Archives for February 2014

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.