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.

Coming: Hayata Itoh (1st round draft pick), Shingo Matsuzaki, manager Yutaka Wada

Going: Tsuyoshi Shimoyanagi, Kodai Sakurai, Ikuro Katsuragi, Keiji Uezono, manager Akinobu Mayumi

Staying: Matt Murton, Craig Brazell, Randy Messenger, Jason Standridge, Takashi Toritani, Kyuji Fujikawa

Hanshin’s biggest change this season is in the dugout, where Yutaka Wada replaces Akinobu Mayumi, who failed to lead the Tigers to a Central League crown or a Japan Series appearance in three years at the helm. Wada is a Hanshin lifer, having spent his entire 16 year playing career with the team, followed by another 10 years in various coaching roles in the Tigers organizatoin. Wada also occupies a special place in Hanshin lore, as the last active player from Hanshin’s legendary 1985 championship team at the time of his retirement in 2001.

Wada inherits a roster that is largely unchanged from 2011, a team finished fourth in the Central League despite outscoring its opponents by 39 runs. In a small league though, run differentials are deceiving, and a big chunk of those 39 runs came from blowing out Yokohama a few times. Rookie outfielder Hayata Itoh figures to get a serious look during spring training, as center field is a hole, and left fielder Tomoaki Kanemoto is on his last legs after a venerable career. Retaining Matt Murton was a big win for Hanshin, as they can count on his steady bat in right.

Hanshin made no significant changes to its pitching staff this offseason. Hiroyuki Kobayashi is working on a move to the rotation after a so-so season in middle relief; I wonder if lefty Daiki Enokida could make a few starts as well. Depth is always a plus, and while Hanshin had four starters pitch 150+ innings with 3.00 or lower ERAs, lefties Minoru Iwata and Atsushi Nohmi both struggled with injuries prior to 2011. On the farm, Taiwanese prospects Ikketsu Sho and Kai-Wen Cheng both put up good numbers at ni-gun last year, and righty Takumi Akiyama has shown promise as well.

Hanshin is beginning to age at some positions, but overall still has a talented veteran roster. That coupled with regression from of last year’s top three should see the Tigers back in playoff position this year.