General Red Sox

A (Lukewarm) Defense of the Daisuke Matsuzaka Deal

We mean season in the "brief period of time" sense, as opposed to the baseball season. At any rate, Daisuke Matsuzaka will have Tommy John surgery, all but ending his career with the Red Sox (he likely won't return until halfway through next year, the final one of his contract).

Almost immediately, Justin Bopp at Beyond the Box Score opines: "… further confirmation that the Daisuke contract is one of their worst decisions ever."

Now, this is obviously wrong in a number of ways, not least because the Sox in their history have made so many horrible decisions both on and off the field that Matsuzaka isn't even close to the top.

From trading Tris Speaker to letting Ed Barrow leave to become GM of the Yankees to commencing the fire sale to New York shortly thereafter to Tom Yawkey's refusal to integrate the club until he was the last owner standing to the Sparky Lyle trade to forgetting to mail Carlton Fisk a contract to the Jeff Bagwell trade to lowballing Roger Clemens, the Sox pre-Epstein made some horrific personnel moves. And this doesn't count the boneheaded hiring of boneheaded or past-their-prime managers like McCarthy, Higgins, Zimmer, McNamara, (Jimy) Williams and Little, nor does it count the horrific on-field decisions these managers made to cost the Sox playoff appearances, pennants and championships in 1948, 1949, 1978, 1986, 2001 and 2003, among other years I'm surely forgetting. 

Finally, Matsuzaka's contract itself is not actually any worse than some of Theo Epstein's stinkers from years past. If he never pitches another season for Boston, the Sox will have paid Matsuzaka $52 million for 10.4 wins, according to Fangraphs. That's exactly $5 million per win, which is right in line with what teams are paying for value these days. According to Fangraphs, the Sox received $44 million in value, again assuming Matsuzaka never throws another pitch for them. Does anyone doubt John Henry's getting at least $8 million in insurance money for Matsuzaka's lost season. Notwithstanding the insurance money, an $8 million gap in value would be less than the Red Sox paid Julio Lugo to play for someone else in 2010, and is exactly what the Sox paid Edgar Renteria to play elsewhere for three seasons (on top of the $2 million gap between his salary and performance for the season he played in Boston.

Comparing Daisuke to Lugo and Renteria isn't doing him any favors, but unlike those two players, he was actually worth his salary in three of his five seasons thus far, at least according to Fangraphs. But Fangraphs looks at peripheral stats and ignores actual runs allowed in determining its WAR totals. Baseball-Reference pegs Matsuzaka a win less, mostly because he allowed a lot of runs with decent peripherals when he pitched in 2010. Either way, Matsuzaka had two seasons where he was unquestionably worth his contract, which is more than can be said for Lugo or Renteria, and one of those seasons was a three-win rookie campaign in a season when the Sox won the division by two games, followed by a postseason in which he won Game 7 of the ALCS and Game 3 of the World Series. Those wins are easily worth far more than the rate calculated by Fangraphs.

So the contract: Not great, but not horrible. Certainly not "one of their worst decisions ever," unless "their" is referring to Theo Epstein and John Henry, in which case still I wouldn't put it anywhere close to the twin shortstop debacles, and Mike Cameron and John Lackey currently have the privilege of being ranked above Matsuzaka's contract, as well. I'd view it more in line with the Hanley Ramirez-Josh Beckett trade: defensible, led to some fantastic results, not sure if it was worth the cost.

Now, Justin is likely making the common mistake of lumping the posting fee in with the contract; the contract itself was more than reasonable for a pitcher of Matsuzaka's caliber and pedigree, while the posting fee was audacious (some would say outrageous). But there are considerations that ameliorate the cost of the posting fee. First, the cost didn't have to come out of the Red Sox' budget, which means Henry could have scrounged behind his couch cushions for Benjamins (not Amelie, we hope) to pay it. So unlike a traditional $103 million contract, the Sox as a ballclub aren't necessarily hamstrung by the expense.

