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2014 MLB Free Agency: Why Loophole Will Remain in Japanese Posting System

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2014 MLB Free Agency: Why Loophole Will Remain in Japanese Posting System
Koji Watanabe/Getty Images

The Japanese posting system is flawed, but that doesn't mean the New York Yankees are to blame.

At the general managers and owners meeting in Orlando, Fla., Pittsburgh Pirates CEO Frank Coonelly pointed out a giant loophole in the current MLB system for signing Japanese stars like Masahiro Tanaka.

Mark Feinsand of the New York Daily News provided the details of Coonelly's critique:

Coonelly spoke up on behalf of small-market teams by proposing that posting fees be counted for luxury-tax purposes, which would likely bring down the numbers and allow small-market teams to enter the fray for Japan’s top players.

However, as Feinsand noted, not everyone agreed with the proposal. Yankees president Randy Levine rebutted Coonelly's logic by drawing a parallel to the current system for signing Cuban players:

That, in turn, sparked Levine to counter with the argument that if Japanese posting fees were subject to the luxury tax, then the process for signing Cuban free agents should also be changed.

It's an excellent point by Levine. In recent years, big-name players like Aroldis Chapman, Yoenis Cespedes and Yasiel Puig have also scored major deals. The most recent Cuban import, Jose Abreu, just landed a $68 million contract from the Chicago White Sox.

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None of those signings counted against the international spending caps of the respective clubs, however, because that's exactly how MLB and the players union drew up the rule. The same rule also excludes posting fees from luxury-tax calculations.

David Waldstein of the New York Times broke down exactly why the players union rejected proposals to tie posting fees to the luxury tax: "The union has no interest in rules that limit a team's ability to spend.”

And why would the union have any interest?

One of the primary functions of the player's union is to ensure that its members earn as much money as possible. If posting fees counted against the luxury-tax threshold, then clubs would have less money to spend on other free-agent signings.

As Coonelly argued, from a competitive balance standpoint, including posting fees in the luxury-tax calculation would create a more equitable market. But, the issue is not just about the conflict between small-market and big-market clubs. The input of the players is also vitally important.

For now, the Japanese and Cuban markets will remain outliers in the MLB free-agency landscape. As Feinsand noted, the earliest opportunity to change the rules will come at the end of the 2016 season when the current CBA expires.

Clearly, some updates are in order, but the changes will have to be fair to all parties involved.

The posting fee process needs to be reigned in so that all clubs can compete for the top talents in Japan. But the league and the player's union will need to find a creative way to do so while not damaging the earning power of the players.

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