The New Posting System And What It Means For MLB

Thursday will mark the 19th anniversary of Hideo Nomo signing with the Dodgers to become the first impact Japanese-born major leaguer to make the jump to Major League Baseball.  Meanwhile, we're just weeks removed from the latest Japanese sensation, Masahiro Tanaka, signing a much more lucrative deal with the Yankees.  When I spoke with former Dodgers GM Fred Claire, the man who brought Nomo to Los Angeles, earlier this offseason about the parallels between the two processes, he rightfully said that there were hardly any, save for their position and nationality.  Tanaka's transition involved about a year of will they/won't they chatter about whether the Rakuten Golden Eagles would post the star pitcher and thirty days of intense talks between clubs and agent Casey Close.  Nomo, meanwhile, broke free from the Kintetsu Buffaloes by simply "retiring" from Nippon Professional Baseball.  Yankees GM Brian Cashman surely wishes things were still that simple.

After watching Nomo flee with ease and, years later, seeing Hideki Irabu and Alfonso Soriano join MLB without any compensation coming NPB teams' way, NPB finally put their foot down in 1998.  NPB reached agreement with commissioner Bud Selig on a new system that would compensate Japanese clubs for allowing players – who have to wait nine years before reaching free agency – out of their contracts to make the jump.  The system, devised by Orix BlueWave GM Shigeyoshi Ino, called for MLB teams to take part in a silent auction where they offered up a dollar amount to the Japanese team to win exclusive negotiating rights with the posted player.  If the winning team and player reached agreement on a deal within the 30-day window, the NPB team would get their posting fee.  If a deal was not reached, the Japanese club got nothing and the player was returned to his NPB club.  It was a system that gave NPB clubs checks that ranged from the reasonable to the sizable to the titanic.  The first player posted, Alejandro Quezada, earned the Hiroshima Toyo Carp a $400K check courtesy of the Reds.  Ichiro Suzuki, the second posted player, went to the Mariners after Seattle gave the Orix BlueWave a little more than $13MM.  Nearly eight years later, the Red Sox paid the Seibu Lions $51.1MM for the privilege to give Daisuke Matsuzaka a six-year, $52MM contract.  There was a bilateral opt-out clause on the MLB-NPB agreement on a year-to-year basis, but it survived nearly a decade-and-a-half.  NPB had about as much incentive to tear up the contract as a lottery winner would have to light their ticket on fire.  It's surprising, however, that MLB allowed the system to continue as constructed for as long as they did.

With nearly all of baseball drooling over Tanaka in 2013, MLB finally forced NPB to come back to the table with NPB to hammer out a more favorable agreement.  The new system caps the maximum posting fee at $20MM and, unlike the previous system, allows the player to negotiate with any team that is willing to pay the fee.  On the surface, it would seem that this overhaul was a major victory for Selig & Co. since Dice-K and Darvish's fee was more than double that amount and Tanaka surely would have tripled it.  However, as this year's Tanaka sweepstakes showed, the overall cost to the winning club may not change very much at all.  Star pitcher Yu Darvish cost the Rangers $111.7MM overall between his $60MM contract and $51.7MM posting fee.  Tanaka's posting fee was roughly $32MM less but cost the Yankees $175MM in total with $155MM going to the 25-year-old.  Ultimately, what did MLB gain from the new system?  I spoke with Major League executives and agents to try to bring some clarity to the latest iteration of the posting system.

Some would argue the new system allows for competitive balance in the bidding process since a smaller market club won't have to pay an exorbitant tax to be in the mix for a prized Japanese player.  That doesn't seem to pass muster, however, when considering that the total cost could be effectively equal.  The new agreement also gives the Japanese player freedom to choose his club, but that aspect of it isn't a huge benefit MLB teams.  "I'm not sure what it accomplished other than giving the money to the Japanese player themselves rather than the teams," one executive said."If that was [MLB's] goal, then they accomplished it, but I don't know that it benefits them in any way."  One National League executive who spoke with MLBTR on the condition of anonymity explained that the new system makes for a more level playing field for a reason that hasn't gotten a lot of attention.

"How many clubs can afford to drop $60MM in the current year and then start the bidding process?," the high-ranking exec said of the old system, which called for the posting fee to be paid out rather quickly. "I think the old system was one of the most unbalanced things in the game…It just had so many imperfections."

