Meet MLB’s new deal

On Jan. 3 in Japan, news broke on about the details of Yusei Kikuchi’s contract with the Seattle Mariners. According to the report, Kikuchi gets a guaranteed three-year, $43-million deal, with a $13-million player option for 2022, and a four-year, $66-million team option should he decline to exercise his.

Had the Mariners made this a straight-up $109-million deal. They would have had to fork over to the Seibu Lions a $18.225 million transfer fee. Instead, Seattle will pay considerably less.

Welcome to the future of the posting system.

Other than the standard evaluation of a player’s talent and future value, there are other issues at play here. By making this a three-year deal, the Mariners minimize the amount of money they will have to forfeit to the Seibu Lions.

The current posting fee is an amount of money equal to:

  • 20 percent of the first $25 million of the guaranteed contract.
  • 17.5 percent of the next $25 million of the guaranteed contract.
  • 15 percent of everything else including bonuses, incentives paid and options.

That means the first part of the Mariners’ payout to the Seibu Lions in addition to Kikuchi’s contract, provided’s numbers of a $43 million guarantee are accurate, will be worth $8.15 million in addition to another amount equal to 15 percent of any bonuses and incentives.

But here’s the sweet part for the Mariners — and why will likely see more deals like this in the future. Seattle can bank everything else until the decisions are made about team and player options after 2021. If the Mariners do exercise their option on Kikuchi, who will then be 30, the share of the posting fee they will then pay will be the repayment of a three-year, $9.9 million, interest-free loan from the bank of Seibu.

The second trick is that by making the rest an “option,” all of Kikuchi’s future income from this contract will only require the Mariners to pay 15 percent of that amount to Seibu.

It’s a small bit, but changing the posting fee on the first $7 million paid to Kikuchi after 2021 to 15 percent from 17.5 percent, will save Seattle another $175,000 for good measure.

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