NPB Tracker

When Rakuten was mulling over what to do with Masahiro Tanaka last December, a thought occurred to me: what if Rakuten came up with a compensation package that included company stock? Obviously Rakuten was never going to approach what Tanaka ultimately got from the Yankees, but if they had offered him, say, a grant of one million shares in Rakuten (TYO: 4755), that would have been a little more creative than just offering to double his salary. Of course in the end they did neither.

Unlike Major League teams, which are mostly owned by groups of wealthy individuals, Japanese baseball clubs are mostly subsidiaries of large corporations. While a few clubs are significant sources of revenue, many are operated as marketing loss leaders for their parent corporations. Rakuten’s Golden Eagles club, for example, seems to fit in to the latter category.

In my industry (technology/software), it’s commonplace to compensate employees with company equity, usually in the form of incentive stock options or restricted stock units. Japanese companies seem to prefer cash bonuses as variable compensation, but that bit of reality wasn’t enough to dissuade me from this thought exercise:

What if Japanese teams partially compensated their players with company stock? Would the players be better or worse off?

To explore the question, I took a player drafted at some point over the last ten years from each team owned by a publicly-traded company, and estimated how much money they’d have today if they had taken 10% of their draft signing bonus in company stock. I deliberately chose first round picks that haven’t panned out for this exercise.

The results are below, but before we get to them, here are some points to remember:

• This is a thought exercise. I’m not suggesting that anyone should do this.
• The starting share value is the closing price on December 1 of the year the player was drafted.
• Share values are as of market close on February 14, 2014.
• Lotte, Seibu, Yomiuri, and Chunichi are privately held, so they aren’t included here.
• The currency unit is Japanese yen. If you’re more comfortable with US dollars, JPY 100m is about $1m, and JPY 10m is about $100k.
• I didn’t account for dividends, and fortunately none of these stocks split over the periods I looked at.
• If you find mistakes in my calculations please let me know.
• I cheated for DeNA. Kota Suda was drafted and played his rookie season under Yokohama’s previous Tokyo Broadcasting System ownership. But this is a thought exercise, and it wouldn’t be fun looking at TBS’s stock, or a very recent DeNA draftee. So we’re clear, I denoted Suda with **.

To my surprise, most of the players would have come out ahead, with only Orix and Mazda really taking a beating. And even then, both were casualties of the 2008 global financial crisis and clawed back share value in 2013.

It’s not much of a surprise to see Softbank and Rakuten at the top of the growth table, as both are giants consolidating positions of global leadership in their industries (mainly telecommunications and e-commerce, respectively). It is a bit of a surprise to see Yakult up there, I haven’t looked into that one. I thought DeNA would have grown more, but they do seem to have a diversification problem and are in a notoriously fickle market (mobile games).

It would be irresponsible to write a post like this and not point out that much of the growth listed here happened in 2013, fueled by Abenomics monetary policy. While Abenomics seems to have coincided with stock market growth, there has also been some volatility, and it obviously remains to be seen if it leads to the end of Japan’s long problem with stagnation.

The Yokohama BayStars have an impressive track record of futility. They’ve finished in the Central League’s basement seven of the last nine years, twice finishing more than 40 games out of first place. The February issue of Yakyu Kozo featured a detailed analysis of Yokohama’s 2010 futility. Among other things, the ‘Stars were the worst or second to worst in the Central League in scoring first in games, winning percentage after scoring first, wining percentage after failing to score first, advancing runners, scoring with runners in scoring position and less than two outs, and inducing swinging strikes on pitches outside the strike zone.

After an offseason that saw the BayStars wave goodbye to their best pure hitter, their best arm, and a productive middle infield bat, I figured another last place finish was the safest bet in Japan this year. So far Yokohama has matched this expectation, in 6th place with a 14-22-3 record. But it’s more competitive last place, with the bright spots being that so far Hama’s offense leads the Central League with 28 home runs and 133 runs scored. Their pitching is still way behind the rest of the league though, and that’s probably not a situation that will improve much during the season.

So the focus in Yokohama has to be on finding and developing the players who are going to be on the next good BayStars team. Some of them may be on the roster already, and here’s what I would consider a good season for the BayStars.

• Development from Takayuki Makka, Kota Suda, Atori, Kisho Kagami and any other young pitcher that happens to be around.

Pitching has been the core of Yokohama’s problem for so long that pitching has the be the top priority, particularly developing the best prospects from the last two or three drafts. I don’t really see a potential ace among this group, but if three of these guys become useful pitchers, that’ll be a pretty big win.

