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Matsuzaka contract - tick tock tick tock


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#101 Zupcik

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Posted 14 November 2006 - 06:01 PM

Couldn't the Red Sox claim they had no knowledge of such a deal?  If I'm the Red Sox I would stay as far away from this as possible.  They can assume there will be money changing hands but as soon as they get involved they've got mud on their hands.

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You would weigh all of the facts and circumstances to determine if the transaction: (1) $42 million to Seibu; (2) $10 million from Seibu to Matsuzaka, was in reality (1) $32 million to Seibu; and (2) $10 million from the Red Sox to Matsuzaka. This is determination is why there are lawyers and courts.

#102 xjack


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Posted 14 November 2006 - 06:02 PM

Couldn't the Red Sox claim they had no knowledge of such a deal? If I'm the Red Sox I would stay as far away from this as possible. They can assume there will be money changing hands but as soon as they get involved they've got blood on their hands.

This would require some sort of collusion from Boras as well, as I'm pretty sure that the standard MLB contract lays out agent compensation. If the contract calls for Boras to collect a way above-market commission (10%), it would be hard for the Sox to argue that they didn't know what was going on.

#103 SoxsFans

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Posted 14 November 2006 - 06:05 PM

Couldn't the Red Sox claim they had no knowledge of such a deal?  If I'm the Red Sox I would stay as far away from this as possible.  They can assume there will be money changing hands but as soon as they get involved that's tampering.

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Wow now John Henry is going to get into Money Laundering?

Lol, I know the point you are trying to make, I just don't agree with it. It's shady business anyway you slice it and I would expect that when the posting system was layed out, this type of thing was accounted for.

#104 wade boggs chicken dinner


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Posted 14 November 2006 - 06:11 PM

While this is all interesting speculation, I really don't think a "kickback" could happen to any substantial degree for these reasons:

(1) the posting rules give Selig the power oversee the bidding and contract process "to ensure that they not been undermined in any manner." Selig has broad power to take "other actions that he may deem appropriate and in the best interests of baseball," including voiding the bid OR the player contract.

(2) Seibu is a publically traded company. This company has to report its finances. I would think that it would be pretty difficult for Seibu to hide a $10M payment to DM.

(3) The basic agreement has a very broad definition of salary. To the extent the commissioner's office knew about the payment, it would have to declare it part of salary just for the luxury tax implications (as mentioned above).

(4) I'm not a tax lawyer, but if any part of the payment occurred while DM was residing in the US, he would at minimum (I would assume) report the income.

#105 SaveBooFerriss


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Posted 14 November 2006 - 06:13 PM

Quick answer:  If it's US source income the recipient is liable for the income tax.  The Red Sox would have normal employer withholding obligations with respect to the income (e.g., FICA, FUTA, etc.) plus if the recipient is a foreign person (using the IRC definition) there may be additional withholding obligations.  The Red Sox could face penalties if they don't fulfill these withholding obligations, but the payment itself would not be the problem.

By the way, any lurking potential foreign employees of the Red Sox should seek competent tax advice.

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Well, the FICA & FUTA is likely not a problem because he probably has other sources that exceed the taxable wage base.

#106 Zupcik

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Posted 14 November 2006 - 06:17 PM

Well, the FICA & FUTA is likely not a problem because he probably has other sources that exceed the taxable wage base.

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Medicare (part of FICA) is not subject to a cap.

#107 Guest_Corsi Combover_*

Posted 15 November 2006 - 03:10 AM

Asked whether Roy Oswalt's five-year, $70 million deal would be a starting point for discussions, Boras said that it would not because Oswalt wasn't a free-agent.


Source: http://www.boston.co..._thinks_so.html

Does this mean that Boras is expecting Matsuzaka to sign a deal in excess of $70M?

#108 E5 Yaz


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Posted 15 November 2006 - 03:11 AM

Source: http://www.boston.co..._thinks_so.html

Does this mean that Boras is expecting Matsuzaka to sign a deal in excess of $70M?

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i think more likely it means he was $15M a year for 3 years

#109 Noah

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Posted 15 November 2006 - 03:42 AM

Source: http://www.boston.co..._thinks_so.html

Does this mean that Boras is expecting Matsuzaka to sign a deal in excess of $70M?

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Matsuzaka isn't a free agent either. What's his point?

#110 dnramo

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Posted 15 November 2006 - 06:49 AM

Oh, absolutely... it's sitting out there as an obvious option. I just can't see the folks overseeing this deal allowing it, since they represent entire league(s). Like I said, if Seibu is only going to net $30 million at the end of the day, wouldn't they have been better off accepting a $38 million from the Mets that would require no kick-back? The Mets might be willing to meet Boras's demands without asking for money back.

How in the world would one determine the "winner" of the bidding process if there's nothing in place to ensure that the winning number really means anything?

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Matsuzaka is still an employee of the Seibu Lions. Why would an employer paying an employee to do something within the scope of his employment be considered corrupt? More importantly, why would either league interfere with it? I don't see anything remotely dishonest/unethical/untoward about this. If you do, perhaps you should reevaluate your biases.

Your assumption that some other team that bid less would be more generous at the negotiating table is also specious. If Omar was going to be soft at the negotiating table with the player, why be frugal with the team?

