Cuban Super-Prospect Moncada Could Shatter Bonus Record

I wrote last week about the most recent high-profile Cuban defector (now a free agent) LF Yasmany Tomas after writing last month about the most-recently-signed high-profile Cuban in Red Sox CF Rusney Castillo. I also wrote earlier this week about the next huge prospect in the July 2nd market, so it only follows that I would tell you about the next potential big name amongst the Cubans.

The most recent news on this front is about 2B Hector Olivera, with news of his defection breaking this week. He’s not a shoo-in to be a huge money guy as he’s already 29 and there’s some concern/uncertainty about a potential blood flow condition in his left arm.

Olivera has a live bat and may still be able to play up the middle in the big leagues, but he hasn’t been scouted in years since he hasn’t played in any international tournaments in that period, the only way MLB teams can see Cuban players in person. If he can clear these medical hurdles, Olivera was seen as one of the best players on the island a few years back and, while he may be past his physical prime, could still draw a multi-year deal at some point in the next year.

While Olivera is an interesting case to follow, that isn’t the next superstar type guy that readers keep asking me about. If you’re into that sort of thing, your guy is Yoan Moncada.

The Next Elite Cuban Prospect

Moncada is 19 and packs a lot of tools into his 6’1/210 frame. He’s a plus-plus runner with above average raw power from both sides of the plate and the tools/skills to stick in the infield, possibly at shortstop. Moncada is the quick-twitch type with big bat speed that clubs covet and his track record of hitting at big tournaments and in Cuba’s professional leagues is excellent considering his age.  Ben Badler has even more details about how he’s performed in specific tournaments if you can’t get enough of this stuff.

So, this sounds great. We have a guy that scouts say has talent like Yasiel Puig and he’s a switch-hitting teenage shortstop. Why haven’t I heard more about him yet? Shouldn’t he be the top story on MLB Trade Rumors every day with teams offering over $100 million?

There are two reasons this hasn’t happened yet. First, due to his lack of pro experience and his age, Moncada is subject to international bonus pools, along with the 16-year-old July 2nd prospects you hear about once a year. Secondly, it’s confirmed that Moncada isn’t in Cuba, but nobody knows exactly where he is (Mexico is a common guess).

If you followed Puig’s defection story, you know how shady things can get when human/drug traffickers see a way to make money. It’s assumed by people in the international baseball industry that Moncada is at some juncture in the same process that Puig was in and that Moncada will be “found” once the right people get paid, which could be any day or much longer. It may not be pretty, but this is what elite Cuban baseball players have to do to get paid these days.

Timing Is Everything

Teams have been exploiting a weak point in MLB’s rules that helped set up the international bonus pools in 2012. In the first few years of the system, a handful of teams went over their allotted pool (which varies from $2-5 million per team, assigned in reverse order of the MLB standings like draft picks), paid a 100% tax on the overage and then couldn’t sign a player for over $250,000 for the next season. The reason they did that was because the punishment wasn’t big enough; if you signed two years worth of players in one year, it basically costs the same but you get half of your players a year earlier.

MLB noticed this and upped the penalty before the 2014 period opened, with the same 100% tax, but now with a two-year ban on signings over $300,000. That still wasn’t enough to deter multiple clubs from blowing past their pools this year, including the Rays blowing past their pool for the second time in just the third year under these rules. This 2014 pool-busting trend was headlined by the Yankees, who spent roughly $30 million in bonuses and taxes, double the previous record.

(Side note since people always ask about this: most in the industry assume the Yankees’ blatant exploitation of the rules will lead MLB to move more quickly towards an international draft with hard slots. MLB is not communicating at all with clubs about their intent in this area, but logistically it couldn’t happen until the 2016 period opens in July.)

I explain all of this because when Moncada becomes a free agent will dictate which teams can sign him. The Red Sox were another club that went over their pool this year, along with the Yankees. If Moncada is declared a free agent between now and July 2nd, 2015, then those two clubs have an advantage as they have huge revenues and have already gone over their pool amount and paid the penalty. To sign him, any team would go over their pool and pay the overage, but teams that are under their pool would want their year to go over their pool to also include a full crop of July 2nd players to make up for the two-year penalty.