While a $20MM posting fee paid out over 18 months isn't a drop in the bucket for a small-market club, it's much more palatable than a posting fee that had no ceiling and had to be paid within that year.  As many baseball officials pointed out to MLBTR, if Darvish's fee was nearly $52MM, how high would Tanaka's have been?  The cost alone would be prohibitive to most of baseball, but a GM would have to work even harder to sell his owner on doling it out relatively quickly.  The new system may not drive down the overall cost for the winning team, but it'll allow more clubs to be have a realistic chance to be in the chase because the money is spread out, the executive argued.  In conversations with MLBTR, multiple baseball people pointed to the Astros being finalists for Tanaka as evidence that the system is already leading towards a leveled playing field. 

The exec and a couple of agents also believe it's also possible that the new system will ultimately tamp down the overall cost somewhat, even if the savings were far from evident in the Tanaka case.  A blind auction without a cap can lead the winning team to pay the Japanese club far more than the second-highest bidder, an outcome that may have happened with the Red Sox and Dice-K.  While the negotiating process with any player is far from an open book, clubs at least found a way to 86 a good chunk of the mystery involved in signing a Japanese player and, possibly, lower the overall bill.

On the Simpsons, when washed up TV personality Krusty the Clown announced his retirement at a press conference, one reporter asked, "But Krusty, why now? Why not twenty years ago?"  A similar question could be asked of MLB.  With the right to get out of the old posting system in their pocket all along, why not take advantage and work out something new with their Japanese counterparts?  After all, it doesn't seem like NPB has much leverage in the matter.  Of course, MLB badly wants to have the world's best players on their stage during their prime years but NPB's ability to sign a player away also means netting the kind big money they wouldn't come close to seeing by keeping him.  A prominent agent familiar with the negotiations that took place told MLBTR that MLB reached this realization in 2013 and drove a hard bargain: either re-work the system or we'll put the kibosh on it altogether.  As much as they wanted to bring Japan's top talents across the ocean, they made it clear to the Japanese league that they would rather wait nine years and pay the clubs nothing than dole out a tax of $50MM or more for stars.  The Japanese teams bristled at the notion of losing out on so much cash but they ultimately buckled.  

Depending on who you ask, the reworked construct could save big league clubs some cash on its face, but nothing in the business of baseball happens within a vacuum.  With the premium for a star Japanese player coming down from upwards of $50MM to a maximum of $20MM, the situation is now a lot closer to that of a typical free agent.  In turn, some have theorized that agents can use Japanese players for comparison when their clients are on the open market.  For example, the agent for James Shields (expected to be one of the top pitchers in 2015), could point to Tanaka's as a comparable.  If Tanaka came with a $50MM+ surcharge like Darvish, then it would be harder to draw a straight line between the two.  While one exec believes it's more "apples to apples" and could have a small impact on values, other baseball officials told MLBTR that they didn't see it driving up the cost of regular free agents.  

Even if it doesn't help with overall costs, it seems as though the new agreement benefits a lot of big league clubs because it allows for competitive balance.  And, of course, the posted Japanese players are the big beneficiaries under the new agreement.  The new $20MM cap may be an improvement, but with a wide array of views and motivations, it's hard to find two baseball people who agree on what the perfect system would look like.  An executive who is largely in favor of the re-worked agreement theorized that the lowered payout could lead to NPB teams using "strategic timing" – hanging on to players until they get closer to free agency rather than putting them on the block in their early-to-mid 20s.  One agent would like to see MLB find a way to talk NPB into lowering the amount of service time needed to reach free agency.  Overall, team officials and player representatives seem pleased with the way the new agreement worked out.  It will still cost clubs a premium to bring over the next Darvish or Tanaka, but more teams will have a fighting chance to come away with a top overseas talent.


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49 Comments on "The New Posting System And What It Means For MLB"


Jim Allen
1 year 5 months ago

Japan could back out of the posting system and just let its teams sell the negotiating rights, the way MLB clubs do with Triple-A players NPB wants.

Aramis Ramirez' Basement
1 year 5 months ago

Pretty Crazy a guy who has never thrown an MLB pitch got $155 M

Not like i didn’t want the Cubs to get Tanaka though lol

txftw
1 year 5 months ago

It is crazy, but it means that Tanaka must be pretty good to have multiple teams be willing to give him $155 million even though he’s never pitched in MLB.

