Wednesday, November 01, 2006

Posting (Not The Blog Sort)

One of the most coveted players on the open market this off-season isn’t exactly a free agent in the usual sense. Japanese pitcher Daisuke Matsuzaka, the 26-year old star of the WBC and the real deal according to ex-pat Bobby Valentine, will be the subject of some intense bidding and even more intense maneuvering. As it turns out, his services will depend first on the mysterious process known as posting.

Here is how Going Deep Interactive describes the process:

Japanese players are not subject to the Rule 4 Draft, which currently includes only residents of the United States, Canada, or Puerto Rico (or other U.S. territories), or non-residents attending high school or college in the United States.

But they're not really free agents, either, unlike Latin American players, who are eligible to negotiate and sign with any club so long as they are at least 16 years old.

The process to sign a Japanese player who is already playing professionally is, in a way, like the amateur draft, with one basic, significant exception. While the right to negotiate with a drafted amateur is based on a team, in reverse order of record, using a draft choice on him, the right to negotiate with a Japanese player is secured by the highest bidder.

At any point between November 1 and March 1, a Japanese team can "post" one of its players, which essentially means it puts its player up for bid to see how much a Major League club will pay the team to get it to release the player from his Japanese contract. Sometimes the team initiates the process to see what it can get for the player. Other times the player asks his team to post him. And sometimes, a Major League club may anonymously request a status check, basically putting the Japanese team on notice that it has an interest in a particular player to see whether the Japanese team would consider posting him.

Regardless of which trigger is involved, the Japanese team has full discretion as to whether to post the player. If interested, it notifies the MLB Commissioner's Office that it wishes to post the player. MLB then distributes official notice to the 30 big league clubs advising that the player in question will be available for posting starting on a certain date. The clubs are given 72 hours to submit a blind bid for the player. After the 72-hour window expires, the club that submitted the highest blind bid is awarded the right to negotiate with the player.

The club and player then have 30 days to make a deal. If the club comes to an agreement with the player, the blind bid money goes to the Japanese team as a transfer fee. If there is no agreement with the player, no money exchanges hands between the MLB club and the Japanese team (the bid money is returned), and the player cannot be reposted for another year.

The system was created in response to Hideo Nomo's 1995 "retirement" from Japanese baseball, which effectively allowed him to sign with the Dodgers without compensation to the Kintetsu Buffaloes. The system does not apply to players with at least 10 years of service in the Japanese professional leagues.

The posting bid is sometimes as significant as the dollars involved in the eventual contract: the Mariners bid $13 million before the 2001 season in order to negotiate with Ichiro Suzuki, whom they eventually signed to a three-year, $14 million deal. On the other end of the spectrum, San Diego secured the right to negotiate with Akinori Otsuka with a prevailing bid of just $300,000. The Padres then signed the reliever to a two-year, $1.5 million contract with a $1.75 million option for 2006, which the Rangers inherited when they acquired Otsuka in January.

The posting bids on Matsuzaka are expected to be in the Ichiro range, if not higher. The Rangers have reportedly sent director of pro and international scouting A.J. Preller to Japan to scout the righthander, who turns 26 on Wednesday.

Buster Olney, of ESPN, offers the following, which should only complicate matters further (while no doubt increasing the attorneys’ fees):

The posting system is deeply flawed. For example, here's one sabotage scenario that might interest a team like Baltimore, which is faced with the possibility that Matsuzaka will land with either of the big market monsters in its division, the Yankees or the Red Sox. The Orioles could post a huge bid -- say $50 million -- and blow everybody else out of the water. With exclusive negotiating rights, they then could offer Matsuzaka a take-it-or-leave-it minimum bid, like a six-year, $6 million 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 a 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 -- then the Orioles would have a frontline pitcher for much less than the total package of $80 million that everybody expects it will cost to keep Matsuzaka. And if he were to stay in Japan after such a lowball offer, then 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.

Even though as many as ten teams might post their interest in Matsuzaka, the final number of teams willing to meet his and Boras’ price could be limited to the usual suspects. You might have noticed in reading numerous articles on the prized right-hander that the Phillies do not appear on any list.


The Other Kevin said...

