do they hold onto their ace and let him usher in a new stadium in 2021? Or, do they play it safe and avoid a potential disaster, by letting him walk?

Payroll situation

Heading into the 2017 season the Rangers have the sixth highest payroll in baseball at $167,560,000. This marks the sixth season in a row the Rangers have had a top-ten total payroll. This is to be expected from a team chasing a World Series title with multiple All-Stars on the roster.

However, financial turmoil could be right around the corner. The Rangers already have $93,750,000 on-the-books for 2018, with only four-players having guaranteed contracts. They also have an $11 million option on Mike Napoli; a $6 million option on Martin Perez; and a $4 million option on Tony Barnette. If all of these are executed, the Rangers would have $114,750,000 in contracts before arbitration and contract renewals.

Given past spending, this would leave the Rangers with about $50-million to fill in the other 21-spots on the roster. Let’s try to predict how much money the Rangers will have left after in-house spending.

Pitching

Let’s assume the Rangers pick up Martin Perez’s option and let both Napoli and Barnette walk. This puts the Rangers 2018 payroll at $107,500,000 with a $2.5 million buyout on Napoli’s contract and a $250,000 buyout on Barnette’s.

Sam Dyson and the Rangers avoided arbitration by agreeing to a $3,520,000 deal this off-season. Let’s assume he makes $4-million in 2018. Let’s assume both Jake Diekaman and Jeremy Jeffress settle for $3 million; Matt Bush makes $1 million; both Alex Claudio and Dario Alvarez make $500,000; and Keone Kela settles for $2 million. This takes care of the bulk of the bullpen with the payroll at $118,750,000 leaving roughly $40 million to spend.

With Darvish, Andrew Cashner, and Tyson Ross all on the market, Cole Hamels and Martin Perez are the only pieces from the 2017 starting rotation guaranteed to return. Let’s assume both Ross and Cashner return to form in 2017 and expect a big payday. With retaining Darvish in mind, the Rangers let them walk leaving three-open spaces in the rotation. One of those spots will be taken by youngster Yohander Mendez who will make $500,000 in 2018 leaving still around $40 million left to spend with two-rotation spots left open.

Positional Players

With superstar catcher Jonathan Lucroy also hitting the market, the Rangers are left at a crossroads. Let’s assume the Rangers pass on re-signing Lucroy, who’s looking for an annual salary of $20 million. With Lucroy gone, the Rangers turn back to Robinson Chirinos as a stop-gap until prospect Jose Trevino is ready. In his final year of arbitration, Chirinos settles for $2.5 million while Brett Nicholas makes $500,000 in the back-up role. With $3 million invested in the backstops, the payroll is up to $122,250,000 with close to $45 million left to spend.

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The infield is where things begin to become complicated. Voiding Napoli’s option leaves an opening at first-base. Let’s assume Joey Gallo fills in the roll, and in his last year of team control makes $750,000.

Rougned Odor will be entering his first year of arbitration. Let’s assume Odor has another good season in 2017. The Rangers want to ink their young second-baseman long-term and agree to a multi-year deal averaging $12 million. Utility man Jurikson Profar settles for $2 million. Elvis Andrus and Adrian Beltre already have third-base and shortstop locked down, but backup Hanser Alberto makes $500,000. With Odor’s extension and other infield spending, the payroll is now up to $136,750,000 with around $30 million to spend.

Shin-Soo Choo is the only outfielder with a guaranteed contract but let’s assume with the departure of Napoli, Choo becomes the full-time DH. The Rangers let center-fielder Carlos Gomez walk. Nomar Mazara takes over in right field getting paid $500,000 in his final year of team control. Delino DeShields makes $2 million in his first year of arbitration and takes over in center. Left field is taken over by Ryan Rua making $1 million with a young prospect making the minimum $500,000 as the fourth outfielder. With the Rangers going the cheap route in the outfield, only spending $3,500,000 the payroll now sits at $140,250,000.

Money left for possible extension

Let’s assume with several high-profile free agents hitting the market, ownership gives Jon Daniels the green-light so spend a franchise record $170,000,000. This would leave the Rangers $30 million to spend.

With holes in the rotation, a questionable outfield, and below-average catchers the Rangers will have to allocate some of that money elsewhere. Say the Rangers find a veteran outfielder to fill the fourth outfielder role for cheap and bring in another Tyson Ross type pitcher to fill the bottom of the rotation.

This would finally leave the Rangers with roughly $20 million to spend on Yu Darvish. However, with the recent pitching market, is that enough?

What will Darvish’s contract look like?

The free-agent market has turned into the lottery for starting pitchers. David Price set a record with the highest average annual salary at $31,000,000 after signing with the Red Sox in the 2015 off-season. That record was broken four days later by Zack Grienke, who’s earning an absurd $34,416,667 per season.

The market is so thirsty for top of the rotation arms, that middle of the road guys are getting paid like All-Stars. Mike Leake’s career 4.00 ERA earned him $16 million per season. Wei-Yin Chen’s career ERA+ of 104, which is hovering around average, also earned him $16 million per season.

With the 2016 off-season providing a drought of starting pitching talent, marque free agents Yu Darvish and Jake Arrieta figure to make a huge amount of money. But just how much can an injury prone Yu Darvish get?