Likewise, we don't know how much return on the investment the Sox were expecting for that initial outlay, nor how much they received. If the Matsuzaka signing paved the way for the Hideki Okajima signing, then the Sox certainly received more benefit than we would initially credit. Likewise, there's some evidence Junichi Tazawa also followed that path because of the Sox' highly publicized success in 2007 with two Japanese pitching stars, and Tazawa still has promise as he recovers from his own Tommy John surgery. Then there's the Japan-Boston connection. Did the Sox receive anything close to $51 million in ad revenue out of having Matsuzaka on their team in those early years of the deal? Probably not, but they certainly received something, and we don't know what it is.

Finally, there is the nearly unquantifiable notion that the Matsuzaka posting fee/signing energized a fanbase reeling from the 2006 debacle. We all remember those days, right? Following Henry's plane from California to Boston, late-night posts on YFSF, SOSH and elsewhere, etc. It was a crazy month, one that undoubtedly led to renewed enthusiasm for the 2007 Sox and the consequent ticket and merchandise sales, though the extent to which these benefited the Sox above what the market would have been is extremely difficult to tease out (especially since merch sales are split among all 30 teams).

I think it's safe to say John Henry did not get his money's worth for everything he spent on Daisuke Matsuzaka; the Red Sox ballclub clearly hasn't received the full value of his contract in on-field performance (though a combination of performance and insurance may actually make it a wash, if not a slight gain). But the Sox received two great seasons, won a World Series with him and opened a door to a nation of baseball fanatics hitherto focused principally on just the Mariners and Yankees. 

Would the Sox make the deal again? It's hard to say, which I guess means it's not the unqualified disaster many are likely to describe it as.

29 replies on “A (Lukewarm) Defense of the Daisuke Matsuzaka Deal”

That said, I also had grown tired of the way Matsuzaka carried himself on and off the mound, never mind the horribly inconsistent results, and, strictly in a baseball sense, am not terribly sad to see him go, if indeed he is gone.

If only for the amazing month of waiting for Daisuke and the deadline craziness that energized this site the Matsuzaka move was worth it. And 2007 will never be forgotten, Dice-K threw 200+ innings if I remember correctly and was an important piece of a championship. For that I can’t really say much of anything, and it is even harder to comment on the finances without knowing what kind of insurance the Sox may have had on the deal or how it was leveraged. It is quite possible that Henry financed the posting fee, so the cost wasn’t even hard cash outlay, banks were lending on anything way back in the mid/late oughts.
That said, he was more of a disappointment than not, though I found him very interesting as a pitcher. A total oddity.

If these reports are true and his season is, in fact, over and he doesn’t come back in time for next season, then 4 of the 6 years of the contract will have been bad to awful injury-riddled seasons. I don’t know. That’s a bad deal for most clubs. I’m really not trying to crap on your more nuanced posts, but isn’t this a trees from the forest situation? He’s not been cheap, there has been an additional opportunity cost of having him penciled in the rotation, there is the fact that his not having lived up to expectations for most of the deal has probably led the Sox to signing expensive and risky starting pitching deals(I’m thinking of Lackey). And again, there is the fact that he has given the Sox close to nothing and maybe worse for four of the six years.
What’s interesting to me is to see how this affects the Yu Darvish posting, if it does at all. For one thing, will the Sox be in on the bidding? Will the Yanks? Does Darvish hate Dice-K right now?

All reasonable points Nick. But I simply won’t blame Daisuke or his failings for why Theo signed Lackey. Sorry. He doesn’t deserve that one.

Now that Daisuke’s career is over in Boston and he proved to be an epic failure (as compared to his billing) even with a slightly above league average ERA+. Remember he was the best pitcha evah and had a famous gyroball.
SO, I am just wondering if YFSF will be having a Haiku contest, so we can all say sayonora to Daisuke and his world famous gyroball.
Seriously, that Haiku contest several years ago screamed arrogance, so can his failure be celebrated with the same degree of fanfare?

