New CBA Tries To Stamp Out Loopholes To Sign Shohei Ohtani

When Shohei Otani is officially posted and becomes available for all 30 teams to bid to sign, it will set off what should be one of the wildest negotiations in baseball history.

Normally when a player of Otani’s caliber becomes available to sign, it becomes a bidding war. Eventually, all but a few teams drop out. Or if a player with Otani’s talent comes up through the draft, he ends up only getting to negotiate with the one team that drafts him. But in Otani’s case, the signing will by necessity be more like a college recruitment process rather than the normal negotiations of a top MLB free agent.

The team that signs Otani will have to pay a posting fee to his current Hokkaido Nippon-Ham Fighters team. Under the most recent posting system, that release fee was capped at $20 million. There is no current posting agreement between Japan’s Nippon Professional Baseball and Major League Baseball, and one will have to be announced before Otani will be able to come to the U.S. It is possible the new posting system will change the limits of the bids, but MLB has been looking to lower those costs, not raise them. There is no expectation that it will change in a way that returns to the older system that saw the Fighters land a $51 million posting fee from the Rangers for Yu Darvish. Given the relatively low acquisition cost, all 30 teams should make an attempt to sign Otani.

Otani is still subject to the international bonus pools. Under the previous Collective Bargaining Agreement, Otani would have been eligible to be a true free agent if posted this offseason, not subject to any bonus restrictions. But the age cutoff to become exempt from the bonus pools was pushed from 23 to 25 in the newest CBA, with the minimum number of seasons in a foreign professional league also raised from five to six. As such, Otani will have to sign a minor league deal. The only financial inducement teams can offer is a signing bonus, and even that bonus is limited to the few million that teams have left in their 2017-2018 international bonus allotments.

Otani is turning down the opportunity to sign for $150-250 million as a true free agent after the 2019 season by coming over now. It’s very possible that his signing bonus to come to the States will be less than the $2.5 million or more he could be expected to make playing for the Fighters in 2017 if he remained in Japan. So it’s safe to say that the initial money is not going to be nearly as important in this deal as it is in almost any free agent negotiation.

So teams will have to sell their city, their team, the potential for endorsement deals and the potential for Otani to both pitch and hit. They can try to sell Otani on why he would look best in a Yankees, Red Sox or Rockies uniform. What they can’t legally do is to promise to make it up to him financially in the future if he signs with them.

Right now some very smart lawyers in every organization are assuredly looking to see if there are any loopholes that find that would aid their case in what they can offer Otani. But the current CBA is explicit that other than a bonus and a minor league contract, any other financial offers are a violation of the CBA and could lead to fines, suspensions for players and/or front office officials, voided contracts or other penalties. Teams can’t offer Otani an opt out. They can’t sign Otani’s parents to a massive personal services contract. They can’t even promise him a spot on their Opening Day roster.

And the last sentence of the introductory paragraph about circumvention makes it clear that the list of possible violations is “non-exclusive.” So even if a team gets creative and offers something not explicitly banned by the list of violations, the commissioner’s office could still come back and declare that such an offer is a violation of the CBA.

Here’s the full circumvention section from the current CBA:

H. Circumvention
No Club or player (including their designated representatives) may enter into any understanding, agreement, or transaction, or make any representation, whether implied or explicit, that is designed to defeat or circumvent the provisions of the International Amateur Talent System. Any Club (or its representatives)
that is found to have engaged in circumvention or attempted circumvention will be subject to sanctions by the Commissioner, including fines, suspensions, non-approval of the transaction(s) or contract(s), and loss of future signing rights. A non-exclusive list of conduct that will subject Clubs (and Club personnel) to sanctions includes:
1. Providing, paying, or promising a player, his advisor, his foreign league or federation, his trainer or his family members anything of value other than the compensation and benefits contained in the Minor League contract.
2. Making any payments to, or providing anything of value to, an individual advising, representing or training a player.
3. Agreeing to enter into any business transaction with a player’s advisor or trainer, including signing other players represented by the advisor or trainer, as consideration for a player entering into a contract with a Club.
4. Promising, representing, or committing that a player will be placed on the Club’s Major League roster by a particular date.
5. Releasing a player as part of a scheme to exclude a Signing Bonus contained in the player’s next contract from being charged to a Club’s Signing Bonus Pool.
6. Promising, representing, or committing to sign a player to another Minor League contract or a Major League contract in the future, or to provide additional compensation or benefits under the extant contract (such as a higher salary in future years of the Minor League contract).
Any Club that is found to have willfully circumvented the requirements of the International Amateur Talent System by providing, directly or indirectly, more compensation or other consideration to a player than is permitted under the System may be disciplined by the Commissioner, up to and including a prohibition on that Club signing any International Players for up to one (1) year or having its Signing Bonus Pool decreased by up to 50% for up to five (5) years.

None of this means a team won’t end up having a wink-wink deal with Otani to tear up his contract in the future. But the contract language of the CBA is written in a way to make that as illegal as MLB and the MLB Players Asssociation could possibly make it.