Also, I may be wrong on this (haven't read the posting agreement, only read a few descriptions of the process), but if the Red Sox and Matsuzaka fail to reach an agreement at the end of the 30-day negotiating period the Seibu Lions can accept the next highest bid or repost him, should he agree. No doubt the second-highest bidder will be whispering sweet nothings into Seibu's ear to reduce the ammount, if any, Seibu is willing to contribute in order to get the contract signed.

#111 OttoC


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Posted 15 November 2006 - 07:59 AM

Also, I may be wrong on this (haven't read the posting agreement, only read a few descriptions of the process), but if the Red Sox and Matsuzaka fail to reach an agreement at the end of the 30-day negotiating period the Seibu Lions can accept the next highest bid or repost him, should he agree. No doubt the second-highest bidder will be whispering sweet nothings into Seibu's ear to reduce the ammount, if any, Seibu is willing to contribute in order to get the contract signed.

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If the Red Sox, bargaining in good faith, fail to reach a contract agreement with Matsuzaka, he will remain property of the Seibu Lions and the posting fee will be returned to Boston, Matsuzaka will not be eligible for posting again until November 1, 2007. MLB's Commissioner could use his power's to revoke the Red Sox's rights to negotiate if he found conduct that was not consistent with the Agreement or that he deemed was not in the best interests of baseball. His actions could include awarding negotiations rights to the second-highest bidder.

Such an event would be interesting from an academic point of view because there is nothing spelled out about the posting fee in that case. Would Selig tell Seibu that they now have to settle for $38M? Would he tell the second-placce bidders that they now had to pony up an additional $13M to match the accepted bid? Perhaps the only equitable thing would be for the second-place bidder to refund to Boston the difference between their respective bids with Boston remaining on the hook for the $51M.

There would be a lot of wailing, gnashing of teeth, and lawsuits if any of these scenarios came into play.

#112 86spike


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Posted 15 November 2006 - 08:47 AM

Hasn't this discussion on mythical 'kickbacks' played itself out for now?


Back to the contract.

With the amount of the postign bid revelaed to be an astronomical $51M+, how does that effect the negotiations?

I would think this should allow the Sox to begin the yearly salary proposals at a much lower threshhold since they can (rightly) point out to Boras how much they've already spent in this endeavor. Obviously Boras will argue the other side fo that coin and say that the Sox are already in for a ton so they know how valuable DM is and need to pay him accordingly.

So who wins out?

I still feel like the correct amount of money to pay him (at least in his first 2-3 seasons) is something like $8M per year. The length of the deal reached will be interesting since the Sox need to consider the value of a short deal if he bombs (so they will either be rid of him sooner or can trade him more easily) and the risk of him being great and then holding them hostage in arbitration for 3 years.

I'd love to be a fly on the wall for this series of meetings!

#113 tywebb444

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Posted 15 November 2006 - 09:57 AM

Found this:

http://www.philly.co...ts/16017778.htm


Some general managers speculate that Boras will seek only a 1-year deal with Matsuzaka, reasoning that he'll want to leave more money in the system for his other clients. In that scenario, the Red Sox would still control his rights for 6years and simply negotiate a new deal from season to season.


Someone please tell me this is a joke. I just don't see the Sox bidding 51.1 million to then have a new deal done every year for him. Lets give the reporter credit for coming with a new angle, no matter how ridiculous it is.

On top of the fact that Matsuzaka would probably be very pleased that Boras wants to leave more money on the table for his other clients. I'm sure that's why he signed with him

Edited by tywebb444, 15 November 2006 - 09:58 AM.


#114 amarshal2

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Posted 15 November 2006 - 10:01 AM

Found this:

http://www.philly.co...ts/16017778.htm
Someone please tell me this is a joke.  I just don't see the Sox bidding 51.1 million to then have a new deal done every year for him.  Lets give the reporter credit for coming with a new angle, no matter how ridiculous it is. 

On top of the fact that Matsuzaka would probably be very pleased that Boras wants to leave more money on the table for his other clients.  I'm sure that's why he signed with him

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I think I can safely say this is inacurate. Boras is not going to put his client in a situation where he has to stay healthy to be assured a salary. It's almost shocking that the author would print this.

Edited by amarshal2, 15 November 2006 - 10:02 AM.


#115 TheBenzingerGame


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Posted 15 November 2006 - 10:01 AM

Also, I may be wrong on this (haven't read the posting agreement, only read a few descriptions of the process), but if the Red Sox and Matsuzaka fail to reach an agreement at the end of the 30-day negotiating period the Seibu Lions can accept the next highest bid or repost him, should he agree. No doubt the second-highest bidder will be whispering sweet nothings into Seibu's ear to reduce the ammount, if any, Seibu is willing to contribute in order to get the contract signed.

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No, you're completely wrong about this. If there's no agreement with the Sox, DM goes back to Japan for another year. There's no "reposting" or "sliding down to the second best bid." So before you accuse me of having "biases" because I -- and many others here -- grasp that this process is part of a larger whole, maybe you should read up on it a bit.

#116 DamonasaNomad

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Posted 15 November 2006 - 10:10 AM

There would be a lot of wailing, gnashing of teeth, and lawsuits if any of these scenarios came into play.

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Which is why they won't.

My prediction: Matsu signs one day before the deadline for 4-5 years at $10 million a year. Seibu and the Sox finalize an agreement for collaboration on future unspecified "marketing rights and opportunities."

