Masahiro Tanaka deal ramifications

Masahiro Tanaka wakes up a happy man today. His talent has been validated by the fifth-largest contract for a pitcher in Major League Baseball history, and he has a chance to show that his skills will translate into a starting role with the game's marquee franchise.

Agent Casey Close is also walking with an extra spring in his step after negotiating a combined $370 million in salaries for Los Angeles Dodgers ace Clayton Kershaw and Tanaka in a six-day span. The two contracts have brought Close and his agency, Excel Sports, additional cachet that can't be measured in commissions.


The process was a good one. We don't feel cheated whatsoever. We don't feel as if we weren't provided the same opportunities as the Yankees. They just had a better offer, and that's where he chose to go. You move on.

"--Arizona GM Kevin Towers

The New York Yankees are for the most part upbeat about the deal. The addition of Tanaka fills a major void in their rotation, even if it came at a price that's going to send them rocketing past the $189 million luxury tax threshold and force them to help subsidize the hopes and dreams of some of their small-market or low-revenue brethren.

For other participants in the process, the pursuit of Tanaka and his Curt Schilling-caliber splitter has been more of a mixed bag. While the players' association has reason to hope that Tanaka's $155 million deal helps raise the asking price for Ervin Santana, Matt Garza, Ubaldo Jimenez and other free-agent starters left on the market, those pitchers are hamstrung by the fact that the Tanaka sweepstakes took until Jan. 22 to play out, and spring training is fast approaching.

And while the Arizona Diamondbacks, Chicago Cubs and Houston Astros can tell their fans they tried their best, they still lost out to the Yankees' money and mystique in the end. The disappointment was apparent in Arizona general manager Kevin Towers' voice when he reacted to Tanaka's decision in a conference call Wednesday.

"The process was a good one," Towers said. "We don't feel cheated whatsoever. We don't feel as if we weren't provided the same opportunities as the Yankees. They just had a better offer, and that's where he chose to go. You move on."

The least fulfilled participant in Tanaka's free-agent adventure: his former employer, the Tohoku Rakuten Golden Eagles, who received a fee that paled in comparison to the estimated $70 million-plus they might have landed under the old system. Only in the world of Japanese baseball importing and exporting can a team have $20 million fall in its lap solely for being a player's employer and be characterized as a "loser."

If Tanaka's coming-to-America party showed one thing, it's that the business of taking Japanese stars to the U.S. remains a delicate and complicated one, with supply and demand, competitive balance and free-market principles careening every which way. Baseball can take steps to change the rules. But it's powerless to alter the disparate financial agendas of the parties involved.

Inflationary pressure?

Tanaka joins the Yankees amid a changing dynamic for star Japanese players who have yet to accrue the whopping nine years of service time required to be unfettered free agents. Under the system formerly in place, the Yankees would have simply had to post a higher bid than 29 other MLB clubs to receive exclusive rights to negotiate with Tanaka. That all changed in mid-December, when MLB announced a new system that allowed any team willing to pay a $20 million "release fee" to make a run at Tanaka. That's significantly less than the $51.7 million the Texas Rangers spent for a 30-day window to talk to Yu Darvish in December 2011.

From the beginning, many in the process thought a change was in order. If Tanaka was talented enough to prompt a bidding war, why was Rakuten entitled to a 40-50 percent cut simply because it had all the leverage?

Still, the process took some interesting detours along the way. During the MLB general managers meetings in Orlando, Fla., in November, Pittsburgh Pirates president Frank Coonelly created a stir by suggesting that the posting fee -- whatever it turned out to be -- should be subject to MLB's luxury tax along with the money any team chose to pay Tanaka. Money that the Yankees and other big spenders lay out in luxury tax payments is used to help fund player benefits and MLB's Industry Growth Fund.

In an interview with ESPN.com Wednesday, Coonelly said he was surprised when media reports characterized him as a champion of small-market rights, when he was simply expressing a long-held personal belief.

"Somehow I got pegged as being somebody who was fighting the fight for the small markets, because it was said to the New York media by somebody who's not in a small market," Coonelly said. "My position has been pretty simple: The posting fee, by definition, is part of the cost of signing a player. I've always believed it should be considered part of a club's payroll for competitive balance tax purposes. I wasn't speaking on behalf of small market clubs. I was simply speaking on behalf of one of 30 major-league clubs."

