FanPost

How you pay for Yu Darvish




Darvish is going to be a beast, but a lot of people assume the cost will be too much. However, because of the posting fee, you can structure the payout to not be excessive at all.

Let's just say Darvish wants $78M over 6 years, or $13M per year. And let's say the posting fee ends up being around $60M. $138M is a lot to give to someone who hasn't thrown an inning of ML ball, but here is how you mitigate the cost.

Step 1, David Glass sets up a company called Darvish Inc. He funds the company with $60M, the amount of the posting fee. Then he loans the money to the Royals to pay for the fee.

Step 2, Darvish Inc. creates bonds to be put onto the market. The payouts will be once a year for 20 years and will carry a 3% annual interest. The annual bond payout will be equal to the annual payment from the Royals to Darvish Inc. for the loan.

Step 3, the Royals pay the $60M posting fee to the Nippon Ham fighters to negotiate with Darvish.

Step 4, as part of the contract, Yu Darvish is given the first 6 years worth of bonds, or $19.99M, leaving the Royals to pay him $58.01M over 6 years in salary.

Step 5, the remaining bonds are sold on the market for $42M (or Glass could keep them himself/sell to the next owner as part of the purchase of the franchise), which cost the Royals $63.04M over the course of the remaining 20 years.

Glass would lose $18M on this deal, but if 10000 extra fans came to each of Darvish's 16 homes starts at $40 per fan, you would make that up in under 3 years. Not to mention anything in Japanese advertising.

The Royals only pay $78M over the course of Darvish's contract, and Darvish gets the money he's looking for.

The extra $3.69M to $5.42M from 2018-2031 will not hurt as much as there will be a new TV deal at some point, and inflation in total salary, or the stadium naming deal could be allocated towards this.

The contract is doable.

This FanPost was written by a member of the Royals Review community. It does not necessarily reflect the views of the editors and writers of this site.

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