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September 5, 2007

The Big Picture

Raiding or Raising the East?

by David Pinto

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Professional Japanese baseball faces an uncertain future. With the success of Ichiro Suzuki, Hideki Matsui, the World Baseball Classic win, and the hoopla surrounding Daisuke Matsuzaka, Major League Baseball sees Japan as a new pool of talent for North American teams. Through the posting system and soon through signing talent out of school, the one-way flow of stars from the Eastern to the Western Hemisphere could drain talent from the Far East. Unless talent--star talent--actually flows both ways across the Pacific, the Japanese major leagues may slide into outright dependence on Major League Baseball instead of becoming a major league equal.

Earlier this year, Robert Whiting wrote a four-part series on Japanese baseball. The first part of the series he titled, "Is the MLB destroying Japan's national pastime?" The question requires serious consideration, as the majors leagues have a history of turning independent leagues into vassals. In his Historical Baseball Abstract, Bill James goes to great lengths to educate readers about the independence of minor league teams in the early days of baseball. These organizations were professional leagues that were in the business of winning championships, not developing talent for the majors. Over time, and especially after the supreme court granted Major League Baseball an anti-trust exemption, the majors used their economic clout to force small town teams into the service of big city clubs.

Perhaps even worse was the outright destruction of the Negro Leagues. The owners of affiliated minor league teams at least were supplied players and financial compensation for their loss of autonomy. The Negro Leagues were simply driven out of business, as the big leagues simply plucked players away with no compensation. Major League Baseball could have paid Negro League teams for the players they signed. They could have entered into working agreements with Negro League clubs to make them part of the farm system. But as usual, Major League Baseball was only interested in acquiring inexpensive talent.

Are these the fates facing Japanese teams? It doesn't need to be so. Dr. Daniel Drezner is an associate professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University, and also a huge baseball fan. In discussing the WBC with Dan, the professor expressed the thought that the tournament represented a huge foreign policy success for the United States. At the time of the announcement of the Classic, Dr. Drezner noted in a Newsday op-ed that the loss of the Olympics wasn't a bad deal for baseball, because by taking control of the world game, MLB gets to use its "soft power" to promote the game on its own terms:

If the globalization of baseball advances the national interest, which venue works best? The Baseball Classic may be much smaller than the Olympic Games, but its participants suggest the power and scope of the organization. Teams from six continents comprising roughly a third of the world's population and half of the global economy are represented. The Pacific Rim, currently the most dynamic region of the global economy, has numerous participants.

...

If managed and promoted properly, the Classic has the potential to take on the attributes of soccer's World Cup--an event that inspires much more global passion than the Olympics. A recent IOC report observed that more than 110 countries have national baseball federations. The potential for future growth is there. At worst, the Classic will generate as much global interest as the world competitions for rugby and cricket.

And what better way to promote the WBC than to ensure a high level of competition across the world, starting in the Pacific Rim? The goal of Major League Baseball and Nippon Professional Baseball (NPB) should be to create a Japanese league on par with the best professional teams in the AL and NL. But that means both sides need to show a willingness to make structural and cultural changes, with MLB using its "soft power" to bring about changes in Japan.

Maybe the toughest thing to change is the notion that whatever benefits major league owners benefits baseball. In order to make this game a worldwide phenomenon, MLB should be willing to take short term losses for long term gains. For example, scouts are in the Far East looking to sign the best players from that region to bring into the US minor league system. The Japanese should be encouraged to do the same in the US system. And that means abolishing the draft, so all amateurs are free agents. As last week's article argued, the draft no longer maintains parity in the majors; helping Asian teams acquire good talent can be used as a reason to dissolve the institution. Yes, the Japanese will lose potential stars to US teams, but by drawing from a larger pool of players, the quality of the league should remain good, and over time improve, especially as the world population increases and more people play baseball.

In general, MLB needs to encourage a much more free flow of players between North America and the NPB. Rather than the current posting system, direct trades between the leagues would mean that Japanese teams get compensated without losing talent. Japanese teams should compete for American free agents, bringing our stars across the Pacific to boost interest in their teams. Imagine the publicity if someone like Alex Rodriguez signed with the Yomiuri Giants. MLB attendance boomed after players started freely moving between North American teams; that dynamism might help Japan, too.

There are two structural problems to correct before any of this can take place, however. First, there's a shortage of professional general managers, and second, there's no minor league system. The second point is why Japanese players wait nine years to become free agents. They usually come out of high school straight onto the major league roster. They don't receive the years of development time you see in North America, so they become free agents at about the same age as their MLB brethren. In the last fifteen years, MLB created four new franchises and four new minor league systems, so there is plenty of expertise available to help NPB in this regard. With a similar minor league system, major league rules covering arbitration and free agency could apply to Japan as well.

The first point is the easiest to address, thanks to a glut of managerial talent. As I noted after the MIT Sloan Sports Business Conference:

The conference left me hopeful for the future of the sports industry. Given the attendance, there are a very large number of young business people looking to make their mark in the world of sports. Unfortunately for them, there are only a limited number of jobs. With supply outstripping demand, the sports industry gets to hire the most extraordinary applicants and pay them ordinary wages (at least as entry level employees). I hope this means we're in for an era of business innovation among all sports.

All of this requires that NPB drops the desire to (as Whiting puts it) "limit the number of 'gaijin suketto' (foreign helpers)." Here's where MLB needs to wield its "soft power" with some precision--MLB must act in a way that convinces NPB that they are considered equals. However, Japanese baseball must also be made aware that without changes to their game, the North American teams will continue to draw off talent to the point of leaving no players worth posting, and a game in a state of decline.

Little League is actually a great example of this use of "soft power." The prestige of the Little League World Series forces countries to stick to the rules enacted in Williamsport rather than risk losing a berth in the tournament.

As Major League Baseball embarks on a global growth strategy, it should be aware that it has the power to ruin as well as enhance foreign baseball leagues. With Japan winning the World Baseball Classic and supplying a steady stream of stars to North America, the NPB is ripe for integration into the North American system. A successful working agreement that preserves the independence of the teams while improving the level of play would lay a foundation for spreading the game to the rest of the world--imagine major league-level play in the EU, Africa, and China. By helping Japan develop into a equal among major leagues, MLB can show they will not unfairly dominate the sport. Therein lies the path to global success.

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