Finally: Changes to the Posting Agreement With Japan

It looks like Major League Baseball and Nippon Professional Baseball finally have agreed on changes to the posting system between their two bodies. Joel Sherman reports:

Since MLB is the last to approve this, and the $20 million cap was their idea, it’s probably going to be approved.

There is one wrinkle that is a bigger deal and could cause consternation with certain clubs. After bandying about proposals that used reverse order of standings to determine the posting winner, this proposal will allow all of the teams that pony up $20 million to get to the negotiating table. Small-market teams will be happy to get to the table with the big boys, but unhappy, perhaps, about having to go toe-to-toe with bigger wallets. Perhaps the fact that there are things to like and not like about these changes — coupled with the $20 million cap that most American teams are probably happy about — means that this is likely to pass in MLB’s Executive Counsel.

This is a coup for the Japanese baseball players that wish to come to America. After all sorts of ideas that did not improve their leverage at all, the best Japanese players suddenly have the ability to negotiate with multiple teams. That will have the immediate impact of increasing the player’s share of the money. If the market bore $111 million for Yu Darvish, but he was posted in this system, he’d be $40 million richer. This should also mean that Japanese stars have better incentives for asking their teams to post them to American teams. Market-based solutions for the win.

That isn’t to say that there aren’t losers in this deal. Japan’s teams posting their players get less money for their troubles. It may even make it less likely that Masahiro Tanaka gets posted. $20 million is not nothing, but it’s also not the $50-60 million that the Rakuten Golden Eagles may have gotten under the old posting system.

The onus on setting the price for a player now shifts to the Japanese team, which has pluses and minuses. Having a player return to Japan after agreeing to be posted puts egg on the faces of all involved. Once a player requests to be posted, and the team agrees, nobody wants the player to have to return. Imagine if trade negotiations were public, and a team had to publicly announce that they had failed to trade a player but were super happy to get him back for the upcoming season. When Hisashi Iwakuma failed to sign with the Athletics, and his agent accused the team of negotiating in bad faith, we got an idea of how Japanese baseball was afraid of that happening again. Now they can set a price that they think is attainable, but they get less money for their player as a result.

It looks like Japanese clubs will get a little less money for their players in return for the security that posted players will actually move on. American baseball gets price controls on the process, and Japanese players get leverage. Each party got something they wanted. And now, there’s a system in place and American fans can begin to hope that a certain Rakuten pitcher decides he’d like to come to America. From his perspective, the process just got a lot more attractive, after all.

[A correction was made to this article. Japanese teams set the price of their posted players up to $20 million, the author erroneously believed that it was merely a $20 million cap.]

Print This Post

Graphs: Baseball, Roto, Beer, brats (OK, no graphs for that...yet), repeat. Follow him on Twitter @enosarris.

30 Responses to “Finally: Changes to the Posting Agreement With Japan”

You can follow any responses to this entry through the RSS 2.0 feed.
  1. Shankbone says:

    So do the Golden Eagles blink? Seems to me they can still get their 20MM next year and get another year of value from the best player in the NPL. Going from 50-65MM to 20MM is quite a haircut. I bet if Tanaka doesn’t push hard they don’t post him, then they’ll do it next year while they still have the year of leverage. If he was a FA next year they would definitely have to post him and just grit their teeth while counting the 20MM.

    Vote -1 Vote +1

  2. Kinanik says:

    Wait: is the $20M posting fee is paid only the highest bidder after the player is signed? Or is it paid by each team that goes to the negotiating table? If the former, why would any team *not* offer the high bid (for a player worth at least $20M). If the latter, why would the Eagles necessarily be unhappy? Instead of $60M from one team, they get $20M each from three teams, or some such.

    Can Japanese players pay their teams to post them? It seem like, while they might be happier to be posted, their teams will not be as happy to post them (unless each team that bids the maximum pays it). Unless there is some ‘outside’ bargaining, or players can commit to a ‘grim trigger’ strategy against a team that doesn’t post them, it seems like Japanese teams will keep holding to their players who are worth more than $20M to them, whether the players like it or not.

    Vote -1 Vote +1

    • Kinanik says:

      It looks like (re-reading the tweets) that only the winning team sends money. In this situation, does any team *not* bid for Tanaka? It also looks like the NPB teams can choose a maximum bid below $20M (which a team might do to avoid only one team winning and then failing to sign the player). This looks a lot like free agent compensation, except the posting team gets to choose a price, rather than the price being decided by the signing teams’ draft position.

      Vote -1 Vote +1

  3. nada says:

    can someone explain to me how Japanese teams and players agree for a given player to be posted? Say between Rakuten and Tanaka.

    Does the team have all the leverage–? Can they (the team) just say, “No, I refuse to post you, now go play out your contract.” Or can the player put pressure on them somehow (besides talking to the media)?

    If there’s no way for the player to force being posted, why would the teams ever agree to do this any time before the last year of their contract? The new system caps their benefits at a level so low that it seems to me better for the team to keep their stars around in almost all cases.

    Secondly, why did NPB and those teams ever agree to this in the first place? Usually with agreements between groups with equal leverage it’s more like a little bit lost and a little bit gained for both sides. This just seems like NPB seriously lost, and MLB seriously won. What’s the upside for Rakuten and the other NPB teams?

