The “posting system” currently in place for the transfer of baseball players from Japan’s Nippon Professional Baseball to Major League Baseball in the U.S. has been in effect since 1998. A previous agreement had been in place since 1967, the United States-Japanese Player Contract Agreement. However, after several high-profile instances of Japanese players moving to MLB in the 1990’s, the latest system was created.

Currently, players in NPB reach free agency after nine years. At that point, they can negotiate with MLB teams and their previous club receives no compensation. The posting system was created to allow NPB clubs to make players that haven’t reached free agency available and receive compensation, which comes in the way of the posting fee that MLB clubs bid on.

Hideo Nomo (1994) and Alfonso Soriano (1998) voluntarily retired from their Japanese clubs because of language in their contracts that stated that they were only under contract for playing baseball in Japan, i.e. there was no provision for moving from Japan to the U.S. as a player. By voluntarily retiring, both players circumvented the Japanese league’s reserve clause and began negotiating with MLB teams to play in the U.S.

Another complication was the case of P Hideki Irabu in 1997 that saw his Japanese club, the Chiba Lotte Marines, strike an exclusive deal with the San Diego Padres. Irabu famously declared he would only play for the Yankees and, after much back-and-forth, the Padres ultimately shipped Irabu to New York.

Under the current posting system, the process starts with an NPB player under contract notifying his club that he wishes to play in the U.S. major leagues. The club can deny this request, or make the player available during the next posting period, November 1 – March 1. If the player is posted, the MLB commissioner is notified and he, in turn, notifies all MLB teams of the availability. Once an NPB player is posted, MLB teams seeking his services are required to place bids in a silent auction that takes place over a four-day period.

These bids are for exclusive negotiating rights with the player for a 30-day period. After the four-day silent auction, the commissioner notifies the NPB team of the winning bid. The NPB team then has four days to accept or reject the bid. If the NPB team rejects the bid, the player stays with his NPB team. The player can then start the whole process again in subsequent years.

If the NPB club accepts the bid, the 30-day negotiating window opens for the MLB club and the posted player. The winning bid becomes the transfer fee to the NPB team that loses the player to MLB. The bid/fee only goes into effect if the player agrees to terms on a contract with the highest-bidding MLB team. If no agreement can be reached, the bid/fee is annulled and the player’s rights revert to his NPB team.

Only players who are under contract with a Japanese team can be posted but players who have reached free agency with nine or more years of experience are exempted. Bullpen
Wall Street Journal – Hideki Irabu
Baseball Prospectus