Last week, Japanese pitching sensation Yu Darvish agreed to a six-year deal with the Texas Rangers worth approximately $60 million. The kicker? The Rangers actually spent over $111 million to sign Darvish, bidding a cool $51,703,411 for negotiating rights through the Japanese posting system in accordance with Darvish’s contractual obligations to his current club in Japan.
Darvish, 25, has dominated for most of his seven years in Japan’s Nippon Professional Baseball league, leading the league in WHIP the last five years. He posted an otherworldly 2011 campaign that featured an 18-6 record and 276 strikeouts in 232 innings, along with a 1.44 earned run average and 0.83 WHIP.
We need to take these numbers with a grain of salt given the level of competition in the NPB, but most experts claim the talent in the league exceeds AAA Minor League baseball in the United States. Given his success, it is reasonable to expect Darvish to excel in the MLB as soon as the 2012 season despite failures of similarly hyped Japanese pitchers such as Daisuke Matsuzaka. Whether or not committing roughly $18.5 million per year proves to be a sound investment for Texas remains to be seen, but Darvish’s value should still exceed the $10 million or so a year he will receive.
So while the posting system works, is it fair for all parties involved? Japanese ball clubs certainly favor it, as it forces MLB clubs to potentially bid exorbitant figures to ensure they have the opportunity to sign the player and deny other clubs any chance of landing him. Likewise, MLB teams can certainly opt out of the process if they refuse to pay such a sum for unproven talents in the United States. If they do not sign the player within 30 days, they do not have to pay the posting fee.
After bidding excessive amounts, though, teams are also less likely to be willing to dish out a market-value contract for the player. In traditional negotiations as free agents, players have the leverage of other teams’ pursuits to push the value of the offer higher, but with only one sole suitor (and the alternative of returning to Japan), the player is not likely to receive an ideal offer.
Although Japanese players who go through the posting system are not free agents, as they are still under contract with their Japanese clubs, changes must be made to the system for the betterment of the players.
One way to increase player compensation and reduce extreme posting figures would be to alter the system from a blind bidding approach, like a silent auction, to an open bidding process, similar to a traditional auction. Teams will be able to monitor the competition and determine whether or not they wish to continue bidding, which in theory should reduce the high bids. Could teams react to other teams’ bids and bid higher than they normally would? It could happen, but it is hard to imagine teams would risk paying even higher prices, and lower winning bid totals could likewise increase the compensation for players.
Another — and potentially better — alternative would be to eliminate the posting system entirely and allow the players to enter the United States market as free agents. Such a change would undoubtedly favor players the most, as they would be able to freely choose their price and destination. MLB franchises would probably favor such a change, as more teams would have a chance to land the player at a cheaper total price.
Japanese clubs would obviously oppose such a change, but if a standardized payment system was built into the system to compensate the teams with the players under contract, many clubs may be on board.
Ultimately, the posting system restricts the freedom of Japanese players wishing to play in the MLB. Although American amateurs are forced into the draft, other international players are granted free agency status. And for individuals likely leaving their homeland and entering a new culture, the ability to choose their new home at a better price is only fair.
Preston Barclay is a sophomore in the McDonough School of Business. TURNING TWO IN THE 202 appears every Tuesday.