“…It is quite possible that Henry financed the posting fee, so the cost wasn’t even hard cash outlay, banks were lending on anything way back in the mid/late oughts….”
gee sf, i financed my last vehicle purchase…felt like “hard cash” to me…sure was “hard” to make the payment every month…in fact, i wound up paying twice the purchase price by financing…
don’t hold your breath joe stewart…

Why are you guys visibly more bitter than us?
The haiku contest was one of the great fun things at this site. If you are unable to recognize that as entertainment and only as “arrogant” you are a joyless excuse for a fan.
And dc, you surely understand the idea of equity investment and leverage versus cash investment,, no? ROI totally differs dependent on how cash is used. This isn’t any excuse-making, but it becomes murkier discussing how bad an investment Dice-K was for Henry without knowing more of this information, in particular the posting fee. And it is silly to proclaim with any certainty how bad these contracts are for any team without knowing more about how these deals are structured or insured. We really can primarily talk about baseball performance.

The contest was a lot of fun. I just reread it and it really brought out the best in a lot of the readers here. And by the way, I would say there were probably more Yanks fans who contributed haikus than Sox fans. Part of that has to do with differences in literacy rates between the two fan bases, but it also had maybe something to do with being a non-arrogant, fun thing.

The Sox invested $103 million in the pursuit and securing of Dice-K. And I’m not talking about adding every little silly expense like airfare here. I’m talking about the amount they chose to bid for the right to speak with him. Whether the 50 or so per cent of that 103 million which went toward the posting fee came out of funds that their ownership would have spent on other baseball expenses or out of spare change would be interesting to know. But to simply ignore it on the assumption that it came from some other funds is something only a fan of the team would do. I understand if you want to say that the posting fee shouldn’t be lumped in when calculating the team payroll for 2007, but when calculating the investment that was made in Dice-K and whether it was worth it, I don’t think it is a “common error” to include it. It certainly is no more disingenuous to include it than it is to simply discount it altogether on the assumption that it came from some other funds.
Having said that, any investment that brings a world championship is pretty hard to argue against, which is why I assume many sf’s will be no less concerned with the value they got from Dice-K than the net value that came out of the wash on the Beckett-Ramirez deal. And the ancillary benefits of positioning the Sox franchise in the Japanese market, which are probably pretty impossible to quantify but are certainly real, are clearly part of the value reaped by the Sox.
I do wonder if Henry/Epstein would say – in private – that they would do it again knowing what they know now. My guess is “no”, but I of course have no clue.

My only point is that I have no idea what the posting fee constitutes. I just don’t. So we can look at it in raw terms (since we don’t know the machinations of how it was spent or accounted for), and in those terms it is obviously a lot of money and not fair value for the services provided. They overbid (since nobody else was within $20M) but we’d be having the same conversation if they spent $31M and won the posting battle by a nickel.
I am adamant that we don’t as fans have any idea about the finances; they are totally opaque and an analysis, by virtue of this, is cursory and thin. We don’t know if Henry used the posting fee to offset tax burden on profits. We don’t know how he might have been able to write it off. We don’t know if he put $5M in equity for a low-interest $50M loan and is amortizing the posting fee. He may very well have just sent a wire for $50M out of the team account, but I bet he didn’t.
It isn’t so black and white as “he just blew $50M”, just as with any large contract or investment in general. That’s my real point.
As for the fact that the Sox won the title his first year, then got a really excellent year out of him in the second, well this is easily forgotten by a lot of people. I certainly won’t be one to say “hey, look at the great things Dice-K did for the Sox!” but I am more ambivalent about things than those who want to cry bloody murder about the money involved. I don’t imagine that there was much discussion about the cash being spent on Bernie Williams the last couple of years of his monster deal even though he stunk: he earned that money in the first few years of the deal and it wasn’t really a constriction on anything. The Sox could afford what they paid, quite clearly, so what is all the animus (not from you, but from a lot of SFs in fact) about? Don’t we like it when our teams try to acquire talent and do it within what seem to be their means? Of course I hope the money confusion doesn’t stop us from assessing performance objectively (the performance was up and down, hot and cold, enigmatic, sometimes interesting and fantastic, more often infuriating and disappointing, but the numbers also show there was a good amount of value).
Personally I find the financial stuff pretty interesting, unfortunately it is so cryptic that the resulting analysis ends up, to me, being a touch superficial.

