LA Times writer Dylan Hernandez tweeted this morning that the Nippon-Ham Fighters are making big efforts to post two-way player Shohei Otani this offseason.
Shohei Ohtani moves another step closer to MLB, as the Nippon-Ham Fighters announced they will post the two-way player this offseason, according to Japanese news reports.
— Dylan Hernandez (@dylanohernandez) November 10, 2017
Otani is one of the most talented international players the game may have ever seen. On the mound he can touch 100mph with his fastball (which averages at 96mph), and at the plate he’s capable of hitting towering home runs. Otani has a .286 career batting average in 403 games as well as a career 2.52 ERA in 82 starts in the Japan Pacific League. How this two-way talent will be utilized on a Major League team will be one of the more interesting stories once he finally is signed. So what can this mean for the White Sox? Clearly any team in the game would be interested in signing this player but unfortunately not every team will have a monetary chance.
Up until recently teams were able to pay just about whatever amount they wanted for international talent and then pay the penalties for going over the soft cap. The most Sox-relevant example (in more ways than one) would be when the Boston Red Sox shelled out $63 million to sign Yoan Moncada. At the time of the Moncada signing the Red Sox had $1.8 million in international bonus money remaining for the signing period, but Boston gave Moncada a $31.5 million signing bonus, thus causing them to incur a 100% overage tax payed to the commissioner’s office. $31.5 million signing bonus + 100% penalty ($31.5 million) = $63 million total spent on Yoan Moncada.
I only call it a “soft cap” because the penalties incurred by a team really didn’t do all that much. They had to pay the overage tax but if a team had an infinite budget they could sign every player they wanted to with no restrictions. MLB saw that a changed needed to be made and they made it. While the new agreement still has some flaws it is a very competitive formula that keeps every team near the same level and if you want to take a risk on a player and spend past your budget you’re going to be behind for a while.
Teams are now held to a strict cap depending on market. Most teams will have a budget of $4.75 million, while mid-market and small-market teams can spend $5.25 million and $5.75 million, respectively. There are a couple different rules in regards to trading cap space; teams can trade for up to 75 percent of their max space in 2017-2018 and 2018-2019, then just 60 percent after that. A team with a budget of $4.75 million could trade for some additional cap space and up with around $8 million to spend. Same applies for other teams in regards to their respective budgets.
This does not mean that a team cannot spend past that budget, however if they do they have to pay a 100% tax on any dollar amount past their budget, turning an $8 million investment into a $16 million investment, and so on depending on the size of the contract. In addition to that tax teams that spent past their budget are limited to signing international talent to a contract of $300,000 for the next two signing periods. Teams can give out as many $300,000 contracts as they want but are not able to sign an international player for more than that amount until their penalty period ends, at which point they will go back up to the hard cap respective to their market and… I mean, I guess they could blow past that if they really wanted to and face the penalties for two years… again.
The Nippon-Ham Fighters are making an interesting decision. Otani is 23-years-old and would be restricted to whatever budget a Major League team has remaining and will have to sign a minor league contract. Right now the Texas Rangers have the most money available to spend (roughly around $3.5 million) while a good amount of the entirety of Major League baseball is at that $300,000 limit. If the Fighters waited another two years to post Otani when he turns 25 he would clear those restrictions and be able to sign a major league contract for whatever amount a team wanted to give him. Apparently both the Fighters, who I assume would receive a cut of the contract as compensation, and Otani are okay with this restricted scenario as the Fighters are negotiating with Major League Baseball to finalize his eligibility for signing. Currently Otani is not making much more than he would receive in his first American contract, but his value to a Major League team is well beyond what teams are limited to at this point.
So back to the White Sox. This past offseason the front office dipped pretty deep into their international budget by inking outfielder Luis Robert to a minor-league contract with a $26 million signing bonus. Per the new rules regarding international signings the White Sox now have a $300,000 contract limit to any international signings in the 2017-2018 and 2018-2019 signing periods. Odds are pretty high that Otani is going to want more than that, but unfortunately it won’t be that much more. In essence it will come down to quite literally Shohei Otani choosing whatever team he wants to play for since nobody has any money left right now.
Whether Major League Baseball has the ability to limit “verbal agreements” in terms of extensions after the initial signing is undetermined and I honestly have no clue how they would even attempt to regulate something like that. “Okay Jerry, I know you’re giving him this $300,000 contract but you can’t promise him $40 million afterwards. Okay? Okay.” I would imagine that is how a lot of the contract negotiations will go but it’s all shady, behind-closed-doors, under-the-table type dealings that I don’t think Major League Baseball wants anyone to be involved with.
So could Otani end up on the White Sox? Sure. At this point they have about as good a shot as anyone who isn’t the Texas Rangers. Once Otani clears and is officially made available I’m sure the rumors will start to pour in but for now there is a clear breakdown of what the White Sox are capable of offering at this point in time.