How much money Seibu actually winds up banking is the subject of much rumor, but no one except Boras and the Sox ever knows for sure.

#117 amarshal2

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Posted 15 November 2006 - 11:09 AM

Wow now John Henry is going to get into Money Laundering?  

Lol, I know the point you are trying to make, I just don't agree with it.  It's shady business anyway you slice it and I would expect that when the posting system was layed out, this type of thing was accounted for.

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No, that's not even close to what I was suggesting...

Anyways, credible baseball sources give this life. I'm just trying to explain the motivating factors, not get into discussion about International Tax Law that I know nothing about.

Remember, it's not unprecedented for the Japanese team to kick back part of the posting fee,

Jim Callis's Ask BA

Edited by amarshal2, 15 November 2006 - 11:12 AM.


#118 TheBenzingerGame


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Posted 15 November 2006 - 11:18 AM

Jim Callis's Ask BA

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My favorite part of that article:

He unquestionably would push Jacoby Ellsbury aside for the No. 1 spot on our Red Sox list, and he'd get my vote for No. 1 on the Top 100.



#119 DamonasaNomad

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Posted 15 November 2006 - 11:21 AM

Jim Callis's Ask BA

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So I guess it's my turn:

1. How does Callis know this?

2. This is shady and corrupt.

3. This completely undermines the whole posting process.

4. If this ever got out, Selig would have to hit the Sox with a huge fine and turn their rights to negotiate with Matsu over to the Mets.

5. I refuse to believe that JWH would ever be part of any such shady dealings.

#120 TheBenzingerGame


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Posted 15 November 2006 - 11:22 AM

So I guess it's my turn:

1.  How does Callis know this?

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It sounded to me like he was just going off the same Mariners rumors that started this entire discussion. Not much new there.

#121 PedroKsBambino


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Posted 15 November 2006 - 11:27 AM

So I guess it's my turn:

1. How does Callis know this?

2. This is shady and corrupt.

3. This completely undermines the whole posting process.

4. If this ever got out, Selig would have to hit the Sox with a huge fine and turn their rights to negotiate with Matsu over to the Mets.

5. I refuse to believe that JWH would ever be part of any such shady dealings.


I think the most likely is actually...

6. Everyone involved in the posting process (including MLB, MLBPA, Seibu, and Boras) understands this is part of the deal.

#122 DamonasaNomad

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Posted 15 November 2006 - 11:30 AM

I think the most likely is actually...

6.  Everyone involved in the posting process (including MLB, MLBPA, Seibu, and Boras) understands this is part of the deal.

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Bingo!

I'd take it even one step further:

7. Anyone who has taken a graduate course in business negotiation understands that three-way compromise is part of a three-way negotiation.

#123 xjack


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Posted 15 November 2006 - 11:56 AM

Remember, it's not unprecedented for the Japanese team to kick back part of the posting fee


I have a world of respect for Jim Callis as a baseball writer, but I don't think he's thought this through from a business and legal standpoint.

As I've said before, if Seibu were to kick back part of the posting fee to Matsuzaka, it would amount to the Red Sox essentially shielding a sizable piece of player pay from the luxury tax. There's simply no way the small market teams would allow that.

Moreover, while I'm not a lawyer, I ran all this by my wife, who is. (She's a long-time federal prosecutor.) Matsuzaka could be charged with U.S. tax evasion if he does not report income that is essentially pay from the Red Sox that's been laundered through Seibu. Moreover, if the Red Sox were in on this scheme they could be charged with tax evasion (if they don't do proper withholding) or even fraud and conspiracy, depending on the specifics.

Edited by xjack, 15 November 2006 - 11:57 AM.


#124 NortheasternPJ

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Posted 15 November 2006 - 11:59 AM

As I've said before, if Seibu were to kick back part of the posting fee to Matsuzaka, it would amount to the Red Sox essentially shielding a sizable piece of player pay from the luxury tax. There's simply no way the small market teams would allow that.


If Seibu makes a $10 million investment in NESN to ensure their fans are able to watch all of Matsuzaka's games, its not for the player. It may impact revenue sharing but not luxury tax.

#125 PedroKsBambino


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Posted 15 November 2006 - 12:00 PM

I would think the money goes from Seibu to the Red Sox, not to Matsuzaka. And I think that's what Callis was suggesting as well.

They have hypothetical expsoure under anti-kickback laws but those lightly to unenforced in the US and since it's essentially impossible to subpoena things in Japan, it's a pretty hopeless situation for a prosecutor.

I also would guess it's a 'marketing partnership' or some such thing rather than a straight-out kickback. I agree that the Red Sox aren't very likely to take the equivalent of a paper bag full of cash out of this.

This is part of how business is done in a lot of the world. Obviously I have no idea if it will happen here, but it wouldn't shock me if a corporate partnership with money going from Seibu to the Red Sox is a part of the larger situation.

Edited by PedroKsBambino, 15 November 2006 - 12:06 PM.


#126 bowiac


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Posted 15 November 2006 - 12:02 PM

I think you guys are reading a bit too much into an off the cuff comment by Callis, which could(and likely is) no more than a retelling of old rumors. He's not Gammons - he doesn't drop major scoops on the public in a nonchalant manner like that.