Time will tell

maristmetsfan
1 year 5 months ago

Am I missing something with Soriano?

start_wearing_purple
start_wearing_purple
1 year 5 months ago

Soriano initially played for Hiroshima but he got into a contract dispute and retired from NPB. He was the last major player to do so before NPB put their foot down.

M.C. Antil
1 year 5 months ago

Your lede is simply flat out wrong. Masanori Murakaki was the first Japanese-born player in the big leagues. He played for the Giants for two seasons in the 60’s.

start_wearing_purple
start_wearing_purple
1 year 5 months ago

First “impact” Japanese-born player. So he’s correct.

John Cate
1 year 5 months ago

Murakami had enough of an impact that he nearly caused an international incident when the Giants tried to keep him past the time when the Japanese team had loaned him. And when he went back to Japan a year later, he got a ton of money (by the standards of that time) for his trouble.

John Cate
1 year 5 months ago

Murakami had enough of an impact that he nearly caused an international incident when the Giants tried to keep him past the time when the Japanese team had loaned him. And when he went back to Japan a year later, he got a ton of money (by the standards of that time) for his trouble.

Joe Valenti
1 year 5 months ago

I never realized Soriano played in the NPB

Harris
1 year 5 months ago

This is just another example of MLB catering to the small markets. For all the whining that people make about the Yankees overspending, it seems that Free Agency is the only place they can actually spend their money.

stl_cards16
1 year 5 months ago

The Yankees are spending $175MM to get Tanaka…..and you think this system helps small markets? Only a handful of teams can even think of giving out a contract that large to anyone.

Harris
1 year 5 months ago

Because so many teams were able to post such an inexpensive posting fee, competition was raised, therefore increasing the amount the Yankees had to pay Tanaka. The Yankees were one of a few teams who could have afforded an expensive posting fee, therefore the small amount of a max bid catered significantly to small market teams.

stl_cards16
1 year 5 months ago

The Yankees did not HAVE to pay Tanaka any amount. So you think MLB need to make rules to help the Yankees spend less money while still getting any player they want? I’m not sure of your complaint.

Denny Doyle
1 year 5 months ago

Your comment isn’t a response to anyone else. After Yankees spent $491m on FAs, some may think you’re the whiner.

Harris
1 year 5 months ago

Obviously the Yankees spending says a lot about their inability to develop minor leaguers, but Free Agency is one of the only areas where the Yankees can spend the resources that their franchise brings in. The draft as well as international Free Agency now have spending limits, so the Yankees can’t even fully use their resources on younger players.

bigb69
1 year 5 months ago

The spending limits are more like spending suggestions with penalties. the Yankees don’t care about either as they have stated they will blow the international spending limit out of the water this year.

Denny Doyle
1 year 5 months ago

Obviously you’ve missed the news this week that said Yankees planning to blow past the spending limit on international players. Any cursory internet search will locate articles on this. They’ll probably spend more on foreign players than any other team spends on their draft picks.

Also, Yankees stood to have 4 first round picks this year, starting with the 18th. But, that would required a rebuild period, that all other teams have to go through from time to time. Yankees ‘chose’ not to, and forfeited all 4 of those picks, to acquire FAs. These are choices of the Yankees, based on avoiding mediocrity for a few years, but they come with a cost in draft picks.

Fernandito Andujar
1 year 5 months ago

Completely agree with you Denny. Most fans won’t accept a rebuild in NY, but the team made that choice to forego the picks. i wish they would have, since you can’t keep paying guys in the late thirties those ridiculous salaries.

sgtschmidt11
1 year 5 months ago

Baseball is already losing ground to other sports and you are advocating for making it less competitive by letting teams spend wherever and however they want to? How would other teams even compete against the Dodgers and Yankees? What fun would it be to watch the Yanks vs. Dodgers every World Series?

Fernandito Andujar
1 year 5 months ago

You’re comment would hold more water, except for the fact that Yankees last won in 2009 and the Dodgers in 1988. Many small market clubs have been quite successful, so spending money does not mean team can’t compete with the big market teams. The Twins, A’s, Rays, Reds, Indians , etc are just a few of the clubs that have enjoyed success during that time.

Denny Doyle
1 year 5 months ago

The previous post was ‘hyperbole’. I don’t think anyone expects a Yank and Dodger WS every year.