Conversely, if Moncada becomes a free agent any time from July 2nd, 2015 to 2017, those two clubs have no chance to bid on him because of the two-year penalty. Then, a whole new group of clubs could coordinate their international spending to roll three years of July 2nd signings into one year and also plan to make a run at Moncada, getting the most bang for their buck/penalty. With an international draft looming, this could also be the last opportunity any team would have to acquire a player of consequence under the age of 25 in an open market.

Enter Game Theory

While the timing is an interesting aspect to this, the most intriguing part is the money.  For the sake of the thought experiment that follows, we’ll assume Moncada is a 19-20 year old free agent version of Puig in the infield, though that obviously is skipping way ahead of where we are now.

(As a quick aside, while I’m talking about international bonuses and game theory, when I broke the story about the Yankees blowing past their bonus pool, I wrote about why the Tragedy of the Commons and the Sword of Damocles help explain why clubs didn’t blow out their July 2nd spending until the most opportune times.)

Clubs can’t give major league contracts to players subject to international bonus pools, just like they can no longer give them to draft picks. Clubs can only pay players in lump-sum bonuses, though those bonuses can be paid in multiple installments but the bonus has to be paid in full within 12 months of signing.

The two ways around this are 1) a side agreement to give a big league deal/extension moments after signing the contract and 2) ripping up the deal and giving a new deal to a “minor league free agent” who isn’t bound by international pools anymore. The problem is that #1 is unenforceable and technically illegal (all agreed-to terms at time of signing have to be in the contact) and #2 is so blatantly skirting the rules that MLB wouldn’t allow it. In addition to all this, the bonus would be subject to the tax, which is 100% on every dollar over your pool (which range from $2-5 million, roughly).

Since Moncada would be 19 or 20 when he would sign, with a decent stretch of not playing in games, he’d spend a year or two in the minors. Given the current market, that sort of player would probably draw a 9-year deal for $100 million, although that dollar figure could be a little light. With a bonus-only contract structure, you would only get his six control years (like any draft pick) and would have to pay his three arbitration salaries as you go, rather than pre-negotiating them into the long-term deal.

Here’s the question: with essentially a dollar-for-dollar tax on the bonus for this player, how much would you pay him in an upfront bonus, in what would surely be a fierce bidding war? I feel like $50 million (with a roughly $45 million tax on top of that) is the most you could justify while $30 million seems reasonable enough that multiple teams may be willing to pay that much. For reference, the biggest draft/international bonus of all time is $8 million (Gerrit Cole) and the biggest guarantee (via a major league contract, back when those were legal) is $15.1 million (Stephen Strasburg).

As I noted multiple times above and I’ll note again here, this is getting about 20 steps ahead of ourselves with a player some high-level international scouts haven’t even seen yet.  That said, most of them have seen him, they’re all raving and there’s too much money involved to think Moncada doesn’t reach the free agent market at some point in the next year or two.



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Kiley McDaniel has worked in the scouting departments of the New York Yankees, Baltimore Orioles and Pittsburgh Pirates and has written for ESPN, among other outlets. Follow him on twitter for real-time thoughts on the players he’s seeing and hacky attempts at humor.


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Cool Lester Smooth
Guest
1 year 7 months ago

So it’s in his interest (and in his traffickers’ interest) to hit the market over the next 9 months, right?

Here’s hoping he manages it. Jose Contreras 2.0 in terms of bidding war potential.

Jeff in T.O.
Guest
Jeff in T.O.
1 year 7 months ago

Couldn’t a Canadian scout go and check out the talent in Cuba? Is there such a thing as a Canadian scout? Perhaps I should get into the business. Scouting ballplayers in the sun, yeah, I could get into that.

