MLB Ratifies New NPB Posting System, Formally Announces Shohei Ohtani Will Be Posted Today

Major League Baseball announced today that owners of all 30 clubs have ratified a new posting system between MLB and Japan’s Nippon Professional Baseball. The two sides also agreed to an extension of the previous posting system through Nov. 1, 2018, and MLB formally announced within its release that Shohei Otani will be posted by the Hokkaido Nippon Ham Fighters today. The release fee on Otani has been set at the maximum $20MM. Additionally, the Seibu Lions will post submarine right-handed reliever Kazuhisa Makita on or before Dec. 31, MLB announced. A release fee has not yet been set for Makita.

Beginning today, any team that is willing to meet the Fighters’ release fee ($20MM) will be allowed to negotiate with Ohtani and his agent, Nez Balelo of CAA Baseball. Only the team that ultimately secures a contract with Ohtani will be required to pay that $20MM out to the Fighters, however. The negotiation window will run through 11:59pm ET on Dec. 22, according to the league’s release, giving teams three weeks to negotiate.

As for Ohtani, his age means that he falls under the collective bargaining agreement’s designation as an international amateur, meaning he’ll be subject to international bonus pools. At present, the Rangers’ remaining pool of $3.535MM is the largest amount he can be paid. The Yankees ($3.5MM) and Twins ($3.245MM) are next in line. The Pirates can offer north of $2MM, while other suitors for Ohtani’s services like the Mariners and Angels can offer better than $1.5MM.

Ultimately, it seems unlikely that Ohtani’s free agency will come down to a simple matter of the highest bid, though. By coming to the United States right now, he’s forgoing the chance to sign a free-agent contract that could have been worth more than $200MM by simply waiting another two seasons. Balelo has already submitted a memo to all 30 teams asking for presentations including details on evaluations of Ohtani as a pitcher and hitter; player development and medical facilities; Spring Training facilities; cultural assimilation for Ohtani; a “detailed” plan for integrating Ohtani into the organization; a sales pitch on the city itself and what makes it desirable; as well as relevant marketplace characteristics.

Unlike Otani, the 32-year-old Makita is not a young star headed into his prime. Rather, he’s long been a successful starter and reliever. Makita is still subject to the posting system, though, because he did not begin his pro career in Japan until the age of 26, thus leaving him shy of the requisite nine years of service time to be considered a free agent under Japan’s rules. However, under MLB’s collective bargaining agreement, Makita is considered a professional. In other words: he’s subject to the posting system but not to international bonus pools.

Makita owns an excellent 2.83 ERA in 921 1/3 career innings. After moving to the bullpen full time in 2016, he’s posted a minuscule 1.91 ERA in nearly 150 innings. Makita’s submarine delivery could well hold appeal to a wide swath of clubs looking to give opponents a different look in the middle and late innings of a game, but his 5.0 K/9 rate will give teams some pause as well.

Beginning next offseason (Nov. 1, 2018), the release fee associated with a posted player will be directly tied to the size of the player’s contract with an MLB club. Per the league’s release, the sliding scale is as follows:

• For Major League contracts with a total guaranteed value of $25 million or less, the release fee will be 20% of the total guaranteed value of the contract;
• For Major League contracts with a total guaranteed value between $25,000,001 and $50 million, the release fee will be: (i) 20% of the first $25 million of the guaranteed total (i.e. $5 million) plus (ii) 17.5% of the total guaranteed value exceeding $25 million;
• For Major League contracts with a total guaranteed value of $50,000,001 or more, the release fee will be: (i) 20% of the first $25 million of the guaranteed total (i.e. $5 million) plus (ii) 17.5% of the total guaranteed value between $25,000,001 and $50 million (i.e. $4,375,000) plus (iii) 15% of the total guaranteed value exceeding $50 million
• For Major League contracts that contain bonus, salary escalators or options (Club, mutual or vesting), the Club may owe a supplemental release fee at a later date equal to 15% of any bonuses or salary escalators actually earned by the player under his contract, and/or 15% of any compensation paid to the player in Club, mutual or vesting option years that were exercised or vested;
• For Minor League contracts, the release fee will be a flat 25% of the signing bonus. (For Minor League contracts of “Foreign Professionals” that contain Major League terms, a supplemental release fee will be owed if the player is added to the 25-man roster.)