Despite agreement, Tanaka undoubtedly will be posted
Rakuten Golden Eagles upset, but getting $20 million for asset better than nothing
The clog of this offseason has been about the greatest free-agent starting pitcher who is not technically free -- Masahiro Tanaka of the Rakuten Golden Eagles. The 25-year-old Japanese superstar is coming off a season where he compiled a 24-0 record to go along with a sparkling 1.27 ERA, while leading his team to its first Japan Series Championship.
An expired posting system agreement between Major League Baseball and Nippon Professional Baseball has been the first snag in Tanaka's journey to MLB. That has just about been resolved, with the final step -- considered to be a formality -- coming next week, when MLB's executive council will ratify the new agreement between MLB and NPB.
The agreement is a good one for just about everybody, including Japanese players and Major League owners. The losers in this deal are the Japanese team owners, who agreed to a posting fee cap of $20 million, and there is no one more upset than the owner of the Rakuten Golden Eagles, Hiroshi Mikitani. Mikitani and the Eagles were the lone Japanese team to vote against the new MLB-NPB proposal.
Friends still connected with NPB have told me that Mikitani was furious with the other 11 Japanese team owners who agreed to the deal. In the past, top Japanese pitchers have yielded posting fees north of $50 million. That money goes directly to the team -- a rights fee for selling their most valuable commodity to an MLB team. Rumors had Tanaka setting a new posting fee record, possibly as much as $60 million to $70 million. This new agreement has wiped those dollars away. If posted, the Eagles will instead receive $20 million for Tanaka.
Mikitani is an interesting guy. He founded Rakuten, Inc., an e-commerce and Internet company based in Japan. The 2012 revenues for the company were reported to have been $4.3 billion, his net worth is estimated to be above $6 billion. He received his MBA from Harvard and has attempted to make his company an English-speaking company, despite it being based in Tokyo. It has been said he greatly appreciates his United States experiences, something he wants Masahiro Tanaka to experience as well.
Initial reaction over the new posting agreement from Mikitani and Eagles president Yozo Tachibana was anger, and threats followed not to post their ace. The Eagles feel they could not allow MLB to steal Tanaka away at what they viewed was a fraction of his value. But there is a part of this story that everyone has seemed to ignore, and ultimately it will lead to Tanaka getting posted.
Tanaka, like so many Japanese players, has had his heart set on coming to the U.S. to pitch. Not only to cash in, but to apply his trade at the highest level of competition in the world. And while he is not an international free agent until after the 2015 season, Tanaka will be a domestic free-agent after '14.
In NPB, it is nine years of service time for international free agency and eight years for domestic free agency. That means if the Eagles don't post him now, he is free to move to any Japanese team he would like for the 2015 season.
An understanding was had -- a gentleman's agreement -- in which Tanaka would be posted after the 2013 season. The timing was right. He was a year away from domestic free agency, and it is unlikely his value will ever be higher. The Eagles must have assumed the old posting system would have remained in place and they would have been the recipients of the highest posting fee ever received. They would gladly let Tanaka pursue his dream while they collected somewhere near that $60 million and $70 million dollar estimate.
If the Eagles go back on their word and don't allow Tanaka to pursue MLB now, they run the risk of angering him so much so that he walks after the 2014 and pursues Japanese free agency. Or worse yet, he doesn't request to be posted after 2014 and becomes an unrestricted free agent at the ripe age of 27 after 2015. Either scenario potentially leaves Rakuten with $0 in return for their ace.
Technically, he could still request to be posted by the Eagles after 2014, before he hits domestic free agency. But the odds are if he rides it out that far, why not just take it all the way? At that point, he collects every dollar of his value for himself instead of sharing it with the team that went back on a promise to post him this offseason.
There is a smarter business decision that needs to be made here. Mikitani is a self-made billionaire, he is a Harvard man and a genius in the world of finance. He knows the value of a commodity, when to hold and when to sell. The value of his asset -- Masahiro Tanaka -- took a large hit this winter, somewhere around 65-75 percent. He is worth just $20 million to them now, and that will not go up.
Publicly, Tachibana has said he will talk with Tanaka and he anticipates that Tanaka will want to stay in Japan, ending any discussions about their ace being posted. I believe Tachibana is hoping that is the case, banking on Tanaka being as sour about the new posting system as the Eagles are. I don't see how that happens. Tanaka's aspirations haven't changed, and I doubt he is worried about his team's financial losses in this deal, especially when it means more dollars in his pockets.
Tanaka is wisely using an agent through this process, although that agent has yet to be identified. His agent will surely tell him that whatever money was lost by the Eagles due to the new posting fee cap is money an MLB team is willing to pay him.
Mikitani will eventually get over what MLB and NPB did here and agree to post Tanaka. He is a smart businessman and has shareholders of publicly traded Rakuten, Inc. , to answer to. While $20 million is obviously less than $60 million, it is more than $0. You don't have to go to Harvard to know that.