MLB and KBO Agree on New Posting System

MLB has reached an agreement on a new posting system regime with South Korea’s KBO.  The new system provides that KBO players who are posted get to sign with any MLB team they choose, which in practical effect will mean for the highest bidder 90% of the time, with the former KBO team getting a percentage of the contract amount as follows.

For the first $25M guarantee of the contract, the former KBO team gets 20%.  For the next $25M guarantee, the KBO team gets 17.5%.  For any guaranteed amount above the first $50M, the KBO team gets 15%.

The upshot is that on a contract that guarantees the South Korean player $100M, his former KBO team would receive $16.875M.  When Hyun-jin Ryu signed with the Dodgers, his former KBO team, the Hanwha Eagles, received 71.5% of the contracted amount (a $25M+ posting fee compared to Ryu’s $36M guarantee over six seasons.)  The new regime obviously means the player will get a far larger percentage of his true value to the top MLB bidder.

The next Ryu Hyun-jin will cost well more than a $61M+ layout, but it’s anyone’s guess when the next Ryu will come along.  KBO teams aren’t going to make a great deal of money posting their biggest stars on any kind of a regular basis under the new system, but $16.875M is still a lot of money to a KBO team when that $100M player finally comes along.

Two years ago, I proposed an adjustment to the Japanese NPB posting regime, which while different from the one just adopted above, was designed to accomplish the same thing: getting Asian teams to post their best players sooner in order to receive a bigger payout.

If a KBO team has a MLB-caliber player which it posts in the off-season before the player’s age 27 season, that player will command a far higher MLB guaranteed contract than the same player posted when he’s a year short of the nine full seasons it takes to become a KBO (or NPB) true free agent.  That means, under the new posting regime, the KBO team makes a lot more money posting the player a year or three sooner than they absolutely have to.

The same kind of regime would work for NPB postings, except that the percentages the NPB team would receive would have to be higher (maybe 33%, 25% and 20%), because the best NPB players are worth more money to their NPB teams than the best KBO players are worth to their KBO teams, given the difference in league revenue streams.  If MLB teams try to squeeze NPB teams too much, there is simply much less reason for an NPB team to post its best players until it absolutely has too (the off-season before the off-season in which the player is a true free agent).

In fact, I think my proposal is better if the goal is to get NPB teams to post superstars a year or three early, since it directly ties NPB team compensation to earlier posting.  The benefit to the new MLB-KBO regime is that it could mean big money for the next NPB team to develop the next Yu Darvish, Masahiro Tanaka or Shohei Ohtani who commands a contract well in excess of a $100M guarantee.

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Explore posts in the same categories: Anaheim Angels, Baseball Abroad, KBO, New York Yankees, NPB, Texas Rangers

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