This past weekend, Toronto Blue Jays fans experienced a roller coaster of emotions when it seemed like Japanese superstar Shohei Ohtani was going to sign with Toronto, only to be heartbroken after he signed a US$700 million, 10-year contract with the Los Angeles Dodgers.
The Blue Jays wanted Ohtani for a number of reasons. Ohtani is a rare breed in baseball — not only is he one of the best pitchers in MLB, with an ERA of 3.14 in 2023, but he’s also a prolific hitter. His unique skill set has drawn comparisons with baseball legend Babe Ruth.
His global fan base also translates into economic benefits for any team he plays for. According to a study by a Japanese economist, Ohtani’s broad economic impact in 2022 when he played for the Los Angeles Angels was around US$337 million.
Now that the dust has settled, Blue Jays fans and analysts alike must reflect on the lessons learned from this situation.
Don’t let price bulldoze other interests
Blue Jays fans could be forgiven for thinking that when Blue Jays’ owner Rogers entered into meaningful negotiations with Ohtani it was just a matter of time. According to a number of sources close to the negotiation, the Blue Jays’ best offer was similar to the one offered by the Dodgers.
However, as Harvard Business School professor, James K. Sebenius argues, a common error in negotiations is thinking that price is the most important, or only, issue to be resolved.
In the case of Ohtani, the US$700 million price tag was clearly a factor in his decision. But now it seems obvious that other interests, including club location and the competitiveness of the team were also important considerations.
(AP Photo/Eugene Hoshiko)
The best alternative to a negotiated agreement
This may not be much consolation, but the Blue Jays were merely one of 31 losers in the Ohtani sweepstakes. Arguably, the L.A. Angels organization and their fans, having just lost Ohtani to the rival L.A. Dodgers are as — or, perhaps more — heartbroken this week than the Jays are.
The lesson for the Angels fans is to understand the best alternative to a negotiated agreement (BATNA) concept. In short, the BATNA is whatever course of action either side of a negotiation will take in the event that no deal is reached between them.
For example, if you were to enter into a salary negotiation with your current employer with a job offer from a rival company in hand, your BATNA — in the event your salary negotiation is unsuccessful — is to take the rival company’s offer.
In the Ohtani sweepstakes, the L.A. Angels appear to have underestimated Ohtani’s BATNA, perhaps believing their positive relationship, West Coast location and willingness to spend whatever it took to make the playoffs in 2023 would be enough.
Interests versus positions
The Toronto Blue Jays’ and L.A. Angels’ willingness to spend whatever it took didn’t matter. Not because the Dodgers were willing to spend more, but because whatever the compensation figure ultimately was, it would only be acceptable to Ohtani if it satisfied his interests.
It can be challenging to distinguish between interests and positions when so much money is involved in a signing such as this. In short, interests are the underlying motivations that inform positions, while positions are specific demands.
For example, you might ask for $100,000 at your next salary negotiation — that is a position (or, in other words, a specific demand). An example of an interest might be the flexibility the position affords, which may be more enticing than a job that doesn’t meet those interests.
(AP Photo/Ashley Landis)
The Blue Jays and L.A. Angels seem to have misinterpreted Ohtani’s interests and proceeded as if compensation would be enough.
In reality, it appears Ohtani’s interests (based on the contract and its deferred payment structure) were mostly based on sustained excellence and anticipated success over these next 10 years. Ohtani immediately bolsters an already competitive team and has offered the Dodgers an opportunity to become even more competitive by virtue of his deferred compensation.
Failing to correct skewed vision
The Toronto Blue Jays and L.A. Angels seem to have fallen into the common trap of believing their own narrative while negotiating.
The L.A. Angels believed Ohtani would re-sign with them because he valued familiarity, the relationship with the team and the West Coast location.
The Blue Jays believed he would sign with them because of the unique marketing potential being with Canada’s team and the compensation only Rogers could offer, in part because Rogers’ NHL rights were coming to an end.
It’s possible some of those factors did come into play, and that the Blue Jays and Angels executives and fans were not completely wrong to think they had a chance. But clearly, they thought what they had to offer would be enough. It wasn’t.
Looking ahead
There will be ramifications from the Blue Jays’ pursuit of Ohtani. Fans’ expectations will be raised if and when future free agents become available on the open market — notably, Vladimir Guerrero Jr. and Bo Bichette who will become free agents in 2025.
As we get closer to their pending free agency and negotiations, the Blue Jays would be well served to understand those players’ interests and make sure they can meet them in full — or, risk losing out again.