In the end, the Yankees' $20 million fee was not subject to the luxury tax because that change would have required the consent of the players' association. Still, the fee was modest enough not to take a major bite out Tanaka's payday. And with so many teams in the mix to help drive up the price, the Yankees' $155 million outlay for Tanaka will require them to spend more in luxury tax penalties than they would have with, say, a $70 million posting fee and an $80 million contract.


The idea of having a $20 million posting fee to allow other teams to compete was ridiculous. Because of this signing, the entire pitching market will be inflated.

"-- An unnamed MLB executive

One MLB executive, who declined to be named, said the new system runs contrary to a series of moves that MLB clubs have made to keep the cost of player acquisition under control. In recent years, MLB has instituted a new slotting system to slow spending in the June first-year player draft and rules to help restrain spending on international amateur players from the Dominican Republic, Venezuela and other countries. The luxury tax is also meant as a drag on spending, if not a cap, since affluent teams that bump up against it are going to be inclined to exercise restraint.

The only thing MLB accomplished with the Tanaka signing, the executive contends, was to create a worrisome new precedent, since Rakuten got less and Tanaka got a whole lot more.

"Since 1996, the idea has been to have a great player market, but to maintain some kind of controls over player salaries," the executive said. "This is antithetical to everything the teams have tried to do over the last 20 years. So why did they do it? They did it to target the Yankees and Dodgers, because everybody knew they would be interested in Tanaka.

"The idea of having a $20 million posting fee to allow other teams to compete was ridiculous. Because of this signing, the entire pitching market will be inflated. This is going to pull up Matt Garza and Jimenez and all these other pitchers, and it's going to help David Price next year. There are serious inflationary consequences that are going to affect every other player on the market. This serves the players' interests and the union's interests. But it doesn't serve the clubs' interests, because it increases costs. It doesn't decrease or maintain costs."

Coonelly, for his part, scoffs at the notion that Tanaka's deal will have a major impact on future free agents. That horse has already left the barn, he said.

"Clayton Kershaw. CC Sabathia. Justin Verlander. I think we already have players who have signed contracts in recent years who reflect the marketplace for starting pitching," Coonelly said. "Mr. Tanaka's contract may be a good comparable for the next outstanding young 25-year-old professional pitcher who comes over for Japan after a 24-0 season. I can't see him being much of a comparable for anybody else."

Challenges ahead

Events this winter have shown that MLB's policy on international free agents is, for want of a better term, all over the map. In December, the Chicago White Sox signed first baseman Jose Dariel Abreu to a six-year, $68 million deal without having to worry about a posting fee. But the reality is, baseball is going to have a hard time crafting a policy that treats Cuban defectors who establish residency in the Dominican Republic or Haiti with the same formality as established professionals from Japan, who are governed by a contractual arrangement between MLB and Nippon Baseball.

Baseball also has to make allowances that distinguish between Japanese stars such as Darvish and Tanaka and the 16-year-old budding MLB shortstop from San Pedro de Macoris in the Dominican Republic.

Tanaka's windfall, on top of Darvish's deal and subsequent success with the Rangers, is likely to be a clarion call to the next Japanese pitching ace with dollar signs in his eyes and dreams of coming to America. But MLB still needs to walk a fine line between keeping the door open for prime Japanese talent and not making the move to the U.S. so enticing that it raids Nippon Baseball rosters and cripples the Japanese game. As long as somebody is getting the money, the talent flow is going to continue to some degree.

"If the posting fees become too high, then you're going to have Japanese clubs selling these guys after 2-3 years," said one baseball official who's familiar with the process. "They're in the business of running a baseball league -- not running a player auction. If every young star player was posted and a club could get $30-50 million, some Japanese clubs would be in the position of selling players rather than trying to put together a competitive team."

For better or worse, the new posting system runs through the end of the next collective bargaining agreement in 2016, so MLB clubs, their Japanese counterparts and aspiring Masahiro Tanakas, Yu Darvishes and Ichiro Suzukis will have to navigate the landscape to the best of their ability. Competing agendas notwithstanding, they'll have to make do until something better comes along.