#127 xjack


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Posted 15 November 2006 - 12:12 PM

If the kickback was to the Red Sox, not the player, that just makes it even harder for the Red Sox to claim they were in the dark. The legal issues wouldn't be as problematic, but the ethics still suck.

it would still subvert the entire posting process. Selig would have to take action. Otherwise, the next time a top player is posted, what's to stop the Yankees from working out a secret deal with the Japanese club that in which Yankees will bid $100 million, but $90 million will come back to the Yankees in the form of a wire transfer from a Grand Cayman bank?

Edited by xjack, 15 November 2006 - 12:13 PM.


#128 PedroKsBambino


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Posted 15 November 2006 - 12:24 PM

No argument there; I think both the posting process and the 'marketing partnerships' associated with these player movements are shady business. I just think everyone in the discussion is more or less on the same page on them, too.

The tax issues are interesting, and one can theorize that there could be some tax issues which may have arisen for Seattle or NYY from past posting/Japanese marketing partnership situations. Or not.

#129 DamonasaNomad

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Posted 15 November 2006 - 12:36 PM

This is part of how business is done in a lot of the world.

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Damn, PKB, where were you yesterday? I could've used some support in this thread.

I completely agree with the above statement, as long as we agree that the United States is part of the world.

If the kickback was to the Red Sox, not the player, that just makes it even harder for the Red Sox to  claim they were in the dark. The legal issues wouldn't be as problematic, but the ethics still suck.

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I'd agree with this, as long as it were a blatant "kickback" (money in a paperbag, as someone said). It won't be; it will all be part of a complex business agreement which just happens to provide the Red Sox with many millions of dollars of value. (Seibu agreeing to pay for advertising on NESN's broadcasts seems like a good idea.)

But it also could be handled as a Seibu payment to Matsu of several millions for the exclusive right to market his image in Japan -- making commercials for Ginsu knives, for example.

There are many, many ways this can be handled -- but however it is handled, you can be sure that it will be (a) legal and (b ) never explicitly publicized.

And can we stop using the term "kickback"?

Otherwise, the next time a top player is posted, what's to stop the Yankees from working out a secret deal with the Japanese club that in which Yankees will bid $100 million, but $90 million will come back to the Yankees in the form of a wire transfer from a Grand Cayman bank?

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Because an advanced deal, stated and confirmed, would be illegal. What has been discussed here is simply an unmentioned understanding that all parties, as sophisticated businessmen, know to exist. And if Seibu does not want to go along, they are absolutley welcome to give back the $51 million and get nothing instead. But I promise you that they won't.

#130 TheBenzingerGame


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Posted 15 November 2006 - 12:45 PM

Because an advanced deal, stated and confirmed, would be illegal.  What has been discussed here is simply an unmentioned understanding that all parties, as sophisticated businessmen, know to exist.  And if Seibu does not want to go along, they are absolutley welcome to give back the $51 million and get nothing instead.  But I promise you that they won't.

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So on the one hand, you advocate for the kind of cut-throat "real world" business dealings that -- no doubt -- are part of the world we all live in, in order to maximize self-interest.

On the other hand, there's some sort of handshake agreement that the Seibu Lions would be honor-bound to keep after Matsuzaka's signature is on an MLB contract? If none of this is "explicit," what's to keep Seibu from pocketing the entire $51 million? It's theirs, as soon as DM is signed, backroom deal or no backroom deal.

#131 dnramo

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Posted 15 November 2006 - 12:46 PM

No, you're completely wrong about this. If there's no agreement with the Sox, DM goes back to Japan for another year. There's no "reposting" or "sliding down to the second best bid." So before you accuse me of having "biases" because I -- and many others here -- grasp that this process is part of a larger whole, maybe you should read up on it a bit.

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It seems to me that your posts in this thread demonstrate precisely that you don't understand that this process is "part of a larger whole." You seem bent on ignoring the participants' knowledge of the system in your rush to an imaginary moral highground. Like I said before, examine your biases, as you're flying off the handle here without any apparent reason.

If you have some reason to believe that such payments are disallowed in NPB please explain yourself, but this sort of thing is pretty common in MLB, especially around trade deadline time. The details are a bit different, but plenty of players receive inducements from their current team to agree to play for another team, sometimes paid through the new team in the form of an extension.

There's absolutely nothing morally, ethically, or legally wrong with an employer paying an employee for a service within the agreed upon scope of employment, at least in US law. Japanese law tends to be less restrictive in such matters, though I'd have to track down a Japanese employment lawyer to make sure this specific case was okay in Japan.

All the stuff about IRS reporting and luxury tax is fine, but it's not particularly relevant to this situation.

The Red Sox aren't giving Seibu money to give to Matsuzaka. Any inducement to reach an agreement is already in place, and part of the process. Money paid from Seibu to Matsuzaka isn't from the Red Sox, it is from Seibu. There's no circumvention of the luxury tax because the terms between Matsuzaka and the Red Sox are irrelevant to the negotiation between Matsuzaka and Seibu. If you think about it for 5 seconds you'll realize that no matter what contract the Sox offer, Boras will demand money from Seibu in order to agree to the contract. The Sox have leverage over Matsuzaka, Matsuzaka has leverage over Siebu, and Seibu has leverage over nobody, but a $51M inducement to facilitate a deal. This isn't some last minute surprise wrought by fraud and deception -- it's how the system was set up. All parties involved made their decisions with full knowledge of the system, both of its written and unwritten rules, so no one has any reason to cry foul. (Which is why, from what I can tell, nobody is.)