The cost of premier pitching

Darvish will become the next in a long line of recent All-Star starting pitchers to break the bank in free agency. If he can stay healthy, he’s worth it.

Of course, the risk is him staying healthy. His last full season was in 2013 when he pitched 209.2 innings. Since, he pitched 144.1 innings in 2014 before being shut down for the season, missed all of 2015, and only pitched 100.1 innings in 2016.

When Yu Darvish is on the mound, he’s nothing short of electric. In his two-full season’s he’s finished top-ten in CY Young voting, finishing second in 2013. He finished first in strikeouts in 2013 with 277 and struck out 132 batters in 100.1 innings in 2016.

While his time in 2016 was limited, it showed that despite injuries, Darvish is still one of the best pitchers in baseball. His 11.9 strikeouts per nine innings was the second highest of his career and his 2.78 walks per nine innings were the lowest of his career.

So does Darvish deserve Grienke and Price money? When healthy, he’s in the same tier as those guys. But Stephen Strasburg’s extension might be a preview of what’s to come for Darvish.

The Stephen Strasburg effect

The baseball world was shocked when Stephen Strasburg signed his seven-year $175 million extension last May. The Scott Boras client was poised to be the most sought after free agent in the off-season.

Both Darvish and Strasburg are strikeout machines with some of the most electric stuff in baseball. Both have had struggles throughout their careers staying healthy. Strasburg’s last season was in 2014 where he struck out an NL-leading 242 batters with a 2.94 FIP. Darvish’s last full season saw him strike out 277 with a 2.84 FIP.

While the pitching styles are both very similar, their contracts could soon be similar as well. Strasburg will average $25 million a season over the next four years with an opt-out option in both 2019 and 2020.

The interesting aspect of Strasburg’s contract is the way the money is allocated. While the contract averages out to $25-million a season, Strasburg will actually earn $15 million a year through 2024 where he will then be paid $10 million a year until 2030. So while the contracts ends in 2024, the Nationals will be paying Strasburg well after the contract expires.

Allocating the money this way allows the Nationals to preserve current funds while also being able to keep their All-Star pitcher. This strategy could help the Rangers use their limited funds on keeping Darvish while also addressing other needs.

However, there are a couple of reasons why this type of contract could become a nightmare.

The opt-out clause

Opt-out clauses have taken over the MLB. Nearly every recent superstar contract features one and teams are being held hostage by them.

Yoenis Cespedes, Justin Upton, Jason Heyward, and Johnny Cueto all signed some of the biggest contracts heading into 2016. All of which, had opt-out clauses. We saw Cespedes execute his opt-out this past off-season signing a new four-year $110 million deal.

Opt-outs give players full financial stability in case of injury or poor performance, while also giving them the chance to leave for more money if they perform well. While this is great for the players, it puts the team in a lose-lose situation.

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Texas Rangers

Strasburg will be 28 years old at the start of 2017, when his new extension kicks in. He will be 30 and 31 in 2019 and 2020, when he can possibly opt-out. Darvish will be 31 at the start of his new extension. This will make it more difficult for Darvish to successfully negotiate an opt-out clause.

Perhaps, Zack Grienke’s record-setting contract makes for a better comparison. Grienke was 32 in the first year of his new deal. Without an opt-out, $62.5 million of Grienkes $206.5 million contract will be deferred to 2022-2026, after the contract expires.

Predicting Yu Darvish’s contract

So with recent top of the rotation pitching contracts in mind, let’s try to predict how much extending Yu Darvish will cost the Rangers.

Let’s assume because of age and injury history Darvish agrees to six years with no opt-out clause. Because of that injury history, the Rangers manage to sneak an incentive based option for the final sixth year of the contract. The option would be executed if Darvish pitches 180+ innings in the fifth year of the deal.

Given their limited payroll flexibility the Rangers would either have to backload the deal or defer a large amount of the contract after the contract expires. With that in mind, here’s what a Yu Darvish extension could look like.

Six years / $168,000,000
Incentive based option for sixth year (180+ innings pitched in fifth year)
No opt-outs
$60 million differed to 2024-2027
$18 million annually during contract
$15 million differed annually from 2024-2027

This would make Darvish the sixth highest paid player in baseball, all while the Rangers keep some payroll flexibility. Of course, $168 million is a lot to spend over a 10 year span on an oft-injured pitcher. Is he worth it?

So, should the Rangers pay Yu Darvish?

In a utopian baseball society, Darvish pitched 200+ innings a year, leading the league in strikeouts and consistently putting up CY Young numbers. However, we don’t live in a utopian baseball society.

A healthy 2017 from Darvish won’t hide the fact that he failed to put together a single healthy season over a three-year stretch from 2014-2016. Should we really expect Darvish to stay healthy over the course of a six-year contract?

With the Rangers already having big time money locked up in aging players, it would be wise to save the money and invest it elsewhere. Odor will be arbitration eligible. There will be holes in the rotation, behind the plate, first base and in the outfield.

The Rangers just won’t have the flexibility to put all their marbles in a basket that often breaks. While a healthy Yu Darvish is one of the most exciting pitchers to watch in baseball, the con’s of a long-term deal outweigh the pro’s.

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