Because of the structure of his contract, Yusei Kikuchi could end up with a three-, four- or seven-year deal with the Mariners. Let's dig into how each scenario could play out.
The event seemed unlikely.
Given what had transpired in the two months prior, the concept of the Mariners holding a news conference to introduce a major free agent signing this offseason just didn’t seem to fit the process.
To most people, teams tearing down a roster to rebuild don’t sign a free agent pitcher to a sizable contract.
But as general manager Jerry Dipoto has maintained since instituting this offseason plan, which included culling the 2018 roster of several expensive veteran players via trade, this isn’t a rebuild in the traditional or expected sense. Dipoto and other members in the organization continue to call it “a step back” and whether you agree with that notion or philosophy, the move to sign free agent left-handed pitcher Yusei Kikuchi adheres to their premise. Even when Dipoto was weighing the option of stepping back or trying to go for it one last year in 2019, Kikuchi was an acquisition target. They’d scouted him so much that they believed he could help regardless of the direction they would take in 2019.
“Early in September when we sat down with where we wanted to go with this roster, Yusei Kikuchi was always a part of our plan,” Dipoto said. “In the earliest of stages, we presented step-back rosters, and YK was prominently featured.”
Because Kikuchi is only 27 (he turns 28 on June 17) and given the unique contract he was signed to, the Mariners can adapt him to MLB’s increased workload in 2019 at a slower, controlled pace while maintaining the focus on 2020 and 2021.
“Our goal is to go into this season and develop YK along with a lot of the other young players,” Dipoto said. “We’re going to try to win as many games as we can, but our focus is coming out in 2020 with a group of talented players who are ready to go compete at a much higher level, he among them.”
The Mariners’ starting rotation in 2020 could feature Kikuchi, Marco Gonzales, Justus Sheffield, Erik Swanson and Justin Dunn. They would all be under age 30 with Kikuchi the oldest.
At the winter meetings, Dipoto was hopeful but not certain about signing Kikuchi. There were more than a dozen teams interested in signing Japan’s top available pitcher. And it was difficult to know what exactly Kikuchi was looking for in teams. But his agent, Scott Boras, outlined concerns about early usage and adapting to the MLB level. Pitchers in Japan’s Nippon Professional Baseball pitch every six to seven days, while MLB asks starters to work every fifth day on most occasions. It’s led to injuries and massive drop-offs in pitchers coming over from Japan.
With the Mariners not trying to push for 100 wins and a playoff spot in 2019, they could offer a plan to Boras and Kikuchi that would ease Kikuchi’s transition to the more frequent workload.
“I had other clubs that wanted to do six- or seven-year contracts for him and place him right into the fire of their need which was maybe 160, 170 innings, or more than that if they’re in the playoffs,” Boras said.
The Mariners came back with a plan that would be less taxing on Kikuchi. He might still get to 160 innings, but the buildup to get to that total would be less rigorous.
“That was a critical element to our pursuit,” Dipoto said. “Developing a plan for his major league development that was maybe different than a team that was going to pour him in every fifth day, and pushing the gas down and looking to win a World Series.”
But the pitching plan was only part of it. Perhaps just as important or even more important was the contract structure, which was far from typical.
“I don’t know if ours was the richest or longest contract,” Dipoto said.
No, but it might have been the most creative. Boras said he had offers of seven years from other teams but didn’t list the amount of total money being offered. Sources indicated that in their preliminary meetings, the Mariners’ initial offer was a four-year contract, while Boras first asked for six years.
But by using a contract Boras structured last offseason, the two sides were able to come up with something that worked and seemed fair for all involved.
“Last year, Scott did a deal with the Phillies on Jake Arrieta,” Dipoto said. “And we were trying to find a creative way that we could get involved in this process and realistically bring Yusei to Seattle. We suggested something along the lines of the Arrieta deal and immediately it struck a chord with Scott. We were able to come up with something that was pretty creative, and I laud him for coming up with it.”
It’s not the length or the overall salary that is similar. Going into the 2018 season where he turned 32, Arrieta signed a three-year, $75 million contract as a free agent. The first two years of $30 million in 2018 and $25 million in 2019 were guaranteed. Arrieta could opt out of the contract after the 2019 season and forgo the $20 million he is slated to earn in 2020. However, the Phillies have the right to void the opt-out clause by exercising a two-year, $40 million option for the 2021-22 seasons. The salary for the two option years could also increase based on Arrieta’s innings pitched or finish in Cy Young voting in 2018 and 2019.
Arrieta finished with a 10-11 record, a 3.96 ERA and a 2.0 FanGraphs WAR in 31 starts in 2018. So, let’s say Arrieta came back with a strong 2019 season, perhaps similar to his 2016 season, where he went 18-8 with a 3.10 ERA and 3.8 WAR in 31 starts. Following a strong showing, the thinking would be to opt out of the last year remaining on the contract and try to pick up more years and more money on the open market.
A player opt-out offers no benefit for a team. Most GMs, Dipoto included, loathe them and prefer to avoid them. If the player performs as well or better than expected, they will always opt out, which hurts the team. And if a player performs poorly or well below expectations, well, they aren’t going to eschew guaranteed dollars paid when their value was higher and take a chance on the open market at a decreased value. So that really doesn’t help the team either.
