The Ramifications of Possible Changes to the Posting System

According to David Lennon at Newsday, it looks like changes are coming to the posting system that allows Japanese clubs to, in effect, sell their players to American teams. Though this knowledge comes from anonymous sources, the alterations seem to fit an important facet of successful negotiations: there’s something in them for every party at the table.

The old system, in place since 1998, had teams send blind bids to the Japanese team owning the rights of a coveted young player wanting to play in America. The winning American team then had an exclusive window to negotiate with the player, and if they were not successful, the player would return to Japan and an uncomfortable situation (and the posting fee would evaporate).

The major proposed change, according to Lennon, could have “as many as three teams chosen among the top bidders, with the Japanese player then allowed to choose the club he’d prefer to play for and negotiate with.”

Since the complaints about the old system have come from most corners of the process, let’s look at how this considerable change would cost and benefit each major actor involved in your typical posting process.

The Japanese Player
The posted Japanese player benefits the most from this proposed change, as it immediately gives them leverage where they had very little in the past. The posting process can be a painful one that plays out in the media in Japan. Since the player has to request to be posted, he’s already made his decision publicly. To come back is, in essence, to admit that the process failed. And yet that is his only leverage once a team wins the bidding process: take their deal or go home. Now it looks like they may be able to play a couple teams against each other. And, since the team situation has often been important to Japanese players on their way to America, this also allows them to consider other factors. Now they can pick a team that’s closer to Japan, or plays in a city that has a strong Japanese community.

In any case, this large leverage change should allow the player to get more of total money spent in salary. As it is, the Japanese team and player split the total money spent almost 50/50, with Yu Darvish being the first high-profile signing to push that split in the player’s direction with a six year, $60 million contract after his rights were purchased with a $51.7 million posting fee.

Major League Baseball
This particular change — allowing three teams to ‘win’ the posting bid — doesn’t immediately sound like it would affect baseball’s governing body. But if the player receives more of the money allocated to the process, that means more money goes onto the books of the American team. That means more money for luxury tax calculations. And that means more money for Major League Baseball. Add to that possibility other rumored changes, and you can see why baseball’s administration is pushing for changes. According to Ben Badler at Baseball America, another possible change is that the posting fee is capped in the future, which could further push more money onto American team payrolls and into luxury tax territory.

The Japanese Team
Obviously that last change wouldn’t necessarily be one that Japanese teams would love. And, this idea that the changes would help to suppress posting fees, that isn’t something that would bring them to the table necessarily. But that doesn’t mean that the Japanese teams don’t have complaints, and that these changes couldn’t help to solve those issues. After unsuccessful postings have become slightly more common in recent years, there has been some grumbling that American teams can use the process to ‘block’ other teams from signing a player. In particular, when Hisashi Iwakuma failed to sign with the Athletics after their bid of $19.1 million was selected, his agent (Don Nomura) accused the team of not being “sincere” with their four-year $15.25 million offer. Even if Iwakuma didn’t do much better with the Mariners, it’s clear there’s some distrust in the process. And the Japanese team wants successful postings as much as the player, obviously. They might be on board with any changes that help ensure that once this difficult process is begun, it is more likely to complete with a transfer of cash to their team.

The American Team
It’s hardest to tell why the American teams would want these changes. One of the best benefits of the posting process to the big-budget teams is that they can count the posting fee against the marketing budget instead of the payroll, which helps them keep out of the luxury tax. If the posting fee goes down and the salaries go up, even if the net money is the same, the tax implications are not favorable. On the other hand, these changes might intrigue some smaller-market teams. Now it’s easier to get to the table, and once you’re at the table, anything can happen. A west-coast team with a strong Japanese community could surprise the other bidders by using a recruiting process based on non-monetary considerations. Or maybe they get to the table with a smaller posting fee and can therefore offer the player more money while spending the same overall cash outlay. If they aren’t near the luxury tax, it might make sense to them.

Though these changes look to benefit the posted Japanese players the most, there’s something in them for everyone. That makes it exceedingly likely that an agreement is made, even if teams have no choice but to act like it’s business as usual until they know the specific changes made. Masahiro Tanaka might just be the first guinea pig for a revamped posting process this offseason.