“…And dc, you surely understand the idea of equity investment and leverage versus cash investment,, no?…”
nice try sf…try to make me look foolish when it’s you that’s trying to advance a blatantly bogus concept…
…what IH said…
we went round and round when you guys posted for and signed dice.k about the accounting implications so there’s no need to rehash that here…as IH pointed out, we conceded the fact that posting fees are not part of payroll, and through some hocus pocus with the books, the sox probably made it look like it wasn’t paid out of baseball operations budgets…we even conceded that it might be offset somewhat by the gushing revenue stream from tapping into the japanese market…but at the end of day, the sox cut a $51m check to his former team…i’m assuming that whatever financial institution henry borrowed it from expects it to be paid back, and i’ll even bet they don’t care which pocket he pulls it out of…as for whether it was a bad deal for the sox, i say no…it was a good deal…it’s a shame how part of it has turned out, especially for the player, but any deal that helps deliver a championship is a good one…i can’t throw any stones when i consider how much the yankees have spent on arod and burnout to help deliver that 1 championship in ’09…it’s all good, but it’s really annoying when you guys try to spin that “but it’s not real money” crap…

If we don’t know anything, why do we have to assume some really complicated stuff instead of just assuming that the posting fee came out of the Red Sox organization, plain and simple?
Honestly, that’s the most reasonable assumption, and one we should be going with. I don’t see any reason why we should assume the Red Sox did some really clever thing with the money that doesn’t hurt them at all.
I mean, can we now assign certain Yankee salaries to the Steinbrenners dipping into their horse racing proceeds? Is this the kind of logic-land we’re going to here?

I wish this would stop being reduced to black and white. It’s not. That’s the point. I like speculative discussions, in fact I love them. But let’s not get authoritarian here, ok?
We can always use Occam’s Razor, and in a lot of cases that makes sense. I am not sure it does here, but am willing to understand why people use it. I think Henry, who is a financial animal, dealt with the financing in more sophisticated fashion to mitigate risk. But I could, of course, be totally wrong.
I think the Sox and Yankees are in another league with complexity, the entities both team and network are all wrapped up, one owning the other or part of the other, it’s a mess. This makes things confusing, and I am not willing to assume they just cut a $50M check. Or that they had no insurance, or that they haven’t figured out a way to hedge, or amortize, etc. Why is this crazy to think? It’s not about explaining away the move in baseball or financial terms, it’s about understanding that these moves aren’t so cut and dry. I refuse to apologize for this curiosity of mine.

I don’t see any reason why we should assume the Red Sox did some really clever thing with the money that doesn’t hurt them at all.
Where is the evidence that it “hurt them”? If this is your certainty, can you point to some clear evidence that the Sox and their finances were harmed by the posting fee?
The evidence is actually more the opposite, that regardless of what they spent they weren’t harmed in the slightest, they haven’t stopped spending on free agents, they haven’t contracted their scouting budget, they haven’t avoided bonuses for draftees, they haven’t stopped trading for players, etc. Where is the “harm” you assume was inflicted by this?
So there a few (and many more) scenarios:
1. The Sox are in sound financial shape, that the risk (and/or loss) engendered by the Matsuzaka expenditure was not significant.
2. The Sox are in sound financial shape, they were able to hedge the Matsuzaka outlay through other means/methods/policies.
3. The Sox are damaged, in worse financial shape than their actions indicate, due to losses from moves like this one.
4. The Sox are breaking even, the Matsuzaka move cost them the chance at an even higher payroll (should they have chosen to deploy the money elsewhere and not to Dice-K and Seibu).
Honestly, how do we know what it is? If we want to apply Occam’s Razor, I’d go with #1 or #2, at least based on the team’s transactions as of late.

