SBD/January 22, 2014/Franchises

Yankees Win Tanaka Sweepstakes, Agree To $155M Contract With Japanese Star

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Yankees' signing of Tanaka will all but assure that team will continue paying luxury tax
The Yankees today announced they have agreed to a seven-year, $155M contract with Japanese P Masahiro Tanaka. The agreement includes an opt-out clause for Tanaka after the fourth year (Mult.). In N.Y., Joel Sherman reports the Yankees also "have to pay" the $20M posting fee to Tanaka's former team, the Japanese Pacific League Rakuten Eagles. The team's total outlay comes to $175M, and "though the posting fee is not subject to the luxury tax, the contract itself assures the Yankees’ three-year goal to get under" the $189M luxury-tax threshold in '14 is "now all but impossible." The team decided the projected savings of $100M over three years for getting under the $189M threshold was "not as important to the overall health of the organization as doing all they could to be contenders" in '14. The Yankees "if nothing else ... just made their club more interesting, which should help at the box office and with TV ratings -- two other vital areas where they plummeted last year" (NYPOST.com, 1/22). Also in N.Y., David Waldstein notes Yankees Managing General Partner Hal Steinbrenner "always said that luxury tax relief was more of a goal than a mandate, and would not interfere with the objective of putting a championship-caliber team on the field." The Yankees have committed $438M this offseason in free-agent contracts to Tanaka, C Brian McCann, CF Jacoby Ellsbury and RF Carlos Beltran "one year after failing to make the playoffs." Several other teams, including the Dodgers, Cubs, White Sox and D-Backs, were bidding on Tanaka, but the Yankees "were committed to outspending them all because starting pitching was a noted weakness on the team" (NYTIMES.com, 1/22).

HIGH PRICE TAG: ESPN.com reports Tanaka will receive the "highest contract for an international free agent and the fifth-largest deal for a pitcher, trailing only those" of Clayton Kershaw (Dodgers), Justin Verlander (Tigers), Felix Hernandez (Mariners) and CC Sabathia (Yankees) (ESPN.com, 1/22). ESPN's Buster Olney said, "To put that number in perspective, that's what Zack Greinke got, in that range, after winning a Cy Young Award." Olney noted he did not "necessarily think that the Alex Rodriguez suspension and the fact that they won't necessarily have to pay him in 2014 was a big factor because I think the Yankees were going to be aggressive either way" ("SportsCenter," ESPN, 1/22). SI.com's Albert Chen writes Tanaka's $155M deal "might seem insane, but given the market, the new economics of the game, New York's need for quality starting pitching and Tanaka's talent, it might not be insane at all" (SI.com, 1/22).

FAR EAST MOVEMENT: Tanaka becomes the third Japanese player on the Yankees' roster, joining RF Ichiro Suzuki and P Hiroki Kuroda, causing MLB Network's Harold Reynolds to say the club has "just taken in a whole country in Japan." Reynolds: "If I live in Japan, I'm watching the Yankees. They're on all the time (in Japan), and you've got to look at the financial repercusions of that." The Post's Sherman noted the Yankees are "always looking to globalize this brand" ("Hot Stove," MLB Network, 1/22).
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