The Illinois Business Law Journal: The Posting System in Major League Baseball

November 02, 2006

The Posting System in Major League Baseball

The Major League Baseball (MLB) offseason is always an interesting time for clubs, as year after the year one thing remains the same, inflation. The prices on free agent players will be more expensive than a couple of years ago, but the quality of the players may not be up to par. Don't get me wrong, there are offseasons when many excellent players are on the market, but this offseason projects to be one with only a few solid players available. This means that teams will be overpaying for bad talent, and possibly cursing themselves for a few more seasons to come. However, clubs have another option before they fork over all that green for nothing more than a benchwarmer. With baseball thriving in Japan and producing excellent players like Hideki Matsui, teams have started looking overseas by utilizing the MLB posting system.

Buster Olney of ESPN projects the baseball offseason to be a bad one for clubs, "[t]his is what this offseason will be like, with the individual teams thriving but faced with a weak free-agent market: Imagine that it's Dec. 26, and you've got 30 different teenagers, their pockets stuffed with Christmas cash from grandpa and grandma and mom and dad, all headed to the mall at the same time. There is only one Xbox left on the shelf, however, only one great pair of basketball shoes; in fact, there's really not much good stuff at the mall. But the 30 teenagers are going to spend their money, no matter what. Some contracts signed this offseason are going to make you shake your head in wonder, or in shock, depending on your perspective. 'Whatever scenario [of spending] you think of,' said one AL executive yesterday, 'tack on another 20 percent. I think that's what you're going to see." [1]

With this dismal projection by one of baseball's smarter pundits, it is no wonder teams are thinking about bidding on a great pitching project from Japan named Daisuke Matsuzaka, whose posting seems iminent. [2] The posting system was designed for baseball players whose rights belong to Japenese teams to be fairly transferred to Major League Baseball. [3] Whenever a player wishes to move to the MLB, he requests his team to make him available for posting. If the team allows this, they then inform the MLB, and interested American clubs pay a posting fee and submit bids to the Commissioner's office in order to win exclusive negotiating rights with the player. If the U.S. team and the player come to terms, the Japanese team receives a transfer fee. However, if the MLB club does not come to terms with the player, they retain their initial posting fee and the Japanese player is out of luck. The system, which clearly is not fair for the player involved, was designed to compensate Japanese clubs who lost their best players to the MLB, after Hideo Nomo 'retired' from Japanese baseball in order to sign with Los Angeles Dodgers in 1995. [4]

As can be seen, the posting system is far from fair for the Japanese player. In this instance, Matsuzaka is a premiere pitcher, and would have commanded a far greater salary offer if playing in the MLB originally, than what he will now receive via the posting system. The posting system also allows teams to sabotage other rival teams from getting big name Japanese players. Olney states that the Baltimore Orioles could post a huge bid "say $50 million" for Matsuzaka and easily win the rights to negotiate with him so that rivals Boston and New York can not. The Orioles "could then offer Matsuzaka a take-it-or-leave-it, strategically structured bid, like a 10-year, $5 million-per-year deal. Matsuzaka and agent Scott Boras, with just 30 days to negotiate and with no ability to generate a competing bid from another major league team, would have the stark choice of taking the Orioles' lowball offer or remaining in Japan. If Matsuzaka came to the U.S. under those circumstances[,] and that would seem very unlikely[,] the Orioles would have a frontline pitcher for less than the total package that everybody expects it will cost to get Matsuzaka. And if he were to stay in Japan after such a lowball offer, the Orioles would get their posting fee back and would still serve their own purposes, as well, by keeping him out of the hands of the Red Sox and Yankees." [5]

There is definitely a need to change the posting system in Major League Baseball. As the Matsuzaka scenario plays out, the Commissioner’s office should take note of teams trying to sabotage the system. Further, the idea of clubs winning exclusive rights by simply quoting a number without penalty for not structuring a deal is completely anti-player. The system should be reformed from max salary bidding to include years offered as well. That way, the team with the highest dollar amount per year would retain exclusive negotiating rights with the Japanese player, and sabotaging would be difficult. It shouldn’t be the Japanese baseball players fault that the MLB owners have been overpaying for talent for many years now and are now faced with offering up big money for lackluster talent in dry offseasons such as this year.

Sources

[1] Buster Olney, In Pursuit of Matsuzaka, ESPN Insider, Nov. 1, 2006, http://insider.espn.go.com/espn/blog/index?name=olney_buster&CMP=ILC-INHEAD

[2] Jeff Zrebiec, Japan Pitcher Catches O's Eye, Baltimore Sun.com, Nov. 1, 2006, http://www.baltimoresun.com/sports/baseball/bal-sp.orioles01nov01,0,6169857.story?coll=bal-sports-headlines

[3] Posting System,Wikipedia, Visited on Nov. 1, 2006, http://en.wikipedia.org/wiki/Posting_system

[4] Id.

[5] Buster Olney, In Pursuit of Matsuzaka, ESPN Insider, Nov. 1, 2006, http://insider.espn.go.com/espn/blog/index?name=olney_buster&CMP=ILC-INHEAD

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I liked the analogy with the kid going to the mall on Boxing Day. The AL offseason certainly could be handled much better. Like so many other sports, it's all about money - sponsorship, TV rights, and if a club doesnt have the best players, it won't have a chance to fight for the big slices of the TV rights pie.

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