When I first saw that the Red Sox bid $51.1 million merely for the right to talk to Daisuke Matsuzaka, I was quite frankly flabbergasted. And that’s not a word I use very often, because it sounds so silly, but it’s the only word that applies. But the more I think about it, the more I feel that the higher the bid the better for the Red Sox, as long as they are willing to have some balls in their negotiations with Scott Boras.
Boras is infamous for being able to squeeze every last dollar from even the cagiest of GMs. But this time he may have gotten himself into one of the worst situations, leverage-wise, of his long and illustrious GM-bilking career.
Think about it. Who has the most leverage in this situation? Clearly and by far the Red Sox. Sure they have bid the outrageous sum of 51.1 million, but they are in no way on the hook to pay it. If at any time Scott Boras starts getting uppity, the Red Sox can simply threaten to walk away from the table, and they pay nothing.
What is more, even if the Red Sox don’t sign Matsuzaka, they have already won something substantial – they denied his services to the Yankees for at least one full year. And if they don’t sign him, they’ve denied him to the Yankees at no cost whatsoever to themselves.
Thirdly, the very ridiculousness of the huge posting bid gives the Red Sox leverage against Boras, in that they can point to the ridiculous amount they are already paying and appeal to the fact that they couldn’t possibly pay what Boras wants for Matsuzaka. Boras is already talking like the posting fee should have no effect on Matsuzaka’s contract, but he would be utterly naive and a borderline moron if he didn’t know inside that the hugeness of the Sox bid is going to come out of Matsuzaka’s and his own pockets in the end.
Many writers have pointed out that the Red Sox will be under huge pressure to negotiate in good faith for Matsuzaka’s services so they don’t embarrass America and Major League Baseball by looking like it was all just a ploy to block the Yankees and they had no real interest. I agree with this assessment. But given the size of their bid, the Red Sox will not have a very hard time proving that they negotiated in good faith, because whatever offer they make, they will be able to combine it with the huge posting fee they would have paid to show an insane average annual value that they supposedly offered.
Let’s take an example. Let’s say the Red Sox make their final offer at one of the lowest prices we can imagine they will – say, 3 years, at $9 million per year (by comparison, this is Matt Morris money). Sure, at the end of the day Scott Boras might walk away in outrage, but if the Red Sox hold firm, they can say to all the world that they offered in total an average annual value of $26 million per year. And who could really say that the Red Sox didn’t negotiate in good faith?
This is the true genius of the high bid: the Red Sox want a five year deal, but they know that Boras wants only a three year deal. And yet, the more Boras pushes for a three year deal, the much less the Red Sox will have to pay for those three years because when the bid is added, the average annual value will look ridiculous.
Fourthly, the Red Sox have huge leverage because of the way Japanese society works and the amount of money Seibu stands to lose. Whereas the Red Sox can just walk away from the table as long as they can establish that they tried in good faith, Matsuzaka cannot walk away under any circumstances, because if he doesn’t sign, Seibu’s haul goes from 6 billion yen to zilch.
While from an American perspective it would seem perfectly acceptable for Matsuzaka to walk away from the table, go back and play for Seibu for another year, become a true free agent and probably sign a bigger contract while Seibu gets nothing, from a Japanese perspective, he would be seen as the ultimate traitor, letting his team down and depriving it of money, and if he did go back to Japan for another season he would face incredible ostracization and disdain for his perceived selfishness. Because in Japan, loyalty to your organization is seen as paramount, and right now Matsuzaka is still a member of the Seibu Lions so it is seen as his duty to his team to not be too selfish and make sure they get their 6 billion yen.
Finally, there is the genius of the way the Red Sox are dodging the luxury tax. Insofar as Red Sox can manage it so they pay Matsuzaka proportionately less in light of their huge posting fee bid, then it would be in their interests to bid the highest bid possible. If they pay $50 million in luxury-tax-free dollars to the Lions and $30 million over 3 years to Matsuzaka, that is far less money over all than if they paid $30 million to the Lions and $50 million over 3 years to Matsuzaka, because that would be $20 million extra that would subject to a 40 percent luxury tax or whatever the rate is now.
Essentially, by bidding so high, the Red Sox put themselves in a win-win-win situation – if they only get Matsuzaka for three years, they will pay him less per year. If they have to pay more, they will get him for more years. If they have to walk away, they still blocked the Yankees. Plus it will be much harder for Matsuzaka to walk away than for the Red Sox to, as long as they put up a big total average annual value, which the ridonkulously high bid makes it even easier for them to do.
$51.1 million is crazy? Crazy like a fox is what I say.
(Of course, this all depends on the Red Sox being very un-Red-Sox-like and not caring at all what the media says and standing up to Boras. If they are smart, they will realize that they have all the leverage and they will just say no to Boras’s inevitably outrageous demands. If they are pussies, as usual, and worry what the media will say, they will get taken for a very bumpy ride on the Scott Boras Steamroller-O’-Fun).