“…I am not willing to assume they just cut a $50M check…”
i can’t remember exactly, but my recollection is that this is exactly how it was reported…i could look it up if it’s worth it…
“…Or that they had no insurance, or that they haven’t figured out a way to hedge, or amortize, etc….”
nobody said that at all sf, so you can stop trying to make us look like unsophisticated knuckle-draggers…at the end of the day even with all the accounting hocus pocus, it’s still real money that was transferred from somewhere in the sox ownership’s web of finances to dice.k’s former team…i’m not sure how you can argue against that point…can i start saying jeter isn’t being paid real money when his being overpaid comes up again inevitably because of some mystical yankee financial maneuvering?…

i’m not sure how you can argue against that point
Because I am not arguing THAT point. I am arguing that the harm that the posting fee did the Sox is completely unquantifiable, so the $50M “number” is pretty much just available to sensationalize what the real implications of the finances were on the team. It’s an easy thing to latch on to, that $51.111111M number, but the implications of having spent it are completely elusive.
Everyone (not just YFs, but a lot of SFs too) want to yell “what a waste, what an overpay!”, but this is a baseball-observed reaction, not a sound financially analyzed reaction. I am not willing to cop to knowing anything. That’s not an excuse – the baseball results are middling at best, and the money attached sure seems like too much for what they got. But I think there are a lot of complications. And per my last post, the actions of the team belie any harm done by this outlay of money.

well my point was never whether or not it hurt them financially…like you say, probably not…and i did say i thought it was a good deal…the point i’m making, and i disagree that you can’t boil it down to its simplest terms, is that it’s $51m spent for something that can’t be spent on something else, regardless of the source of that money…maybe henry found a bunch of loose change in his sofa…who cares?…now if you can point to something tangible, like the sox inked a $51m marketing firm to peddle dice.k bobbleheads which would offset the posting fee, then i’ll go away…not really ;)

I guess one way to look at it is to say that the Dice-K money came from an enormous pool of discretionary income that the Sox had set aside. So if we keep this situation oversimplified (I will indulge for a moment, somewhat unwillingly!), that means that they cannot spend that discretionary income elsewhere. Fine.
But there is ample evidence that the Sox have enough discretionary income that this move didn’t harm them in any way. So then what is the yelling about re: Dice and the posting fee? That SFs haven’t been hard enough on Matsuzaka or the amount the Sox spent on him? There’s been a lot of that in Boston, frankly; he was hardly loved, even liked, and a lot of that stemmed from the money spent and the perceptions of what he should have done for that money.

“…(I will indulge for a moment, somewhat unwillingly!)…”
…hahaha, welcome to the dark-side of over-simplification ;)
look at it this way, you got a couple of very good seasons and a championship…i’d say money well spent…he was no carl pavano after all…having said that, i do understand the other side of it too, and why the deal is now being criticized…i don’t agree with it, but i kind of understand it…

So if we assume that the Sox have $50M piles of cash laying around, then there was never, ever, any valid defense for complaining about Yankee payroll, and John Henry/Larry Lucchino are as bad hyporitical buffoons as you’ll find in the sport (of course, plenty people think this already, so you could be on to something SF!).
If we assume this, then the only reason the Sox never spent as much as the Yankees was that they cared more about profits than winning.

I think there is a subtext to this conversation that is actually the primary issue for many YFs. And it has nothign to do in fact with the assesment of whether Dicce-K was WORTH the money or whether this was ultimately a good or bad deal. I think it has to do with a long-running historical narrative from lots of non-Yankee fans (including, most prominently, many many Sox fans) that the Yankees “buy” championships, and the sense that many YFs – myself included – have that now that the Sox FO is behaving in much the same way, there is not sufficient acknowledgement of that reality. Indeed, the same people who coin terms like “evil empire” behave in exactly those supposedly “evil” ways, and the Dice-K deal, when you include the $51 million outlay, is one of the primary examples of such behavior.
This is why even while I don’t object to(indeed, I agree with) the argument from some sfs that this was on whole a good deal because hey, he contirbuted to a champiponship run, I don’t begrudge YFs for getting digs in on the money spent.
It is less animus fed by a desire to see anyone “admit to” Dice K being a bad deal than it is a desire to see people acknowledge just how much that deal cost, with – admittedly – the not-too-subtle subtext being that lots of YFs don’t want SFs to have their cake and eat it too – i.e. point the “buying-championships” finger at the Yankees while ignoring when the Sox FO does essentially the same thing.
Having said all that, I agree with your fundamental point above SF that the finance conversations are pretty superficial given the number of unknowns for regular fans like all of us on this site. And that this should cut very much in both directions (i.e. if we’re going ot cut one FO slack on this point, we should cut the other the same when assessing their costs).

