Posting Up: Shohei Otani, the Evolution of the Posting System, and What it Means for Baseball

By: Matt Grasso*

            The visitor’s clubhouse at Dodger Stadium is barely dry from the champagne celebration that took place there following the Houston Astros’ World Series victory, and yet the baseball off-season is already in full-swing. The “hot stove” is heating up with analysts predicting where top free agents such as pitchers Jake Arrieta and Yu Darvish may sign, or where Miami Marlins’ outfielder, Giancarlo Stanton will potentially be traded. The player who is most intriguing this winter is not a household name, holds no awards, and has never been an All Star. In fact, this spring, he will appear in his first Major League game. His name is Shohei Otani. He is Japanese, he is a pitcher, he is an outfielder, and he is coming to America.

            Shohei Otani is a twenty-three year-old right-handed-hitting, left-handed-pitching superstar for the Hokkaido Nippon Ham Fighters in the Pacific League of Nippon Professional Baseball (NPB, the Japanese Major Leagues).[1] His reputation is well-deserved. His fastball creeps into the hundreds, and he couples it with a crisp slider and an above-average splitter.[2] At the plate, he has hit for both a great batting average (.322 in 2016) and well respected power (22 home runs in 2016).[3] Otani has said that he wishes to continue being a two-way player in the Majors.[4]

            The relationship between Major League Baseball and NPB has been rocky. From the 1960s through the early-1990s, there was an agreement between the two leagues in which both would agree to respect the other’s reserve clause, which bound a player to his respective team.[5][6] This mutual respect created a “de-facto ban” on Japanese players coming to the United States.[7] This embargo first cracked in 1994 when Japanese pitcher Hideo Nomo discovered a loophole in the system.[8] By retiring from NPB, his team was forced to release him from his contract.[9] He used his new free agent status to sign with the Los Angeles Dodgers.[10] Three years later, the San Diego Padres negotiated directly with the Chiba Lotte Marines for the contract rights to pitcher Hideki Irabu.[11] When Irabu refused to play for the Padres, his rights were traded to the New York Yankees.[12] A mid-ground compromise was soon developed. In 2000, the posting system was created, which allowed Japanese teams to receive compensation for the player, while allowing the player to negotiate directly with the Major League team.[13]

    This process, known as "posting" has evolved drastically over the years. Its original incarnation stated that any players under contract with an NPB team would be “posted” to Major League teams, alerting them of the player’s availability.[14] Major League teams then had four days to submit bids on the rights to negotiate with the player.[15] The team with the highest bid would then have a thirty-day window to negotiate with that player.[16] If the two sides reach an agreement, then the Japanese club receives the money agreed to in the bid as compensation.[17]

            This system changed in 2013.[18] Under that agreement, Japanese teams would set a given negotiation price, which was now capped at twenty million dollars.[19] Any team willing to meet that price would be given the right to negotiate with the posted player, removing the exclusivity factor from the arrangement.[20] Then, the team who agrees to terms with the player would have to compensate the Japanese team with the set negotiation fee.[21]

            However, unlike in previous major postings, Otani will most likely not receive a large signing bonus. In December, 2016, Major League Baseball, and the MLB Players Association agreed to terms on a new collective bargaining agreement.[22] Under this agreement, there is a hard limit to the amount of money that a team is allowed to spend on international professionals under the age of twenty-five.[23] Since Otani is only twenty-three, his initial signing bonus will have to fall under that cap, and will drastically hurt the team’s ability to sign other international free agents.

            Next winter, the posting system will be changing again. Currently, the maximum compensation fee is twenty millions dollars.[24] Starting next off-season, that number will fall to fifteen million dollars.[25] But, those terms may be short lived. Major League Baseball Commissioner, Robert Manfred, has expressed interest in doing away with the posting system.[26] Currently, this process only occurs for Japan and Korean league players, and is unlike the typical international free agent signings elsewhere.[27] “We’d like to have more uniformity,” Manfred said earlier this year.[28]

            Shohei Otani very well could represent a pivot point in baseball. He is coming to the country with such high status, but receiving such a low signing bonus, which suggests a problem with the system. These established players oming over from Japan are clearly different than the unpolished sixteen year-olds being signed out of Latin America, and they should be subject to different rules. Japanese players typically come to America after playing a few seasons in NPB, a major league against top players in their country. They are better prepared for Major League games. Meanwhile, the sixteen year-olds being signed from other nations are still growing, have rarely  played against top talent, and will require years of minor league experience. To subject both players to the same International Signing Bonus Cap would be unfair to both sides. Not only are the established Japanese stars not being paid as much as they are worth, but the team that signs them will have less room to sign multiple other international free agents. As such, some players will have to wait another year before signing with a Major League organization.