If the sox turned around and agreed to pay Seibu 5M/y and Seibu agreed to pay Matsuzaka 5M/y but the contract between the Sox and Matsuzaka was for the league minimum, that would be different. It would certainly violate the CBA if the Sox didn't count it towards the luxury tax, and Matsuzaka would have to report it as income in the US. That is a very different dynamic from the one at work here, for the reasons mentioned above.

Thanks for the info on posting, though. I didn't know a player could only be posted once in each Nov->March window. That'd be a good bit of info for BB-ref to add to their page on the subject, as it makes Boras' position much stronger.

#132 amarshal2

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Posted 15 November 2006 - 12:57 PM

Thanks for the info on posting, though. I didn't know a player could only be posted once in each Nov->March window. That'd be a good bit of info for BB-ref to add to their page on the subject, as it makes Boras' position much stronger.

<{POST_SNAPBACK}>


You mean weaker...at least with his negotiations with the Red Sox.

Edited by amarshal2, 15 November 2006 - 12:58 PM.


#133 xjack


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Posted 15 November 2006 - 01:00 PM

I'd agree with this, as long as it were a blatant "kickback" (money in a paperbag, as someone said). It won't be; it will all be part of a complex business agreement which just happens to provide the Red Sox with many millions of dollars of value. (Seibu agreeing to pay for advertising on NESN's broadcasts seems like a good idea.)


I'm sorry, but you're being naive if you think most corporate kickbacks are "money in a paperbag." This isn't the movies, and white collar types aren't that dumb. Kickbacks are hidden -- in exactly the manner you'd have the Red Sox pursue.

#134 TheBenzingerGame


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Posted 15 November 2006 - 01:07 PM

There's absolutely nothing morally, ethically, or legally wrong with an employer paying an employee for a service within the agreed upon scope of employment, at least in US law. Japanese law tends to be less restrictive in such matters, though I'd have to track down a Japanese employment lawyer to make sure this specific case was okay in Japan.

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I'm aware of that. Nothing you mentioned is part of the "larger whole" I've been focusing on. The dynamics of a three-party negotiation are obvious. DaaN is not the only person who's taken a class on this.

My point -- and when this began, it was purely theoretical -- is that this kind of behavior is a blatant market inefficiency within the posting process. Not the contract negotiation process.

If the Mets would be willing to part with $38 million in a posting fee and not demand anything in return -- whether it's in a paper-bag, part of a marketing agreement, or any of the other creative ideas we've seen in this thread -- then both the Mets and Seibu are worse off when the Red Sox win the "bid" with a larger sum, but expect something in return that is more than the difference between the highest and second-highest bid.

Why would MLB and NPB, as representatives of their leagues, stand for this? This is a process that undermines the best interests of every party involved, isn't it? The "larger whole" consists of the two leagues, and their member clubs. That is the point which I, and others, have raised here.

But we're obviously not getting anywhere with this. When can I get my new #18 jersey?

#135 amarshal2

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Posted 15 November 2006 - 01:16 PM

The only party I see regarding the 3 way negotiations who is significantly negatively impacted is the Japanese team.

There's some point to the idea that the Rays won't like it if the Red Sox get the smallest break under the luxury cap, but that seems minimal compared to the dollars they will be getting back through increased International revenue. The large market clubs can't complain because they're playing the same game (so long as there is no communication between the Japanese team and the winning team prior to the bidding). The Japanese teams already have a great system set-up for themselves, so I can see how this would be allowed to happen.

Edited by amarshal2, 15 November 2006 - 01:23 PM.


#136 LahoudOrBillyC


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Posted 15 November 2006 - 01:35 PM

I wanted to take another crack at sorting out my views on the contract. There is a lot of difference of opinion here about whether the posting fee is relevant to the contract discussion. That is a matter of opinion, although I can say this with certainty: it is not relevant *to me*.

See, when I discuss the Red Sox economics, it must be said up front that I don't really care that much about the marketing impact of the deal or how much money Henry and Werner rake in. They were rich yesterday, they are rich today, and they will be rich next year. Baseball is extraordinarily profitable, a secret that the owners are no longer even trying to hide. When I discuss the economics of the team, I care about how big their payroll is going to be, and how to divvy up those resources.

If the payroll is $150M, and they give $15M of that to Matsuzaka, its seems a wise investment to me. I could care less that there was a posting fee associated with it. Its just billionaires reaching behind the couch cushions, finding a wad of cash, and handing it to other billionaires. Its not my money.

If the Red Sox took this money out of their payroll budget, then it suddenly becomes *my* money, in the sense that it reduced their ability to improve the team in other ways.

Is it fair that the Red Sox billionaires are more willing to send some tip money along to Japan than the Twins billionaires are? No, its not fair. Should the CBA attempt to move the posting fee dollars back onto the table? Probably. Until then, I don't care.

Edited by LahoudOrBillyC, 15 November 2006 - 01:36 PM.


#137 dnramo

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Posted 15 November 2006 - 02:08 PM

My point -- and when this began, it was purely theoretical -- is that this kind of behavior is a blatant market inefficiency within the posting process. Not the contract negotiation process.

