Small Markets Go From No Chance to Small Chance For Japanese Players

Major League Baseball and Nippon Professional Baseball came to a new agreement this week on the posting fee for Japanese free agents. Previously, NPB teams would post players for free agency, and the highest bidding MLB team would have exclusive negotiating rights for that player. This led to a lot of high bids, with players like Yu Darvish and Daisuke Matsuzaka commanding $50 M just for teams to negotiate with the players. That money was only paid when teams ended up signing the player, which would cost around an additional $50 M for top players. The combined costs meant that small market teams had no chance at landing the top players out of Japan.

The new deal that was reached set a maximum bid of $20 M for players coming out of Japan. Furthermore, any team that bid $20 M had the opportunity to negotiate with the player. This new rule means that there’s no reason for any team to avoid making the maximum bid on a guy like Masahiro Tanaka. Only the team that signs him pays the $20 M, meaning there’s no risk in placing a bid. What this means is that every team can bid the maximum for Tanaka, essentially making him a free agent.

This new rule and the lowered price allows small market teams like the Pirates the opportunity to bid on top players like Tanaka. However, since Tanaka would basically be a free agent, and since free agency favors big market teams, the odds of a small market team landing a top player from Japan are still small.

When you consider the potential price of a player, you have to consider things from the team perspective. In the past, teams were spending $100 M for five years on guys like Darvish and Dice-K. Half of that went to the player, with the other half going to the NPB team. For the player, it meant he was accepting $10 M per year. For the team, it didn’t matter who was getting the money, since they were paying $20 M per year for the player in the end.

The lowered posting fees just means that more money can now go to the player. Instead of a guy like Tanaka getting $50 M for five years, he can now get $80 M for five years. The players from Japan will get more, teams will be spending the same amount overall, and the NPB teams will be getting less. Very few teams can afford to pay $20 M per year on any player, much less a player who has zero major league experience.

Teams like the Pirates now have a chance to bid on a guy like Tanaka. However, their chances of landing him are pretty much the same as their chances of landing any other free agent who will command $20 M or more per year.

Tim Williams

Author: Tim Williams

Tim is the owner and editor in chief of Pirates Prospects. He started the site in January 2009, and turned it into his full time job during the 2011 season. Prior to starting Pirates Prospects, Tim worked with AccuScore.com, providing MLB, NHL, and NFL coverage to various national media outlets, including ESPN Insider, USA Today, Yahoo Sports, and the Wall Street Journal. He also writes the annual Prospect Guide, which is sold through the site. Tim lives in Bradenton, where he provides live coverage all year of Spring Training, mini camp, instructs, the Bradenton Marauders, and the GCL Pirates.

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  • stickyweb

    Tim, one minor point that slightly favors small market teams (well actually hurts large market teams so I assume it helps small markets as a result). If $80 mil out of $100 mil (instead of the previous $50 mil) is now going to the player in your hypothetical example, wouldn’t that extra $30 mil count against the luxury tax figure for the (large market) team that signs the Japanese star? Or did the posting fee used to count? Or is this addressed differently somehow in the new agreement?

    • http://www.piratesprospects.com/author/admin Tim Williams

      The luxury tax level is at $189 M. So that really only hurts the Yankees and the Dodgers if they sign these players.

      • emjayinTN

        If you look at the Yu Darvish deal, it was basically $50 mil Posting and $50 mil Contract. The Pirates are one of those teams who could bid the $20 mil posting and sign him for 6 years/$80 mil – $13.3 mil per year, which eliminates teams like the Yankees, Dodgers, possibly Texas, and possibly Boston. If those teams sign a player they will bid the same but low ball the first few years to try to stay under the cap. Because the Pirates will be losing $14 – $20 (not counting AJ) mil in pitcher contracts after 2014, they can drive the price up even higher.

  • chu8870

    even if the pirates have the money its not like their going to use it,they pirates believe their way of buying cheap is the way to go,i can’t see them anytime soon offering someone a contract worth over 20mill unless its extending someone.

