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Proposed Changes to the Japanese Posting System

2013 November 14
by Phil Miller

The Nippon Professional Baseball players’ union has agreed to some changes in the Japanese Posting system that allows some NPB players to negotiate with MLB clubs.  The posting system is on hiatus for this year while changes are hashed out.

The posting system allows NPB players not yet eligible for free agency a way to negotiate with MLB clubs.  It was developed after Hideo Nomo and Alfonso Soriano exploited loopholes that allowed them to leave their NPB club to play in the states.

As it is currently structured, a NPB club may unilaterally post one of its players or a MLB can inquire about a particular player between Nov. 1 and March 1.  Once the player is posted, MLB teams may make sealed bids which are given to the MLB commissioner.  If no one bids, the player returns to his NPB club.  If teams submit bids, then the MLB commissioner notifies the NPB commissioner of the amount of the winning bid, but not the team that made the bid.  The NPB team has four days to accept or reject the bid.  If the bid is rejected, the player returns to his NPB team.  If the bid is accepted, the winner gets a 30 day window to negotiate with the player.  If no agreement is reached, the player returns to his NPB club, but the MLB team does not have to pay its bid.  If an agreement is reached, the player goes to the states and the MLB team pays its bid as compensation to the NPB team.

Under the proposed changes, if negotiation rights are awarded and the two parties can’t reach an agreement, the MLB team would pay a fine, although I haven’t seen how high the fine would be.  However, if an agreement is reached, then the MLB team would only pay the average of the top two bids.  I presume that if there were only one bidder, that team would still have to pay its bid if negotiations were ultimately successful.  The union has agreed to these changes for only two years.

There are a couple of potential reasons for the changes.  One is they will keep MLB teams from setting ridiculously-high bids to block other teams from getting players.  As currently structured, the posting system does not penalize bad faith bids.

A second reason suggested at Baseball Reference is that the changes will lower the costs for MLB teams, especially when highly-regarded players are posted.  In 2011, the Texas Rangers bid $51.7 million for the right to bargain with Yu Darvish and the Dodgers bid $25.7 million to bargain with Ryu Hyun Jin.  This year, highly-regarded pitcher Masahiro Tanaka is expected to be posted (if the revisions are accepted by the NPB).

However, I’m skeptical of this second reason because a lowering of the fee would just leave more money on the table to sign the player.  It’s not at all clear that this would lower the overall cost (fee + salary) of the winning MLB team.  Come to think of it, perhaps this is why the NPB players’ union signed off on the changes.

In any case, the NPB still has to sign off on the changes and until it does so, the posting system will be on hiatus until further notice.

One Response
  1. Duane Rockerbie permalink
    November 20, 2013

    I would think that if MLB teams know they need only pay the average of the top two bids if they win the auction, higher bids will be encouraged. This leaves open the possibility of collusive bidding where the top two bidders enter a high bid for the winner of the auction and a low bid for the second highest bid. The winning bidder can then make a side payment to the loser that is just less than the savings from paying only the average of the two bids. Don’t think collusive bidding goes on? I am not so sure.

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