• Kentaro Takasaki‘s first eight starts not being a fluke.

I saw Takasaki pitch in relief a season or two ago and was not impressed. I saw him start a game against Chunichi early this season and was extremely impressed. Nothing he threw was overwhelming, but he seemed to throw the right pitch each time while I was watching. Through eight starts, Takasaki has a 2.60 ERA in 52 innings, with 36 K, 15 BB, 3 HR. The ERA is going to go up, but if he has another 120 quality innings in him it’ll be the best season a Yokohama starter has had in a while.

• Getting some kind of sustainable contribution from at least one of their young foreign pitchers: Clayton Hamilton, Brandon Mann, Luis Gonzalez, Kuan-Yu Chen, and I-Cheng Wang.

The foreign pitcher section of Yokohama’s roster is mostly populated with development project types. I would be lying if I claimed to know much about any of these guys, aside from the observation that they mostly completely lack MLB experience and mostly lack upper minors experience. Finding useful innings from one of these guys over the next few seasons will be a plus. Hamilton’s heart seems to be in the right place, I’d love to see him to well.

• Development from Keijiro Matsumoto or Sho Aranami.

Center field has been a hole for Yokohama since… when? Tatsuhiko Kinjo’s most recent good season? Hitoshi Tamura? Tatsuya Shimozono was actually respectable with the bat last year, but hasn’t played at all this season. I don’t really think Hichori Morimoto is a starter any more, though he is a useful player. Matsumoto and Aranami have both up up ugly lines at ni-gun this season; one of those guys turning things around and becoming a viable outfield option would be a major depth boost.

• A good draft.

Most of the guys I’ve written about fall in to a supporting cast category. Yokohama needs more stars, particularly a frontline starting pitcher. There are a couple of big arms in this year’s draft, and they’ll need to score one of them.

I’d love to see a more competitive NPB, one that doesn’t have any doormats. With Orix showing signs of life these last few years, we’re only a healthy BayStars away from such a scenario.

Over the next few weeks, we’ll be publishing team-by-team summaries of this offseason’s NPB transactions. There aren’t enough hours in the day to make this a comprehensive list of all movement, so we’ll focus on the highest-impact changes. Our series starts at the bottom of the Central League, which again means the Yokohama BayStars.

Coming: Hichori Morimoto, Shogo Yamamoto, Go Kida, Naoto Watanabe, Brandon Mann, Clayton Hamilton, Brent Leach, Ikki Shimamura, Koji Ohnuma, Kuan Yu Chen

Going: Seiichi Uchikawa, Hayato Terahara, Kazuya Takamiya, Chris Bootcheck, Stephen Randolph, Jose Castillo, Atsushi Kizuka,Yataro Sakamoto, Toshihiro Noguchi, Takahiro Saeki, Shingo Nonaka, Kentaro Kuwabara

Staying: Shuichi Murata, Brett Harper, Termel Sledge, Tatsuhiko Kinjoh, Tomo Ohka

Summary: A lot of turnover for the BayStars again this year, headlined by the losses of Uchikawa and Terahara. Uchi will be missed, as he was Hama’s most consistent on-base threat, and while Morimoto is a useful player, he doesn’t match up at the plate. And trading Terahara for Yamamoto… I just can’t understand that one. Even if they were dead set on acquiring a lefty, they could have simply signed Eric Stults or kept Randolph. But ‘Stars took a different approach to their import roster this year, signing less experienced minor leaguers Mann, Hamilton and Leach rather than getting more 4A guys. Signing a number of guys and seeing if one of them works out is actually a decent strategy for a team that can’t realistically expect to content in 2011. Or perhaps ownership is keeping the payroll down in anticipation of a team sale.

Yokohama finished last in run production and run prevention last year, and didn’t acquire any veteran talent that will immediately improve the team on either side of the ball. So is there any hope by the Bay in 2011? If there is, it has to come from the team’s young talent. The BayStars’ 2010 draft focused on college and Industrial League players who can help soon, and top picks Kota Suda, Kisho Kagami, and Sho Aranami should all be in the mix for ichi-gun time as rookies. Yokohama doesn’t have great organizational pitching depth, but any steps forward taken by Takayuki Makka, Hitoshi Fujie, Atori Ohta and Yoh Sugihara will be meaningful. Overall, though, this looks like a team that is headed for another last place finish.