  • MaineBucs

    Not specifically on point regarding the new posting system, but —

    Cuba is desperate for outside investment. Cuba has developed same good ballplayers, and in their own way, these ballplayers have created the potential for a more favorable public view of Cuba.

    Cuba needs to get it together and essentially offer its ballplayers for sale, just like the Japanese teams do, and similar to how teams in Mexico demand posting fees for the signing of young ballplayers, like the Pirates had to do when they signed Heredia.

    New leadership in Cuba should see the light. Market your players as a way of highlighting how Cuba has progressed, and make some money off the players that are ‘sold’ to the major leagues. What would you rather be known for — a player like Abreau needing to secretly find a path out of Cuba, or touting Abreau as a local player who also can succeed in major league ball and have good things to say about Cuba. Geez, maybe they would even openly allow and encourage players to return to Cuba to visit their families and become hometown heroes.

    • http://www.piratesprospects.com/author/admin Tim Williams

      It’s illegal for MLB teams to deal with Cuba. That’s why players have to leave Cuba in order to sign with an MLB team.

      • MaineBucs

        Hey Tim

        I know that it is illegal for MLB teams to deal with Cuba. I was suggesting an easing in relations – a business relationship – between the U.S. and Cuba that actually could benefit Cuba and help the better ballplayers in Cuba as well.

        • http://www.piratesprospects.com/author/admin Tim Williams

          That would require an agreement on things that are far bigger than baseball. I just don’t see it happening.

          • MaineBucs

            Even though it may not happen, here it further reason why this type of arrangement needs to happen. Perhaps current Cuban ballplayers in the U.S. could help to make it happen.

            If I recall correctly, there was a time not that long ago when Germany was two countries and apartheid ruled in South Africa.

            It would be difficult, but it is not impossible.

            lhttp://sports.yahoo.com/news/leonys-martin-lawsuit-details-allegations-of-cuban-baseball-player-smuggling-061730936.html

  • Jared

    Major League Baseball is a joke. Limiting what small market teams can spend in the draft while also limiting international free agency bonus allotments while only making minuscule changes to the Japanese posting system and making no changes to free agency, an extremely broken system, leaves small market teams at a sizable disadvantage and leaves MLB looking more and more like a pawn for the large market teams.

    Watching Robinson Cano, very similar WAR to Andrew McCutchen over the last several years, sign a 10-year (ten friggin years) contract worth close to a quarter-billion dollars is disgusting…watching Jacoby Ellsbury sign his massive contract is even more disheartening. Imagine the contract that Andrew McCutchen will receive…or, worse yet, Mike Trout.

  • http://www.facebook.com/bob.martin.9003 Bob Martin

    It’s actually a mute point when it comes to the Pirates, you could drop that

  • http://www.facebook.com/bob.martin.9003 Bob Martin

    It’s actually a mute point when it comes to the Pirates, you could drop that posting fee to a fee million dollars and the Piratez still won’t be players in the Market. We can’t even get them to play in the FA market why would you think the international market would be any different? The Pirates work from an extremely small budget and they won’t difer from it.

    • stickyweb

      And thank God that’s the case. I’d rather get 2 good years of Liriano and pay for them than get 2 good years of Dice K and pay for 6 of them + the posting fee. But that’s just me.

    • Cato the Elder

      Was it not just last year that the Pirates outbid the Yankees in free agency for Martin? That’s not an argument that small market teams are not a t a significant disadvantage – they are – but to dispute the notion that the Pirates will not pay market price for a player if they think it is worth it.

  • CalipariFan506

    Did you guys ever stop and think that these free agent deals are good for the Pirates?

    The Cubs stink because of bad contracts.
    The Mets stink because of bad contracts.
    The Twins have committed small market suicide this winter.
    The Mariners will regret that Cano contract for a long time.
    Do we even need to discuss the Angels?

    I hope these guys sign for more than ever. Truly only the Yankees, Red Sox and Dodgers can operate in this way.