The one, perhaps major, flaw with Olney's scenario is that in his example, the Orioles would be forced to pay the $50 million to the Japanese club immediately, rather than spacing out the payments over several years as they would in a normal contract. $50 million is no small chunk of change to produce on the spot, so I could see this being a barrier to this sort of tactic for all but a very few clubs.

Oisín/Wizlah said...

Cheers for clarifying that Tom. Given montgomery's recent comments about payroll, it does suggest that the possibility of an expensive deal won't stop the phillies for going for it if they want Iwamura for an option at 3b, (given at least one other team's interest (indians)).

RickSchuBlues said...

That last sentence is interesting to consider in light of Pat Gillick's repeated statements about how everything begins and ends with pitching - yet, all we have heard since the season ended is rumors about offensive players, including Iwamura. Evidently PG feels the rotation that ended the 2006 campaign is good enough to get the Phillies where they need to be, and I'm fairly confident he may be right - but if there is a possibility of improving the pitching, such as Matsuzaka, why are the Phillies not linked to any rumors of this ilk?

Tom Goodman said...

I am not as sanguine about their pitching as some. True, if a team has two top pitchers that is normally more than most, but it is difficult to say who would qualify on that score with the Phils. Brett Myers could be a top pitcher, but everyone has been waiting for that to happen for a long time. Cole Hamels could be a top pitcher, but I'd like to see a full season under his belt before annointing him. After that the Phils rotation is decidedly average or below average. Lieber will be another year old, probably in no better physical condition, and prone to starting slowly. The number 5 guy is a complete unknown at this time, but if it turns out to be Randy Wolf it remains to be seen if he can pitch in this ballpark effectively and whether or not he can learn to mix up his pitches more effectively.

I think the emphasis on offense is not unwarranted. Third base is an offensive disaster that must be fixed and the Phils need another outfielder. One of those two spots also has to bat behind Ryan Howard.

Oisín/Wizlah said...

RSB - I guess because too many teams want this pitcher, and at they have the money to put in an outrageous bid for negotiation rights. If memory serves me correctly on the best strategy for a blind auction, its that you have to put down your highest possible bid. It's not unlikely that gillick thinks that its not worth it given the competition involved. It would be an expensive deal for a very good, young pitcher. Given gillick's past experience in this, it wouldn't surprise me.

The other thing is that abreu trade aside, gillick plays his cards close to his chest. I don't think another pitcher is out of the question through a trade, but gillick has said time and again that he will not pay big money for FA pitching. Hard to tell with this guy.

Does anyone else get the sense that gillick is using montgomery to deliberately mix things up with his statements? Or should we all just apply occam's razor and take it that gillick doesn't have that much leeway from the ownership?

George S said...

It would seem that the Japanese baseball procedure regarding 'posting' could lead to some serious abuse. I'm not sure what the rules really are and who is policing it. What is to stop teams from colluding in this process? For example, a big payroll team could simply blackmail smaller market teams by just threatening/hinting at posting a large $$ amount. For example, what's to prevent the Yankees from requesting a minor league prospect from a team like the Royals just to keep the Yankees out of the posting auction, or in consideration for the Yankees keeping their posting bid low and letting the Royals know about how much it is?
In theory, for example, the Phillies could've gotten verbal agreement from the Yankees not to post a large bid on Iwamura or Matsuzuka as part of the Abreu deal. In that case, perhaps the trade does not seem so lopsided, since the Phillies could save millions knowing the Yankees wouldn't be bidding. (Obviously a hypothetical example).

Instead of posting, the Japanese team should be entitled to a % of the player's final negotiated contract value as compensation. For example, 25%. Iwamura signs a 5-yr, $50 mil contract and his Japanese team gets a $12.5 mil transfer payment. It is then in the best interest of the player AND his old team to let all the MLB teams bid up the contract value, just as happens with any FA.
You could also establish a baseline minimum transfer payment amount, below which the Japanese team could veto the deal and keep the player or accept that minimum payment. For example, $10 mil.

It is hard for me to believe that sealed, secret bids can really be kept secret from teams that want to sign a potential all-star player.

Tom Goodman said...

The entire posting system seems designed for abuse. In order for the process to avoid the sorts of shenanigans others have cited, it must be more transparent from the initial phase on.