If the Mets would be willing to part with $38 million in a posting fee and not demand anything in return -- whether it's in a paper-bag, part of a marketing agreement, or any of the other creative ideas we've seen in this thread -- then both the Mets and Seibu are worse off when the Red Sox win the "bid" with a larger sum, but expect something in return that is more than the difference between the highest and second-highest bid.

Why would MLB and NPB, as representatives of their leagues, stand for this? This is a process that undermines the best interests of every party involved, isn't it? The "larger whole" consists of the two leagues, and their member clubs. That is the point which I, and others, have raised here.

But we're obviously not getting anywhere with this. When can I get my new #18 jersey?

<{POST_SNAPBACK}>


I think you may be talking past the rest of this thread, as what I've seen discussed is in no way adverse to either league's interests, and seems to me to be the only way that such an inducement system could operate in a public industry.

1) There is no kickback between the Sox and Seibu. There is no relationship between them at all. If the Sox and Seibu talk and the Sox offer Seibu some added inducement to pass along to Matsuzaka then your criticisms are valid. If the Sox call up Seibu and say they won't agree to any contract without Seibu giving Matsuzaka some money then, to my knowledge, this would also be inappropriate. To the best of my knowledge, this is not the case, nor was it the case with the Ichiro deal. More importantly, the Sox will never be in position to make such a call because of how Boras will run the negotiation. Seibu may offer Matsuzaka an inducement from their own pocket, so that Seibu may in turn receive the inducement from the posting process, but they cannot act as a conduit from the Sox to Matsuzaka. Any additional funds funneled through Seibu would quickly be discovered and reported and all parties involved would get in a lot of trouble, so it's pretty safe to assume that this sort of agreement will not occur.

2) Nothing going on here is new. There's no inefficiency in the posting process because all parties involved know the rules and place/accept their bids within those rules. Any reasonable person would have known that Boras would attempt to extract money from both Seibu and the winning bidder regardless of the bid amount or the teams involved. Inefficiency would require that a party had private information, and such inside information if acquired by some untoward method would be subversive of the system. More importantly, the amount that the Sox offer Matsuzaka is independent of the ransom Boras will extract from Seibu. If Minaya thought Boras wouldn't demand money from Seibu if Minaya just offered more money, he hasn't done his due diligence. If you have a definition of efficiency outside that of economics or finance that you believe applies to this situaton please share it.

3) It's not really a 3-party negotiation. In a 3-party negotiation, each party can offer inducements to the other two. Because the Sox and lions cannot negotiate over inducements between eachother, it's really 2 2-party negotiations. One is between Boras and the Sox to get the best possible offer and the other is between Boras and Seibu to get Matsuzaka to accept whatever the best offer is at the end of the 30th day. The two are related only in that there's a common party. Boras's goal is to extract maximum value from both the Sox and the Lions. Putting the Sox in a position to accept the deal, where the sox would turn around and demand that Seibu give money to Matsuzaka would make no sense -- giving the Sox an offer they would accept ends Boras' leverage with both parties.


If I'm reading you right, you're asserting the criminality/fraudulency of a transfer between the Sox and the Lions outside of the posting process with the purpose of refunding part of the posting fee to the Sox. I do not believe that is the nature of the kickback being discussed, but if such an agreement were in place it would be problematic as it would be outside of and adverse to the posting agreement. Even if such an agreement were not explicitly disallowed, both commissioners would likely have grounds to take action in the best interests of baseball. Such a contract would likely be unenforceable as well, as MLB or NPB franchises may not have the authority to make contracts outside of their league operating agreements. I'm not sure how they're structured for that purpose.

The inducement from Seibu to Matsuzaka, which would effectively reduce the inducement from the Red Sox to the Lions, would be an internal matter governed by NPB rules but would be similar in nature to inducements in MLB to waive no-trade clauses. I doubt there is an explicit or implicit rule against it in NPB or that anyone in MLB would object to it. You know as well as I do that no matter what contract the Sox offer Matsuzaka that Boras will start negotiations with Seibu by asking for $51M, so I don't much see the point of blaming the Sox for having the highest bid. They have no hand in how much Boras extracts from Seibu, so I don't see how it was dishonest of them to outbid the Mets.

#138 dnramo

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Posted 15 November 2006 - 02:12 PM

You mean weaker...at least with his negotiations with the Red Sox.

<{POST_SNAPBACK}>


I was talking about the negotiation between Boras and the Lions. At least in talking about the ethics of this mess, the leverage between the Sox and Boras isn't relevant to me.

Boras has two tactics: wait as long as possible to reach an agreement, and demand a lot of money. I have no idea why it works against MLB teams, but this sort of process is great for him. I wouldn'be be surprised if he got more than half of the posting fee from the Lions, should that information ever be released.

#139 xjack


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Posted 15 November 2006 - 03:01 PM

I wouldn'be be surprised if he got more than half of the posting fee from the Lions, should that information ever be released.

You're just slapping a new coat of paint on the same problem. Which is that no matter how the kickback is handled, it still boils down to player compensation that is being shielded from the luxury tax. There's no way small-market teams would allow that.

FWIW, I found a link to the US- Japanese Player Contract agreement: http://www.bizofbase...seAgreement.pdf

It spells out clearly that the Commissioner will void any contract that undermines either the posting system or the best interests of baseball. It also says any business deals between US and Japanese clubs cannot give a U.S. team preferential rights to a contract with a player.

