The Economics of the (Curious) MLB Posting System

Some of the problems associated with baseball's system have been discussed by Rick here, and our friend The Sports Law Professor, here. Now, some of these concerns are confirmed by economist Duane Rockerbie in a new essay posted on SSRN: Peculiarities of the Major Leage Baseball Posting System, which can be downloaded free of charge. The piece contains very little jargon (and no math) and adds texture to the problems associated with the posting system. For example, the author discusses the danger of "foreclosure," under which "one bidder prevents all other bidders from obtaining the rights to negotiate with the Japanese player, even though the winning bidder has no intention of signing the player to a contract." Because Japanese clubs must decide whether or not to accept a bid before learning the identity of the bidder, they are unable to avoid accepting a bid by a club suspected of opportunistic and disingenuous foreclosure bidding. The author describes a possible alternative, the European transfer method for soccer players, but suggests that it would not be an appropriate model for Japanese players moving to MLB because of the relatively few Japanese-MLB transitions each year.

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