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Changes MLB Still Needs to Make to the New Japanese Posting System

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Changes MLB Still Needs to Make to the New Japanese Posting System
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One of these days, Major League Baseball and Japan's Nippon Professional Baseball will have a posting system that's just right.

The reason we can say that now, of course, is because the system that exists now isn't just right.

I mean, sure, what's there now is better than what's there before. In putting no limit on how high the posting fee could go and awarding only one MLB team negotiating rights for a posted player, the old system was much too friendly for NPB teams and much too unfriendly for players.

It's the exact opposite in the new system that was agreed to in December, which caps the posting fee at $20 million and grants negotiating rights to all MLB teams willing to pay it. With these rules in place, the new system effectively allows Japanese players to be actual, you know, free agents. 

The first test case of this new system resulted in the New York Yankees agreeing to sign ace right-hander Masahiro Tanaka for $155 million over seven years. Add in the $20 million posting fee, and the $175 million the Bombers paid for Tanaka shatters the roughly $111 million the Texas Rangers paid for Yu Darvish in 2011.

Call that a clear win for Tanaka. Despite not having thrown a single pitch in MLB, he's already among the league's highest-paid players. Call it a win for the Yankees as well, as they were able to win a bid for a posted player that, for the first time, included multiple bidders.

It's a loss, however, for the Rakuten Golden Eagles, Tanaka's former NPB club. And it's on this note that we can begin discussing how the posting system can be improved.

 

Step One: Do Away with the $20 Million Maximum Fee Silliness

Some sort of cap was inevitably going to be placed on the posting fees going to NPB clubs. The goal on MLB's side of the fence was obvious: keep as much money within the league's borders as possible.

Capping the fees at $20 million, however, is a half-baked compromise that has its drawbacks.

The Tanaka situation served to highlight one of these drawbacks: for players of his level of superstardom, that's not close to enough money in light of past precedents.

The two big ones are obviously Daisuke Matsuzaka in 2006 and Darvish in 2011. Since the posting fee for both was over $50 million, Rakuten had every right to expect getting at least that much for Tanaka.

Phelan M. Ebenhack/Associated Press
Rakuten president Yozo Tachibana said at the winter meetings that $20 million wasn't a fair price for Tanaka.

When it turned out the posting fees would be capped at $20 million, you might recall that Rakuten was frustrated enough to flirt with not posting Tanaka. The overarching message was that he was worth more to them than that.

Obviously, Rakuten gave in. Teams that find themselves in Rakuten's shoes down the line will probably give in as well. As I wrote when the agreement was first made, there's only a small chance of the posting fee limit keeping superstar players in Japan.

Even still, that there's any chance of that happening is not a happy thought for MLB clubs. Not getting players through the posting system means having to wait until they hit international free agency, and that means potentially missing out on a couple prime years.

This isn't the only flaw with the $20 million maximum. There's also the agreement that it's up to the NPB club to set a posted player's fee before the bidding. It comes off as being little more than a peace offering from MLB to NPB, and it's not without problem potential.

What if a club settles on a $5 million fee only to find out that it had drastically undervalued that player's worth to MLB clubs? What if a club sets a $20 million fee only to find out that it had drastically overvalued that player's worth to MLB clubs?

If the old system was imperfect because it left the door open for MLB clubs to overbid on posting fees, the new system is imperfect because it leaves the door open for NPB clubs to miscalculate a player's value on the open market stateside. 

Since there should be no guesswork when it comes to the posting fee, the best solution would be to...

 

Step Two: Make the Posting Fee a Percentage of the Player's MLB Contract

What this would accomplish is fairly straightforward. It would keep the free agency-esque nature of the new system in place, but a player's release price would be informed by his purchase price.

In other words: No more blind guesses, no more arbitrary limits. 

True, MLB and NPB would have to agree on a proper percentage. The history of the posting system isn't much help, as before Tanaka's signing, MLB clubs were signing players to contracts that tended to be pretty close to the posting fees they paid. A system that would pay NPB clubs 100 percent of a player's new MLB contract is...Well, just no.

But something like 50 percent? That could work.

Mike McGinnis/Getty Images
He was a .329 hitter in Japan. Now he's one of MLB's biggest bargains.

In the case of lesser Japanese stars, a system like that could lead to NPB clubs getting more than they expected. Take a player like Norichika Aoki, for example. Maybe the bidding for a hitter like him reaches $10 million over two years rather than the $2.5 million he actually signed for. In that case, his posting fee would be $5 million instead of the $2.5 million the Yakult Swallows actually got.

As for superduperstars like Tanaka, what you would likely see is much more subdued bidding. For example, as much as the Yankees liked Tanaka, here's thinking they wouldn't have gone as high as $155 million if they knew doing so would result in a $75 million posting fee on top of that.

But say the bidding only would have escalated as far as $100 million. Even in that case, Tanaka still would have become the most expensive international player in history, the Golden Eagles would have gotten a $50 million fee and the Yankees would have been looking at a $150 million investment rather than a $175 million investment.

The only real drawback for MLB would have been more money going over to Japan rather than staying within MLB's borders, which would mean less money subject to the luxury tax.

But there's a way to fix that...

 

Step Three: Make the Posting Fee Count Against the Luxury Tax

Per Article XIII.C.1 of the Collective Bargaining Agreement, only player benefit costs and player salaries count against the luxury tax. Technically, a posting fee is neither. Maybe you'd call it a cost of doing business rather than a cost of, uh, making-team-betterment.

But that doesn't make a whole lot of sense, and one guy who will gladly tell you all about it is Pittsburgh Pirates president Frank Coonelly. Playing off a dispute he got into with Yankees president Randy Levine in November, here's what Coonelly told ESPN's Jerry Crasnick:

My position has been pretty simple: The posting fee, by definition, is part of the cost of signing a player. I've always believed it should be considered part of a club's payroll for competitive balance tax purposes. I wasn't speaking on behalf of small-market clubs. I was simply speaking on behalf of one of 30 major league clubs.

He's right, you know. The posting fee may not go directly to the player, but it is money being spent on a player. A big-market team willing to make a big investment on a free agent knows that the cost of doing so might be a larger luxury tax payment. Why shouldn't it be the same with posted players?

It's not up to MLB and NPB to agree on this when the new posting system expires in three years. If this is going to happen, MLB and the MLB Players Association will have to make it happen when it comes time to revisit the CBA after it expires in 2016.

But if it does happen, then investments in posted players are going to be subject to the same competitive balance measures that free-agent signings are. Add in the destruction of the $20 million fee limit and a rule that allows for a player's fee to be determined by his contract, and what you have is a pretty solid system.

 

If you want to talk baseball, hit me up on Twitter.

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