Also, find it funny you pointed out Dodgers ’88 as being so long ago. The five small market teams you consider “enjoyed success during that time”:
Rays: Never won a WS
Indians: 1948
A’s: 1989
Reds: 1990
Twins: 1991

Does “during that time” mean not since 1991?

Fernandito Andujar
1 year 5 months ago

I could have listed the Cardinals or Tigers. They have won several series in that time and ML considers them small markets teams that need help in the form of competitive balance picks. My point was that teams CAN compete with big spenders. Those teams do so via smart picks, good player development and smart free agent deals. It’s possible. When the Yankees were winning in the late 90’s the core of the team was home grown, a fact that many detractors and FANS of the team forget. It isn’t about spending money.

Denny Doyle
1 year 5 months ago

Agree with ’90s Yankees point. Jeter, Rivera, Posada, Williams even O’Neil (though he wasn’t homegrown). They had a homegrown feel to them. But, thats the reason they get so much heat now a days . They don’t have that mix anymore. Almost the entire team is made up of guns for hire and it looks to be getting worse.

johnbrooks
1 year 5 months ago

Your missing the whole point, Oakland is always in the hunt for the Series. Also they’ve been the unlucky team always on a losing side of a Game 5 in the ALDS, a Game 5 is virtually a 50-50 coin flip. There always right there in the hunt for the Series so Beane is doing something extremely right.

Denny Doyle
1 year 5 months ago

Your missing the whole point. The earlier poster used World Series victories as to the benchmark to say Yankees and Dodgers aren’t that dominate. Then, in the very same post, he proceeded to list 5 “successful” team who each have poor WS victory history in recent years. I was simply pointing out the irony of his post. (Your reading my post out of content to what it was a response to)

My point is Yankees have been in playoffs 16 of 19 years, while leading the league in payroll 17 of those years. Thats not a coincidence. Money does guarantee playoff appearances, and World Series victories.

sgtschmidt11
1 year 5 months ago

You’re rigth they can, but the guy above me is advocating for making the system MORE slanted towards the large market teams. Mine was indeed hyperbole, a what-if, not a what-is scenario. The Yanks are already the most winning team of the decade, I’d prefer if they don’t totally run away with the game.

Fernandito Andujar
1 year 5 months ago

And for all the whining about the Yankees overspending, not enough is made of the fact that they are paying luxury tax to help other teams. And even more important to note, no one is forcing teams like the Astros and Marlins to put that luxury tax to use. Those teams prefer to pocket the checks and make little effort to make their clubs competitive.

Denny Doyle
1 year 5 months ago

Whining (definition): Your team spends 491 million on Free Agents and yet, still complain about the system being unfair to them.

Fernandito Andujar
1 year 5 months ago

I don’t agree with what they spent, but my point was some teams aren’t even trying to compete. yes, the team is spending money to win, but spending that much doesn’t guarantee anything except spending a lot of money.

Denny Doyle
1 year 5 months ago

Of course it doesn’t “guarantee” anything. But, its not a coincidence that Yankees have 16 playoff appearances since ’95 (16 out of 19 seasons) and have had the highest payroll every year except twice during that time, either. (’95 Jays, ’98 Orioles, only teams to have a higher payroll)

But, I do agree with the Marlins and Astros point. There should be a minimum team payroll too, or you lose that league income.

John Cate
1 year 5 months ago

You really shouldn’t lump the Astros in with the Marlins. The Astros are a large-market team, playing in the fifth-largest metropolitan area and fourth-largest city in the country. The Marlins are a small-market team. The Astros are just a disgrace.

gogosox
1 year 5 months ago

Get rid of a posting system all together and if an MLB team wants a Japanese player before they hit free agency, work out a trade. The Yankees could have sent A-rod and Sabathia to Rakuten for Tanaka!

C. McCarthy
1 year 5 months ago

A total pipe dream, but man would this have been awesome to see happen!

stl_cards16
1 year 5 months ago

Yeah I’m sure they would love to pay ARod and Sabathia ridiculous contracts.

txftw
1 year 5 months ago

I wonder how many contracts would have No-Japan-trade clauses. It would be interesting to see which players would want it, but I can’t imagine a majority of MLB players would be ok with playing in Japan at the drop of a hat.

Trock
1 year 5 months ago

MLB is going to pay more in the long run. Tanaka will be a prime example of what ‘premier’ NBP players are going to cost. I like the old system better. The team doesn’t have to post the player so they should be entitled to get as much money out of it as possible.