Andrew and I cross-posted, but I believe his reaction reflects – in a more concise way than mine certainly – exactly what the issue is for many YFs. It really has nothing to do with Dice-K. Indeed, Dice-K could have won 5 Cy Youngs in a row and this issue for YFs would still be there.

My post did come across a little more snarky and antagonistic than was probably necessary. But I agree with IH that the real issue here is that Yankee fans, over the past decade, have constantly been talked-down-to re: the quality of the Sox and Yankee front office. All this talk about ‘inefficient’ and ’embarrassing excess’ of the Yankees and ‘amazing resourcefulness’ and ‘historic ingenuity’ of the Sox, and now we can just pooh-pooh the Sox blowing $51M?
IH is right, you can’t have your cake and eat it too. Although I never quite understood that term. What good is having cake if you can’t eat it? And can you eat it without ever having it in the first place?

All this talk about ‘inefficient’ and ’embarrassing excess’ of the Yankees and ‘amazing resourcefulness’ and ‘historic ingenuity’ of the Sox, and now we can just pooh-pooh the Sox blowing $51M?
Well, it is all relative. ;-)
I think we at this site have done a far better job at recognizing that the “efficient” Sox aren’t entirely efficient. And that Epstein isn’t a “boy wonder” (though he seems to be a very good GM, flaws and all), and that Cashman is also a damn good GM, than the stereotyped generalizing fans described in your posts above. I guess that’s why these kind of discussions can annoy me; most of us who visit and post at this site, though there is normal animus since we are rivals, see through some of the BS narrative that is fed to most fans.
Personally I see a difference between the two teams. But that difference is WAY less different than it was 25, 15 years ago, even 10 years ago or 5 years ago. But I am biased, of course, though with a small crack of an open mind.

Per my post above, I think the smart teams (and there may only be a couple, right?!) would fit into my numbered item (2):
The Sox are in sound financial shape, they were able to hedge the Matsuzaka outlay through other means/methods/policies.
So to go back, it is my opinion that the smart teams are able to cleverly hedge their deals to mitigate risk. That is not the same as creating an equivalency where two teams “can spend whatever they want and to claim otherwise is inconsistent and hypocrisy”.
And this isn’t Sox-centric: it may be that the Yankees can spend even more than the Sox due to the simple fact that they are smarter with how they hedge their deals and mitigate risk. Rafael Soriano notwithstanding.

Is there anyone, besides SFs, who doesn’t consider the posting fee part of the layout for DM? It seems so absurd that only a fan could try to argue it.
Without the $51.11M they don’t ever sign the deal. Couldn’t that money have been spent elsewhere by the team? It became not only an opportunity cost but then a sunk cost.
Didn’t they once refuse to take on A-Rod – the greatest shortstop who ever lived – over a few million? Where were the deep pockets then? Or the financial brilliance?
I agree with others. This topic gets under my skin in Sox territory because the team was consistently portrayed as the little engine that could. Yet, even the 2004 was almost a complete construction with dollars (and a few trades and lucky signings). I remember when they “dug deep” for Jeremy Giambi at first.
If we add up all of the failed Sox signings of the Epstein Era, we’re now approaching almost $500M. The $100M to DM is a big part of that. He was going to be an “Ace” by all accounts. He was nothing close. Burnett has had more of an impact for the Yankees and he cost less. That’s simply amazing to me because he sucks.

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