    Vote -1 Vote +1

    • Bustacard says:

      Keeping the talent in the NPB might just be the point, from NPB ownership perspective. The lure of posting the absolute best Japanese players may not be worth what you would lose any longer. Form what I understand, NPB has lost ground in popularity due to some of the best players heading to the US and Canada. Maybe this is a play to keep the Darvish/Tanaka/Dice K guys in Japan through their prime years.

      Vote -1 Vote +1

      • nada says:

        if that’s the case then why did MLB go for it? Presumably MLB wants great Japanese players too.

        Vote -1 Vote +1

      • LHPSU says:

        Yes, pretty much. Teams were willing to post players for $50-60 million because that’s enough money to pretty much float a franchise even if they tank the next season or two. 20 million, far less, so teams should be less likely to post players, thus keeping them in Japan and improving the domestic product.

        So I think, overall, this is a net negative for players who want to play in the US.

        Vote -1 Vote +1

    • Eno Sarris says:

      The player has to request it, but he can do so privately to allow the team to discuss it with him. Often, though, it’s a public request, and once it’s public, and if it’s the stated and immovable desire of the player, it’s hard for the team not post him.

      Vote -1 Vote +1

      • jdbolick says:

        Not that hard. I don’t know how many years in a row Koji Uehara publicly asked to be posted only for Yomiuri to ignore him, but it was a few. It’s not terribly dissimilar from a talented young player wanting a trade. If the current team is doing well and/or has enough clout to ignore the request then they are more likely to do so. Rakuten is an interesting case because they were typically also-rans before winning it all this season.

        Vote -1 Vote +1

  4. Bill says:

    My understanding is that there will be only 1 bid amount set for each player.
    The Japanese team determines the posting fee they want for the player (up to $20M).
    So it’s not really a matter of “winning” the bid or not.
    It’s now just a yes/no decision for MLB teams to determine whether to meet the Japanese team’s asking price or not.
    If multiple teams “bid”, they would all tie, in effect, as there will only be one pre-set posting fee for each player.

    Vote -1 Vote +1

    • Moo cow, moo! says:

      This, exactly. It’s not business as usual, if some player’s posting value is $12M (as set by the Japanese team), any team that values that player’s contributions at $12M is going to agree to post.

      It’s just the opposite of how you describe it, really.

      Vote -1 Vote +1

    • Eno Sarris says:

      yes I misunderstood the changes. thank you for pointing this out, I clarified it and reworked the article.

      Vote -1 Vote +1

    • Eno Sarris says:

      Looks like that’s how it goes. Team sets transfer fee and anyone willing to pay it gets to talk to the player.

      Vote -1 Vote +1

  5. me says:

    It seems that a better way for this to work would be for some portion of the posting fee to be non refundable, say maybe 10%. So if 11 teams wanted to negotiate with Tanaka and one of them signed him the posting team would get 30 mill. This would limit the negotiations to only serious bidders without costing the losing teams too much. It also might mean that the way to maximize the return for the posting team is to set the posting value lower to have more teams in on the bidding.

    Vote -1 Vote +1

    • jdbolick says:

      I don’t think there have been many cases where a team didn’t agree to terms after winning the bid. Usually the player buckles on his demands and takes less than he wanted. So really, the Japanese players are the only big winners here.

      I wonder what the other proposals were. I would have thought an easier system would have been to let posted players negotiate with all teams, but the posting team would then receive X% of the contract.

      Vote -1 Vote +1

  6. srpst23 says:

    I know that the salaries in the Japanese league are substantially lower than in MLB, but does anyone know how much lower? I cannot seem to find any Japanese salary info on the interwebs. Does anyone know how much Tanaka is set to make this year and next? If it is significantly less than $20 million, would the lost revenue (decrease in gate receipts/merchandise) even make it worth posting him?

    Vote -1 Vote +1

  7. Paul Thomas says:

    I hate the abuse of “market” terminology for what are actually command and control economic systems (like, say, the U.S. economy as designed and practiced by the Republican Party).

    To that end, I am obliged to point out that describing a hard price ceiling as a “market-based solution” to ANYTHING is so ludicrous as to make Milton Friedman roll over in his grave. The fact of the matter is that under this dimwittedly shortsighted system, any player worth over $20M is not going to be posted at all (at least unless it’s the year before his contract is up and the team has to get whatever they can for him).

    It’s axiomatic that price ceilings cause hoarding. And you’re going to see that now. You can forget the days of elite players being posted with more than one year left before NPB free agency. That means they have to play eight years in Japan (since it takes nine to be a free agent), which effectively means that they will be past their primes when they come to the states.

    Nice going, idiots.

    Vote -1 Vote +1

    • jdbolick says:

      Maybe if Japanese salaries start to rise considerably, but as of now $20 million is a heck of a lot more significant for them than it seems to us. That would buy the combined 2013 salary of the 1st, 2nd, 3rd, and 11th highest paid Japanese players. As noted above, I think the posting team getting X% of the subsequent contract with players being free to negotiate with all teams would have been a better system for all involved, but the idea that this will preclude posting is false.