If the Phillies believe Arrieta is a part of their push for the postseason in 2020 and beyond, they can avoid the opt-out by exercising the two-year option and keep him for an additional year.
The dollars associated with Kikuchi aren’t as significant per season as Arrieta, but the chance for a long-term commitment exists for the Mariners if they so choose.
Kikuchi’s contract was announced as a four-year deal by the Mariners and viewed as such by MLB and the players association. The total value is $56 million. The Mariners will have to pay a posting fee of $10.275 million to the Seibu Lions for signing Kikuchi. That figure is derived from the recent agreement between MLB and NPB. The Mariners pay 20 percent of the first $25 million of the contract, 17.5 percent of the next $25 million and 15 percent of the amount above $50 million.
Per Cot’s Baseball Contracts and MLB sources, Kikuchi received an immediate $6 million signing bonus. His official salary for 2019 will be $8 million followed by $14 million in 2020 and $15 million in 2021. But it’s that fourth year where it gets interesting.
Following the end of the 2021 World Series — perhaps the Mariners will playing in it, but probably not — the team has three days to decide if it wants to exercise its club option on Kikuchi. The club option isn’t for one year but four — 2022 through 2025 — for a total of $66 million at an annual average salary of $16.5 million, which would then put the contract at $109 million dollars.
However, if the Mariners choose not to exercise the club option, Kikuchi would be given a player option year of $13 million dollars for 2022. He could either exercise that option, spending 2022 with the Mariners or opt out of that final year and head to free agency.
“It is a contract structure that is beneficial to the club and the player,” Dipoto said. “It gives us the opportunity to keep him here for seven years at 100-plus million or gives him the flexibility to seek something else if it’s not as easy of a transition for him.”
Sources said the Mariners would only have to pay the posting fees on the initial $56 million and not on the money spent if the club option is exercised.
Much will depend on what Kikuchi shows in the 2020 and 2021 seasons, when the Mariners hope the fruits of their step-back labor will somehow result in a 40-man roster that is self-sustaining and poised to compete for an American League West Division title.
The club option offers the Mariners protection against the lose-lose situation of an opt-out but also doesn’t force them into an expensive long-term commitment for a pitcher who never has thrown a pitch in the big leagues.
The scenarios are there for a three-, four- or seven-year commitment.
The three-year outcome might be the least desirable for fans. If the step back isn’t working and the young players the Mariners hope will push the roster forward don’t blossom, exercising the club option on Kikuchi regardless of his success would be counterproductive. Committing to four more years at $16.5 million average annual value (AAV) wouldn’t seem viable for an organization still trying to build a roster and in need of more talent. Unless the comfort of the organization and the city was so appealing despite the lack of team success, Kikuchi would almost certainly opt for free agency for 2022 if he pitches anywhere close to expectations in his first three seasons with the Mariners.
The seven-year contract would come under the most upbeat of scenarios: The step back has produced a roster ready to compete for the AL West title and beyond while Kikuchi is pitching at level where he could anchor a young rotation. Kikuchi has been compared by some to lefty Patrick Corbin, who just signed a six-year, $140 million contract with the Nationals at age 29. The Mariners would be paying Kikuchi essentially an average of $15.6 million per season over seven years compared to the $23.3 million AAV over six the Nationals are paying Corbin. Seattle would essentially be giving Kikuchi a contract befitting of a front-line starter for a playoff-contending team.
The four-year contract might be the most logical outcome because it takes into account a variety of projections based on the success of the player or the team or lack thereof for either. If the Mariners aren’t certain about Kikuchi over the long term, they can walk away after four years. If Kikuchi were to struggle in the first three years, he has the financial guarantee of $13 million in 2022 regardless of his performance. And there is the chance that if the Mariners aren’t in it and Kikuchi pitches well in 2022, they could trade him before he hits free agency.
Some MLB insiders believe this sort of contract that features an opt-out for the player, but opt-out protection for the team will become more and more common in the future. Teams are reluctant to automatically give players expensive long-term contracts. The commitment issues are very real and with reason.
Lefty reliever Zach Britton, also a Boras client, recently signed a similar contract with the Yankees. It’s guaranteed for three-years at $39 million, but the Yankees can exercise an option for a fourth year at $14 million. If not, Britton can also opt out after two seasons
“I came up with the idea of saying, ‘Look, we’ll put an evaluation period where he can opt out after the third year; however, you get to keep him for an additional four if this works out but at much higher values than the inception cost was,’” Boras said of the Kikuchi deal. “Basically the reward for taking great care of YK is something that had to be there for the club, I think, for the club to really care for him much like a draft pick or something along those lines.
“I think its’ a very favorable structure in this situation for both the player and the club because both of them gave a little bit. If the player turns out to be extraordinary, then he gave a little bit of his ceiling in what he could get. The club on inception gave him an AAV that is I think with the exception of (Masahiro) Tanaka the highest that’s ever been given. There was good melding and where the team is and where their needs were, we felt it fit really well.”