ShyamR
Guest
ShyamR
1 year 7 months ago

Polite and Canadian and polite Marc Hulet?

Dayn Perry's Throbbing Member
Guest
Dayn Perry's Throbbing Member
1 year 7 months ago

Why do so many people think Americans aren’t able to go to Cuba? You just can’t go directly from the US to Cuba. It’s trivial to stop off in Mexico or the DR and go from there. I would imagine a gringo watching games with a radar gun and a notebook would raise a few eyebrows though. Cuba doesn’t seem too thrilled with MLB poaching so much of their talent.

drew
Guest
drew
1 year 7 months ago

From what I know It’s technically illegal to do financial transactions there as a US citizen.

So, legally, you can’t work for food or buy food. Thats kind of the same thing as not being able to go. Now the US rarely prosecutes this but they have (I think Huey Newton of black panthers fame was prosecuted).

semperty
Member
semperty
1 year 7 months ago

Would love to see the Cards sign him. I know they just got Diaz, but there are some questions as to whether or not he could stick at SS, and Peralta’s deal would end at the same time as Moncada probably hit Major League form. Could use Diaz at 2B, and just make an all-Cuban middle infield tandem.

Pirates Hurdles
Guest
Pirates Hurdles
1 year 7 months ago

Every team in baseball could use him. This is another reason why an international draft would be much more fair than the current system.

Joel
Guest
Joel
1 year 7 months ago

Cubs might be a bit SS heavy and would use any resources on pitching.

Roger Whitehead
Guest
Roger Whitehead
1 year 7 months ago

Cuban pitching is already said to be in bad shape. There are very, very few that are not soft-tossing junkballers after a generation of defections.

agam22
Guest
agam22
1 year 7 months ago

For the teams it is, not the players

Jose
Guest
Jose
1 year 7 months ago

If by “fair” you mean, kill international prospects. Then yes.

jp
Guest
jp
1 year 7 months ago

“Fair” with respect to what? I see very little fairness in preventing workers from developing nations from bargaining for the best deal from mind-bogglingly rich MLB team owners.

“Sorry, kid. I know we are billionaires who all desperately want to hire you, and you came from a town where people make a few thousand per year, but we just cannot be expected to pay a fair market rate for your services. It just wouldn’t be fair, now would it?”

An international draft takes money away from skilled workers in the developing world and redistributes it to super-rich Americans. It’s just baseball, folks. Competitive balance doesnt justify that kind of immoral restraint on trade.

Za
Guest
Za
1 year 7 months ago

Except it’s not like that at all; IFAs get way, way, way more money than the guys drafted out of American/Canadian/Puerto Rican schools. The slot allotment for 1-1 in 2014 was less than $8 million whereas Tanaka got $155 million and the Yankees had to pay a $20 million posting fee.

Cool Lester Smooth
Guest
1 year 7 months ago

…you just agreed with him.

Jerry
Guest
Jerry
1 year 7 months ago

It’s a sport, not a business. Sports aren’t subject to free market economics. And that is a good thing. The international market is a joke due to corruption and shady practices on the part of teams, scouts, agents, and trainers. International players should be subject to the same rules as domestic prospects: a draft to distribute players after the are 18 yrs old.

It WILL happen. As Kiley noted, the Yankees just made a mockery of the current rules, and those loopholes should be closed. If they want a model for a system that already works, the domestic draft provides one. It’s easy, and the only people who it would hurt are teams and trainers who are benefitting from a corrupt and ludicrous system.

kdm628496
Member
kdm628496
1 year 7 months ago

so the worst team gets the best american prospect AND the best international prospect each year?

dp
Guest
dp
1 year 7 months ago

An international draft is just plain STUPID! Just like the regular draft is STUPID! Anyone who supports any kind of baseball draft isn’t thinking! They system today rewards failure. It is better to limit money by having two spending pools where every team that makes the post season gets a lesser amount then those that didn’t. All teams have access to all players!