      Vote -1 Vote +1

    • Invisible Hand of the Market Inefficiencies says:

      “Market-based solutions for the win.”

      To suggest that this agreement is a market based solution is ludicrous.

      Since when are PRICE CONTROLS now a staple of American free market dogma?

      This is Obama-style Socialism in action!;-)

      Vote -1 Vote +1

      • Eno Sarris says:

        I wouldn’t describe the whole thing as a market based solution, no. I don’t think I did. But the part where Japanese players get to talk to more teams and get more leverage? Yes that part is at least more market based than the last one. Personally I’d rather players could talk to anyone and their posting team would get x%, have said so from the beginning.

        But open market? None of this has anything to do with that. Sports are socialist. Players are under team control. What can you do at this point. Except try to open it up. And yes, I think allowing a player to talk to more teams is closer to opening it up than it used to be.

        Vote -1 Vote +1

  8. Erik says:

    It does seem that the NPB’s goal with this new system is to keep elite Japanese players in Japan.

    The more elite a player is the more time he’ll be forced to stick around.

    Vote -1 Vote +1

  9. anonynous says:

    I don’t see how this can be characterized as anything but a loss for Japanese teams. Capping the posting fees they receive at less than 1/3rd what they were in line to make under the previous agreement is a huge difference. To claim that they get certainty that a player will move on and that somehow makes it all work out just seems ludicrous.

    Can anyone give me a GOOD reason why teams would have any incentive to post their best players before their final year of control? Even if he gets hurt in NPB league and needs Tommy John surgery this year. I could still see American clubs willing to bid $20M on Tanaka next year. So where is the incentive for Rakuten to post him early?

    This is a loss for NPB teams and a loss for American baseball fans who want to see great Japaanese players in MLB.

    Vote -1 Vote +1

    • Eno Sarris says:

      Not if they also wanted to keep their players or have an excuse to keep their players longer. Japanese baseball execs get a little prickly if you suggest they are a feeder for MLB.

      Vote -1 Vote +1

      • anonynous says:

        So the $20M cap is a cover for NPB so they can keep their players longer? Where as in the previous agreement they had the option to sell high or just say “No, you’re under control. We’re not posting you”. You see that as a “win” for NPB?

        Vote -1 Vote +1

  10. Gary Mugford says:

    Like most here, I think the new system will cause the NPB teams to make a calculation. IF the player is worth the ‘insurance’ cost against injury of maintaining an ability to make a set figure in posting fees, they will retain that player into his eighth season of team control. Then post him with a year left of control and for the fee the team anticipates will attract bidders in the MLB bidding process. Surely the Eagles will insure Tanaka against injury if they retain him this season, knowing he is JUST as likely next year to get the same $20MM max. He gives the team value and in Japan, that value is still his contract vs. his contributions. Just like over here. The team would lose the interest rate on $20MM for a year and run the risk of injury, thus the insurance. The cost of that insurance, plus the minimal loss of interest plus his contract becomes the new cost vs. contract calculation. All that is leaving aside the concerns of the pitcher who might want to go to MLB. Most Japanese players, thus far, keep their discontent over that decision to themselves.

    So, if the numbers are right, I do NOT expect Tanaka to be posted this off-season. He’s more valuable than the interest on $20MM to them. But NEXT season, he’ll be posted and probably very early in the process to allow him time to sort through the (probable) 30 suitors that he will have.

    After that, it’ll be the big-wallet boys in control again. They will have the tucker to offer the most money, the best chance to win (mostly) and, coming from bigger cities, the largest Japanese ex-pat populations to offer. That is assuming that becomes something important in the negotitations. The West Coast factor will probably be in play to small degree, but two of the six Pacific coast teams are already on the big-wallet list anyways.

    By the way, set transfer fees for international transfers have been a part of NHL hockey for years. And the teams also have set fees for acquiring players from junior teams. It’s all done with (usually) a lot smaller fanfare.

    Vote -1 Vote +1

  11. james wilson says:

    Let’s not compare this to free markets. It’s not. The player is now going to get an increased share of the money for which he is not going to be posted in the first place.

    Vote -1 Vote +1

  12. jdbolick says:

    If Masahiro Tanaka isn’t posted the new system will be blamed, but probably won’t be the actual reason. As noted above, Rakuten won this past season after years of mediocrity. It makes sense for a mediocre team to sell its best player, especially when that player has thus far been able to elevate them out of that mediocrity. Yet now that Tanaka has accomplished precisely that, it’s hard to imagine a championship team pawning their ace regardless of the price involved. The new posting system merely gives Rakuten cover for keeping him.

    As for the $20 million limit as a concept, only three Japanese players have ever exceeded it, with a common theory being that Igawa only did so because his bids came in the immediate aftermath of Matsuzaka. Tanaka certainly would have topped that, but the point is that elite Japanese players being posted already isn’t common. This isn’t an agreement that shuts the flood gates. And in theory the certainty of a capped amount could lead MLB teams who might have bid ~$15 million to increase their amount to be sure of a negotiating opportunity.

    Vote -1 Vote +1

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>