MLB Gets an Early Christmas Present
As you’ve probably heard, Major League Baseball reached an agreement with the Japanese League and Japanese player’s association to fundamentally change the posting process. Instead of a closed auction, with teams bidding against each other to win exclusive rights to a player, the posting fee would be capped at a (ludicrously low) $20 million, meaning the Japanese player could negotiate with every team in MLB. This transferred a sizable chunk of leverage from clubs (both Japanese and American) to players; if this system had been in place when Yu Darvish was posted, it’s pretty easy to assume the ~$35m+ in posting fee over and above the new limit would’ve been tacked onto his contract.
So that’s a big change, and it’s interesting to see how this extremely closed market responds to the new incentives. But no one was interested in the microeconomics of cartels – they were interested in what it meant to the Rakuten Golden Eagles and their star hurler, Masahiro Tanaka. Tanaka famously went 24-0 last year with a 1.27 ERA. ERA is a misleading and odd stat, but Tanaka’s ERA was last above 2 in 2010. Some people can fluke their way into a low ERA for a season. Tanaka, on the other hand, has simply overmatched NPB for three years running.
The new rules made it somewhat less likely that Tanaka would be posted, because Rakuten’s expected haul from posting fees were artificially capped at somewhere between 1/2 and 1/3 of what the market would bear. While they could get $20m this year or next year, they could get the same payment AND have him play for the team next year and go for a repeat NPB title, sell extra tickets, etc. All of this led me to think they’d just hold onto him for a year and post him next year instead. So I was a bit surprised tonight to see that Rakuten decided to honor Tanaka’s wishes and post him now. They’d offered to make him the highest paid Japanese pitcher ever, but that would’ve earned Tanaka somewhere in the $8m range per year – MLB teams will happily pay him double that.
Many speculate that he’ll join Hiroki Kuroda in the Bronx, as the Yankees haven’t publicly been linked to the big domestic free agent starters like Matt Garza or Ubaldo Jimenez. But in reality, the entire market for starters has been at a standstill as teams waited to see what would happen with Tanaka. It’s not that the Yankees (or Dodgers) don’t care about, say, Garza, and only want Tanaka – it’s that Tanaka’s negotiations will go a long way to determining how teams are pricing solid free agent pitching.
So what does all of this mean to the Mariners? If nothing else, it means that the pitching market can actually start to move. It also means they can formulate their pitch to the soon-to-be 25 year old Tanaka. Moving from the auction system to something approximating actual free agency actually helps the M’s here – they probably couldn’t outspend the Dodgers or Yankees, especially when posting fees didn’t count against the luxury tax. While they still have to compete against them on total contract terms, the M’s can pitch perks like proximity to Japan, no state income taxes, and the opportunity to learn from both Felix Hernandez and Hisashi Iwakuma. It’s not going to make the difference if New York’s offering an extra year and several million per, but it closes the gap, and allows the M’s to essentially punch above their weight class to some degree.
Will the revelations about the front office hurt? Do they outweigh the perks mentioned above? Probably not – it didn’t matter to Robinson Cano, and it wouldn’t matter to Tanaka. I’m no apologist for the FO, but getting Tanaka would be a coup, and would start to change the look of the suddenly very good AL West. It wouldn’t vault the M’s into the lead in projection systems, but it would fill a clear need and it would appear doable given their payroll situation. I’d still give the M’s extremely long odds to land Tanaka, but then, I said the same thing about Cano. Surprise us, M’s.
(Merry Christmas, by the way)