Patrick Newman
1 year 5 months ago

Small nit-pick: Irabu didn’t move to MLB uncompensated, the Padres traded Shane Dennis and Jason Thompson for him. I think there was cash involved too, but I don’t know how much. Irabu refused to sign a contract with the Padres, so they traded him to the Yankees for a much better package than they gave up to get him.

Curious in the East
1 year 5 months ago

Why did the Japanese Baseball League agree to this new posting system? The owners in the MLB would never agree to leave tens of millions of dollars on the table. Yet, that is exactly what Japanese Baseball did. This agreements works great for the players & MLB owners. I simply do not understand why the owners in NPB agreed to this unfavorable deal. I have not see this answered anywhere.

Cock Flakes
1 year 5 months ago

It was take the new agreement or MLB would just wait the nine years for them to become FA’s and the Japanese teams would get nothing. The ball is still in their court if they want to post them or not.

Meh Sheep
1 year 5 months ago

Or MLB could have just ignored the Japanese leagues and made all players from Japan international free agents and the NPB would get nothing.

Curious in the East
1 year 5 months ago

I think this theory is a strong one. I am just surprised that none of the baseball writers broke down why the NPB accepted the deal. Would make an interesting story. I think waiting 9 years is not an option for either side, too much can happen. But simply making them international free agents like players form Cuba makes sense if the NPB didn’t play ball.

If the new deal did not happen, I wonder how Japan would have reacted if the MLB did make their players international FAs? It probably would have meant the courts getting involved which I know MLB wouldn’t want to happen. But all of that is moot now. Thanks for the responses.

John Cate
1 year 5 months ago

If they did that, then Japan would just bar all American players from playing in NPB. The players’ union in the U.S. would never allow that to happen. Nearly all of the “Quad-A” types who go over to Japan to play are members of the MLBPA and have the same agents as established major-leaguers.

This almost happened once, back in the 1960s when the San Francisco Giants tried to keep Masanori Murakami after a Japanese team had loaned him and another player to a Giants’ minor-league team. Murakami did so well that the Giants called him up, and wanted to keep him when he pitched well. The Japanese threatened to ban all American players if the Giants didn’t back down. And this was before the MLBPA had a fraction of the power it does now.

John Cate
1 year 5 months ago

If they did that, then Japan would just bar all American players from playing in NPB. The players’ union in the U.S. would never allow that to happen. Nearly all of the “Quad-A” types who go over to Japan to play are members of the MLBPA and have the same agents as established major-leaguers.

This almost happened once, back in the 1960s when the San Francisco Giants tried to keep Masanori Murakami after a Japanese team had loaned him and another player to a Giants’ minor-league team. Murakami did so well that the Giants called him up, and wanted to keep him when he pitched well. The Japanese threatened to ban all American players if the Giants didn’t back down. And this was before the MLBPA had a fraction of the power it does now.

N1120A
1 year 5 months ago

The Japanese players union put their foot down and threatened all kinds of stuff

johnbrooks
1 year 5 months ago

Yes, but as mentioned above what if NPB just scraps the posting system?
Then lets the team sell there players the way MLB does to foreign
leagues or the way the Independent leagues sell players to MLB teams? If
I were NPB, I scrap the posting system and start selling off the top
players that want to go to MLB where there would be no hard cap on the
amount of money a NPB team gets.

Meh Sheep
1 year 5 months ago

My point is that if NPB didn’t want to have an agreement that MLB could ignore the NPB contracts all together making the selling of NPB contracts to MLB teams invalid since MLB wouldn’t recognize them. Thus the NPB players would all be free agents in MLB’s eyes regardless of their contract status with NPB. This would leave NPB with zero compensation if a player went to MLB. Think back to when players went between the NFL and AFL or USFL OR when players went between the NBA and ABA.

Norm Chouinard
1 year 5 months ago

“One National League executive who spoke with MLBTR on the condition of anonymity explained that the new system makes for a more level playing field.”

I may be wrong but I doubt this. While more teams can easily get into the bidding, the big market teams will win over the little teams whenever they choose. No different than Free Agency.

Richard Hood
1 year 5 months ago

This article is very well thought out and researched but leaves out one point of where the posting system came from. Nomo and all the rest that came before the deal was in place literally had to file retirement paper work to get out of the NPB contracts.