MLB-NBP Announce a New 3-Year Posting Agreement

I never knew the details of the posting system until recently – I just understood that it was an agreement between Major League Baseball (MLB) and Japan’s Nippon Professional Baseball (NPB) league that had to do with players coming to the United States from the NPB. Simplistically,  it is a system for Japanese teams to be able to make their players available to MLB teams.

In 1967, the United States – Japanese Player Contract Agreement, also known as the “working agreement,” between MLB and NPB was first established. It was designed to regulate NPB players’ moves to the MLB. This system was kept in place until a couple of flaws in the agreement surfaced in the late 1990s. Some NPB teams were losing starting players and receiving no compensation. NBL players found ways to void their contracts in order to move to MLB. The second problem was that players from the NBP who were being traded had little or no negotiating power and were sometimes involuntarily moved to the MLB whether or not it was what they wanted.

These issues were not addressed until problems arose in the late 1990s. In 1998 the agreement was rewritten to address the two major problems. The Agreement was rewritten. It was dubbed the “posting system.” A player from the NBP can be “posted” by their team. Once a player has been posted, MLB holds a four-day silent auction for the player which includes all 30 teams. The bid-winning club is then allowed to negotiate with the Japanese player. The NPB then gets the money acquired at the bid auction if the player does in fact play in MLB. If after 30 days the player and the bid winning MLB club cannot come to a contract agreement then the player reverts back to his NPB team and no money exchanges hands. Usually the latter outcome would not happen as the player and highest bidding team would come to an agreement. So, this agreement favored the NPB as they would receive the money from the highest bid, which had no limit.

The new agreement, announced Monday, will be in place for at least the next three years. There is a cap of $20 million that a team can bid on a posted player. It makes each team stand on a more equal playing field. It means that there will no longer be high posting bids such as the $51 million the Red Sox paid for Daisuke Matsuzaka in 2006 and the $52 million the Rangers put down for Yu Darvish in 2011. Because the bid money goes to the NBP, the teams subsequently will be less likely to give the NBP player an exorbitant contract so that they do not exceed the MLB pre-determined payroll limit and be subject to luxury taxes. Even though MLB does not have a salary cap, they do impose luxury taxes on teams that overspend. With the bid cap, the NPB player will be allowed to negotiate a contract with any team he chooses. Smaller market teams will have the chance to then spend more of their money on signing the player and not having to worry about losing $50 million just to be able to get the opportunity to negotiate.

The most current example of how this new posting system agreement will work is in the case of NBP star pitcher Masahiro Tanaka.

Image courtsey of Getty Images

Image courtsey of Getty Images

Although, the latest news is that his team, the Rakuten Golden Eagles, may not be interested in posting Tanaka just yet. If posted, however, Tanaka can negotiate with any team he wants. This basically opens up a complete free agent bidding war benefiting both MLB and the individual players rather offering just a big payout to the NBP.

It is interesting that the NPB would agree to this posting system which benefits MLB and individual players more than themselves. Apparently a lot of NPB teams do not recognize or even use the posting system. The teams that do aren’t exactly going to be giving up their star players left and right.

Essentially, now there shouldn’t be a huge influx of Japanese stars into MLB, and the status-quo will most likely remain the same besides the fact that now both MLB teams and individual players will benefit while the NPB will still receive good compensation for giving up one or more of their top players.