Hidden Vigorish

Detailed Analysis of The Pittsburgh Pirates

Pirates Protest Japanese Player Posting System at Owner Meetings

Major League Baseball was deep into negotiations with Nippon Professional Baseball (NPB) over a new japanese player posting agreement when Pirates President Frank Coonelly threw a last minute curveball on the final day of the 2013 MLB Owners Meetings that blocked the deal. Coonelly led a revolt by small market teams that insist bids for posted japanese players should count towards the payroll luxury tax. MLB and NPB were close to an agreement in which the highest bidding MLB team would pay the average of the two highest bids as a transfer fee to the NPB team for the exclusive negotiating rights with the posted japanese player. The last second demands by Coonelly forced the MLB to pull its offer to the NPB. Previously the transfer fees had not been counted towards the luxury tax. In recent years the transfer fees have been exorbitant costs that only the richest MLB teams could afford for elite japanese players. The Texas Rangers paid a winning bid of $52 million for the rights to negotiate with Yu Darvish in 2012. The Red Sox paid a winning bid of $51 million for Daisuke Matsuzaka in 2007. The next highly sought after posted japanese player is expected to be Masahiro Tanaka. Baseball insiders are predicting the bidding for Tanaka could exceed $60 million. Of course only deep pocketed teams like the Yankees and Dodgers are legitimate landing spots at that high of a figure. The Yankees are especially drawn to Tanaka because they are trying to maneuver under the $189 million payroll luxury tax threshold. There is no way the Yankees would be able to do that if a large transfer fee counted towards it. By raising these issues at the 11th hour Coonelly has essentially thrown a monkey wrench into the Yankees plans. At the very least an agreement between the MLB and NPB has been stalled. It is possible that an agreement will not be hammered out this offseason and no japanese players under contract to teams in the NPB will be permitted to transfer to the MLB for 2014.
 

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