#140 TheBenzingerGame


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Posted 15 November 2006 - 03:06 PM

First, let me say that I agree with you almost entirely on the three points you made here. A quibble I have with the second point is related to the one thing I think we're still talking around...

If I'm reading you right, you're asserting the criminality/fraudulency of a transfer between the Sox and the Lions outside of the posting process with the purpose of refunding part of the posting fee to the Sox. I do not believe that is the nature of the kickback being discussed, but if such an agreement were in place it would be problematic as it would be outside of and adverse to the posting agreement. Even if such an agreement were not explicitly disallowed, both commissioners would likely have grounds to take action in the best interests of baseball. Such a contract would likely be unenforceable as well, as MLB or NPB franchises may not have the authority to make contracts outside of their league operating agreements. I'm not sure how they're structured for that purpose.

<{POST_SNAPBACK}>


That is the nature of the "kickback" being discussed, if you go back to the beginning of this unwieldy thread (and the rumors out of Seattle that started this mess). The assumption was that the Red Sox bid would be, in part, refunded. That's the context of all of this, that's where I saw problems, and that's all I've argued against. If I'm reading you right, we seem to agree that such a transaction is problematic.

It's this very "refund" that corrupts the posting process, and sort of makes your second point moot (regarding what Minaya would bid and what he'd expect to get back). All in all, though, I think you've spelled out exactly what I've been trying to say.

Edited by TheBenzingerGame, 15 November 2006 - 03:17 PM.


#141 DamonasaNomad

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Posted 15 November 2006 - 03:20 PM

First, let me say that I agree with you almost entirely on the three points you made here. A quibble I have with the second point is related to the one thing I think we're still talking around...
That is the nature of the "kickback" being discussed, if you go back to the beginning of this unwieldy thread. The assumption was that the Red Sox bid would be, in part, refunded. That's the context of all of this, that's where I saw problems, and that's all I've argued against. If I'm reading you right, we seem to agree that such a transaction is problematic.

<{POST_SNAPBACK}>

Whoa! Post #3 in this thread was:

"And make no mistake -- as the biggest loser if Theo and Boras can't reach a deal, Seibu will be a major player in this negotiation. They will be kicking in the difference between what Theo offers and what Boras wants."

You took issue with that. How is what dnramo posted in any way different from my post? If your views have evolved to accepting this, that's great. But don't pretend, just because you were interpreting the "kickback" as something blatant and "corrupt", that everyone else was under the same illusion -- several people in this thread have said the same things dnramo did (including the fact that all the bidders understood the circumstances), if in different (inferior?) words.

#142 TheBenzingerGame


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Posted 15 November 2006 - 03:36 PM

Whoa!  Post #3 in this thread was:

"And make no mistake -- as the biggest loser if Theo and Boras can't reach a deal, Seibu will be a major player in this negotiation. They will be kicking in the difference between what Theo offers and what Boras wants."

You took issue with that.  How is what dnramo posted in any way different from my post?  If your views have evolved to accepting this, that's great.  But don't pretend, just because you were interpreting the "kickback" as something blatant and "corrupt", that everyone else was under the same illusion -- several people in this thread have said the same things dnramo did (including the fact that all the bidders understood the circumstances), if in different (inferior?) words.

<{POST_SNAPBACK}>


Because the way you've put it -- in this original post, and ever since -- it's a three-way negotiation. Dnramo described it well as two two-way negotiations.

"If" Theo and Boras can't reach a deal, "they" will kick in the difference. To me, that indicates that Theo sees a limit to the amout of salary he'll pay, Boras wants more, and Seibu makes up the difference... otherwise the deal between the Sox and Boras falls apart. The "difference" Seibu is willing to pay allows the Sox to sign Matsuzaka for less than what Boras wanted.

And, come on, are you now arguing that the schemes we've heard about Seibu sending the Sox money in the guise of "buying advertising" on NESN and such, didn't jive with exactly what you were advocating? Dnramo points out very well that if that sort of thing occurs, there's a problem.

#143 wade boggs chicken dinner


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Posted 15 November 2006 - 03:56 PM

2) Nothing going on here is new. There's no inefficiency in the posting process because all parties involved know the rules and place/accept their bids within those rules. Any reasonable person would have known that Boras would attempt to extract money from both Seibu and the winning bidder regardless of the bid amount or the teams involved.

<{POST_SNAPBACK}>

Dnramo, I also want to say that your post put things differently for me and it makes a lot of sense. But I just want to ask you one thing: if this arrangement (that Seibu kicks money over to DM) became public, what do you think Selig's reaction would be? Maybe Selig would simply pretend not to know, but if any kind of inducement from Seibu became public, you would think that he would be forced to do something--maybe not void the contract but something at least. Also, the player's association never likes below-market contracts; do you think that they would have a say in this as well?

One other point: your situation is different than the rumours concerning the Mariners that I've heard. Didn't Callis (and others) say that the Mariners never paid all of their posting fee to Orix? I think that's the kind of thing that most of us have been thinking of, not what you have described.

#144 SoxFanPJ


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Posted 15 November 2006 - 03:56 PM

If I am the Redsox I would present Boras with two potential templates for a contract.

#1: A longer term deal, 4-5 years, higher AAV, and the willingness to contract away the right to offer arbitration in the 6th year.