    Furthermore, the posting system itself is flawed. One team is more than likely going to have to pay the maximum twenty million dollars, just for the right to talk to Otani. That price will most definitely be a talking point as teams negotiate with him. The biggest issue with the system is that it heavily favors the “big market” teams. Since these contracts trend into the millions, on top of the posting fee, most “small market” teams will find that it does not make fiscal sense to spend money and International Cap space on one player. The ultimate result of these top-tier teams being able to sign these Japanese players more easily than other teams is the extension of their already large market.

            Just as Babe Ruth revolutionized baseball, the “Japanese Babe Ruth,” Otani’s, arrival in the big leagues as a two-way player could bring significant change. Signing into either league has its advantages. If he signs with an American League team, they might let him pitch and be a designated hitter on a semi-regular basis. However, the National League does not have a designated hitter. If he were to sign with a team in that league, he would most likely have to be a one-way player, but would get guaranteed at bats every fifth day when he pitches. If Otani does sign with an American League team, and if they do let him pitch and be a designated hitter, and if he is successful in these endeavors, then he might open the door for more two-way players to no longer be forced to pick a position in the minors. If this lack of specialization occurs, the next inevitable step would be to finally allow the designated hitter in both leagues, killing the last notion of traditionalism in the slowly-evolving sport.

 

* Staff Writer, Villanova University Sports Law Society Blog; J.D. Candidate, May 2020, Villanova University School of Law.

 

[1] Shohei Otani, Baseball Reference, https://www.baseball-reference.com/register/player.fcgi?id=otani-000sho (last visited Nov. 11, 2017).

[2] Dayn Perry, MLB Hot Stove: Shohei Otani's extremely complicated free agency process, explained, CBS Sports (Nov. 9, 2017), https://www.cbssports.com/mlb/news/mlb-hot-stove-shohei-otanis-extremely-complicated-free-agency-process-explained/.

[3] Shohei Otani, Baseball Reference, https://www.baseball-reference.com/register/player.fcgi?id=otani-000sho (last visited Nov. 11, 2017).

[4] Dayn Perry, MLB Hot Stove: Shohei Otani's extremely complicated free agency process, explained, CBS Sports (Nov. 9, 2017), https://www.cbssports.com/mlb/news/mlb-hot-stove-shohei-otanis-extremely-complicated-free-agency-process-explained/.

[5] Victoria J. Siesta, Out at Home: Challenging the United States-Japanese Player Contract Agreement Under Japanese Law, 33 Brook. J. Int’l L. 1069, 1077 (2008).

[6] David Berri, Throwback Thursday: The End of the Reserve Clause, Vice (Dec. 24, 2015), https://sports.vice.com/en_us/article/qkydzb/throwback-thursday-the-end-of-the-reserve-clause.

[7] Victoria J. Siesta, Out at Home: Challenging the United States-Japanese Player Contract Agreement Under Japanese Law, 33 Brook. J. Int’l L. 1069, 1077 (2008).

[8] Id. at 1078.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id., at 1079.

[14] United States – Japanese Player Contract Agreement, Japan Professional Players Association, ¶9, (1998), ‪http://jpbpa.net/up_pdf/1415704387-212862.pdf.

[15] Id.

[16] Id. at ¶ 11.

[17] Id.

[18] Cliff Corcoran, New posting system for Japanese players favors players, MLB teams, Sports Illustrated (Dec. 17, 2013), https://web.archive.org/web/20140126083253/http://mlb.si.com/2013/12/17/masahiro-tanaka-japan-mlb-npb-posting/.

[19] Id.

[20] Id.

[21] Id.

[22] MLB wants to change posting system, Japan Times (May 19, 2017), https://www.japantimes.co.jp/sports/2017/05/19/baseball/mlb-wants-change-posting-system/#.Wgh39VtSzIU.

[23] Dayn Perry, MLB Hot Stove: Shohei Otani's extremely complicated free agency process, explained, CBS Sports (Nov. 9, 2017), https://www.cbssports.com/mlb/news/mlb-hot-stove-shohei-otanis-extremely-complicated-free-agency-process-explained/.

[24] Cliff Corcoran, New posting system for Japanese players favors players, MLB teams, Sports Illustrated (Dec. 17, 2013), https://web.archive.org/web/20140126083253/http://mlb.si.com/2013/12/17/masahiro-tanaka-japan-mlb-npb-posting/.

[25] Dayn Perry, MLB Hot Stove: Shohei Otani's extremely complicated free agency process, explained, CBS Sports (Nov. 9, 2017), https://www.cbssports.com/mlb/news/mlb-hot-stove-shohei-otanis-extremely-complicated-free-agency-process-explained/.

[26] MLB wants to change posting system, Japan Times (May 19, 2017), https://www.japantimes.co.jp/sports/2017/05/19/baseball/mlb-wants-change-posting-system/#.Wgh39VtSzIU.

[27] Id.

[28] Id.