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Patrick Newman

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A Conversation About the Posting System With My Brain

by Patrick Newman (Dec 9, 2013)

So, Brain, the posting system is changing. Apparently the details are still being formalized, but the main changes are that the NPB chooses the posting fee, the $20m limit on fees, and the player's right to negotiate with any team that makes the maximum bid. Thoughts?

Well, it looks like MLB is trying to save its teams from themselves. It feels like both of the proposals started from the point of MLB wanting to reduce posting fees without significantly increasing the Japanese team and player's negotiating. In that sense, NPB did a good job securing some new leverage for it's players. Giving the players multiple MLB teams to negotiate with is a surprisingly player-friendly inclusion, which has been welcomed by a union that has so little come their way.

The real, immediate loser here is Rakuten - and any other NPB that intends to post a marquee player. For teams in that situation, the $20m is almost diabolical.

What do you mean by that?

In case like Masahiro Tanaka's, the new posting system makes the deal significantly better for the player and significantly worse for the team. So the incentive for the player to go and for the team to hang on have both increased. I think this could drive a wedge between the player and team, which we're kind of seeing with Tanaka and Rakuten right now.

But the highest posting fees were indeed astronomical.

Yeah, they are. There's no denying that. But there have only really been two huge ones, Daisuke Matsuzaka and Yu Darvish, who both clocked in at about $51m. Matsuzaka was a flop; Darvish is looking good so far. No one seems bothered by the $25m fee the Dodgers paid for Korean lefty Hyun-Jin Ryu last year, and the Yankees $26m bid for Kei Igawa seems to have been written off as a miscalculation, a knee-jerk reaction to the Red Sox' acquisition of Matsuzaka. Then we have Ichiro at $14m way back in 2000, then Kazuhisa Ishii at $11m in 2001. All the other postings have been sub-$5m.

And let's not forget that the MLB teams have set the market for big postings. People in Japan were shocked when Boston bid $51m for Matsuzaka, and later on, that was thought of as an outlier. The expectation was that Darvish would draw a bid of $30-40m. MLB teams have a knack for spending more than anyone expects.

People seem particularly annoyed by the $51m fee that Boston paid to Seibu for Daisuke Matsuzaka, and it's understandable given his performance, but what gets overlooked is that it's not unusual MLB teams transfer money to one another. No one batted an eye at Detroit including $30m in the recent Prince Fielder-Ian Kinsler trade. No one cared that Texas agreed to send the Yankees $67m to help them undo their A-Rod mistake either.

So this is really about one guy then.

Yeah, probably. If Masahiro Tanaka wasn't perfectly positioned to command another $50m posting fee, I doubt anyone would be having this discussion, at least not right now. There's no one else in NPB that immediately comes to mind as being that hot a commodity; the other elite players are a few years away. So this is really about preventing his price from getting out of hand. The smarter thing might have been for MLB to try to push this kind of change through last year, when there were no postings from NPB. Hyun-Jin Ryu was posted from KBO, but I have to assume that it would have been easier to sell KBO on a $20m limit.

Maybe that's a good thing, right? What if he's a bust?

That's part of the risk that MLB front offices are paid to evaluate. There was no limit imposed on what MLB teams were allowed to spend on Alex Rodriguez, Ryan Howard, Albert Pujols, Josh Hamilton, Jhonny Peralta...

Hang on. The luxury tax is a deterrent from going overboard on player salaries.

So prorate the posting fee over the term of the contract and apply it to the acquiring team's luxury tax number. That way, at least the number comes from what the market is willing to pay, rather than a an artificial cap. The luxury tax is a deterrent, not a hard cap.

Yeah, I know they can't do that because the MLB CBA is set in stone for the next couple years, but then so be it. MLB teams have made their beds, they can lie in them.

Why would NPB ownership agree to this?

Some of them don't recognize the Posting System and refuse to use it. They don't care if there's a limit or not. I can only speculate as to why the others would go along with this... maybe they see it as something that won't come into play very often, or maybe they see it as a disincentive to post their own players. Or maybe they just don't want to face Tanaka next year.

No one seems to like the Posting System. Why does it exist?

It comes down to NPB teams needing to have a way to get something in return for players they are inevitably going to lose to MLB via free agency. Conceptually there is nothing wrong with this; in fact MLB clubs transfer players to Japanese teams for fees that range up to the low seven figures. Case in point, Softbank paid the Cubs $950k last year for Bryan LaHair's contract.

What does it matter anyway?

From a practical standpoint, I don't know, actually. Seibu invested the money they got from Matsuzaka into improvements to their home stadium, the Seibu Dome. Nippon Ham doesn't seem to have re-invested their Darvish money back into their baseball operation in an obvious way. Perhaps there are more subtle ways that I haven't picked up on.

In the bigger picture, a vibrant Japanese baseball culture and a financially healthy NPB is a very good thing for MLB and baseball in general, and limiting how much a team can benefit from developing a superstar player can't possibly help.

There are two baseball leagues in world where a significant number of players earn over $1m annually - MLB and NPB (there might be a few guys in Korea by now). Having 42 organizations that employ baseball players is certainly better than having 30. If we include Korea's 11 teams to the mix, it's better to have 53 than 42.

Another thing is that part of the reason that Japan is a good market for MLB is because Japanese Major Leaguers bring huge fan followings with them. Guys like Darvish, Ichiro and Hideki Matsui were stars before they ever stepped on a Major League field. I don't have the numbers on this, but I would assume that the market for MLB has grown many times over since Hideo Nomo braved the Pacific in 1995.

Thanks Brain.

No problem. I'm gonna go back to thinking about other things now.

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