So if they sign him to a 4 year deal say $11-12M AAV, they keep the right to offer arbitration in the 5th year and waive that right in the 6th season(granting him free agency 1 year early.

On the Redsox side of the deal its higher risk in that if Matsuzaka is injured or performs significantly below expecations they are commtting big money too him long term. On Matsuzaka/Boras' side it gives Matsuzaka more long term security protecting against injury or poor performance. Boras also gets a bigger payout based on the % of a larger contract. It also allows Mats to hit the FA market again while he is still in his peak

#2: A shorter term deal 3 years, lower AAV and refusal to contract away arbitration rights to Matsuzaka's 4th, 5th and 6th seasons.

Say 3 years at $8-10M AAV. There is less security for Mats under this scenario, because he has less guaranteed money coming. But it allows him to negotiate a new long term deal after year 3 with the Redsox in order to avoid potentially astronomical arbitration awards.

It really sounds like Boras will be pushing for a different option, short term deal(3 years) and Matsui clause (granting early Free agency) after the 3 years are up.

If I am the Redsox that would be a reasonable deal, based on the investment ($51.1M) that has already been made. The only way that a deal would work under this scenario is that the early free agency/not offering arb. clause is coupled with a series of 2-3 team options on Matsuzaka at an escalating AAV. That way the Redsox have the choice of picking up the option, but if they decide against it Matsuzaka would be granted FA isntead of still being under the Redsox control and at the mercy of the arbitrator's ruling.

#145 The Gray Eagle


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Posted 15 November 2006 - 03:57 PM

"Seibu will be a major player in this negotiation. They will be kicking in the difference between what Theo offers and what Boras wants.

It seems to me that there isn't anything really wrong with Seibu paying money to Matsuzaka. That's their business and has nothing to do with the Red Sox.

But Seibu paying money to the Red Sox would be a problem and isn't something that should be allowed.

The other teams in the majors should have nothing to complain about if Seibu pays money to Matsuzaka. They would if Seibu paid the Red Sox, IMO.

#146 Pandemonium67

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Posted 15 November 2006 - 04:07 PM

I expect Theo to propose a contract for at least 6 years, with a team option for two more. He will want to lock DM up for a good long time, with a $51 million posting fee as his justification.

Something like: $10, $11, $12, $13, $14, $15, $16, $18*, $20* (*team option)

That's 7/$91, with potential for 9/$129

That's what Theo starts with. Boras will demand something like 1 year, $51 million, with FA status next October and free blowjobs every Tuesday.

The end result will be something like 4/$65, with the Sox having at least one and maybe two option years at $17 to $20.

I hope.

#147 Pumpsie


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Posted 15 November 2006 - 04:11 PM

"Seibu will be a major player in this negotiation. They will be kicking in the difference between what Theo offers and what Boras wants."

It seems to me that there isn't anything really wrong with Seibu paying money to Matsuzaka. That's their business and has nothing to do with the Red Sox.


"Ah-So!" as Charlie Chan used to say. Now we see the cleverness of outbidding the nearest bidder by $10M or so. That money can go to Mats via Seibu and not count against payroll and the cap. If say, the Sox and Boras agree on a 4-year deal and the Sox want to pay $11M per and Boras wants $13M per, Seibu can kick in the remaining $8M and still know they got the highest bid for Mats. The Sox gain by not having to pay a payroll tax on that $8M, and Mats and Boras get their money. It's a Win-Win-Win!

#148 NomarsFool

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Posted 15 November 2006 - 04:44 PM

As has been mentioned, one of the upsides in all this has been keeping him from the Yankees. If the Sox can't agree to a contract, that's exactly what they did, without spending a dime. They would never, ever admit to this, but maybe that's what this was all about.

To me, it seems like spending $100 million or more on a pitcher seems very much out of the normal approach from this team. How many of these kinds of deals actually work out? I bet someone in the Sox front office has crunched the numbers to look at the likelihood of a pitcher being able to put together a streak of Cy-Young type seasons (and only Cy-Young type seasons justify these numbers when you add in the posting fee). Virtually nil.

This seems to be more a team that hedges its bets, tries to find the undervalued player, and doesn't invest a lot because the big investments don't seem to pan out. We'll see, but I'm skeptical whether they really expect to sign him at all.

#149 The Allented Mr Ripley


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Posted 15 November 2006 - 04:53 PM

Schilling and Ortiz were big investments. Beckett is too, in terms of the total amount of his contract (although despite his mediocrity, it's probably an under-market deal). They'll happily give out money for players they feel are worth it, for better or for worse (hello, Renteria).

You can't look at it like they're spending $100mm on a pitcher. $51mm is strictly the cost of doing business with the guy, it's not part of his salary. I think the club can easily afford a one-off payment of $51mm in a special situation like this, particularly becuase it doesn't impact the luxury tax, nor does it tie up any salary dollars in future years. Given Matzusaka's talent and age (and yes, the opportunity to block the Yankees from getting him), it probably wasn't a hard decision to make.

There's no way he doesn't get signed. All parties have a large stake in this going through.

Edited by The Allented Mr Ripley, 15 November 2006 - 04:54 PM.


#150 Pandemonium67

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Posted 15 November 2006 - 05:07 PM

All this talk about the Sox bidding high to block the yankees from getting DM in 2007 is missing part of the picture.

They're blocking the yankees forever.