Cool Lester Smooth
Member
Cool Lester Smooth
1 year 7 months ago

Exactly. It would also be much more interesting, as a fan, to see teams deciding between a couple top end guys or several upper/middle-tier ones.

TIF
Guest
TIF
1 year 7 months ago

So… instead of rewarding failure in terms of overall record, you’re rewarding failure in terms of not making the postseason. I don’t see how that’s a better system.

Jerry
Guest
Jerry
1 year 7 months ago

Why is this better?

It gives teams a bit more options on how they distribute cash. But it undermines the main function of the draft: to distribute talent in the most equitable way. In the current system, the players are not selected in the order of their talent. A system with hard slot caps works. Look at the NFL: talent and system fit reign supreme in football. In baseball, it’s all about money. The Brady Aiken fiasco illustrates this perfectly. That shit never happens in football. And it shouldn’t happen in baseball.

Disgruntled Pittsburgher
Guest
Disgruntled Pittsburgher
1 year 7 months ago

I would vomit profusely if the Cardinals sign him.

Spit Ball
Member
Spit Ball
1 year 7 months ago

You know I don’t know about this stuff. We don’t know where he is and what he is doing. WTH. Should we allow this. Don’t get me wrong. Raw power, athleticism, 6 foot 1 and two hundred ten pounds. MIGHT STICK AT SHORTSTOP! Exciting huh? Still the Americans don’t deal with terrorists but the private sector is allowed to deal with human traffickers without consequence? I mean we all can follow the money straight to the team’s, owners and the league without much evidence. Look I don’t wanna kill the young man’s shot at success and its not Fangraphs job to bring attention to the larger social injustices here. Still lets not just wipe away or ignore the possible unacceptable precedent this type of situation sets.

Spit Ball
Member
Spit Ball
1 year 7 months ago

In fairness to Fangraphs and Kiley McDaniel they did bring attention to the issue in the article. Thank you.

Jose
Guest
Jose
1 year 7 months ago

Theres a thin line between “human trafficker” and “guy who saved me from Cuba”. It is the player’s choice as a human being to do whatever it takes to get out.

Joser
Member
Joser
1 year 7 months ago

In addition to the excellent points already made, I’m not sure what precedent you think this is setting that hasn’t already been set by a string of Cuban players that took this route before him.

John C
Guest
John C
1 year 7 months ago

If you don’t like the system, then write to your Congressman and tell him or her that it’s time for the Cuban embargo to come to an end. In a reasonable system, Cuba would let its players come here to play just like China let Yao Ming play in the NBA. Just because a country is Communist doesn’t mean they won’t let their athletes compete at the highest level. It’s our country’s stupid Cold War-era politics that causes Cuban players to have to sell out to human traffickers to play in MLB.

KCDaveInLA
Guest
KCDaveInLA
1 year 7 months ago

I think it’s time for baseball to evolve to an international draft. Besides the obvious disadvantage to smaller-market teams, baseball could continue to lose substantial interest in this country if domestic talent is restricted by the rules of the draft while international players are limited only by their talent level.

Also, I really hope they make a movie about Puig’s defection…I’d plunk down my 14 bucks for it. I also hope someday that Cuba’s political climate will change, but that’s way bigger than baseball.

Dungeon Master Dayton Moore
Guest
Dungeon Master Dayton Moore
1 year 7 months ago

‘Besides the obvious disadvantage to smaller-market teams, baseball could continue to lose substantial interest in this country if domestic talent is restricted by the rules of the draft while international players are limited only by their talent level.’

Couldn’t we also do this by eliminating the draft and giving teams rookie signing pools based on market size. That way we aren’t penalizing teams for doing well on limited budgets and grow talent domestically instead of killing it internationally?

Jerry
Guest
Jerry
1 year 7 months ago

Competative balance is a thing.

Cool Lester Smooth
Guest
1 year 7 months ago

Yeah, that sounds more like an argument to eliminate the draft system here than one to destroy the ability of teenagers from third world countries to help their families escape poverty.

Paul
Guest
Paul
1 year 7 months ago

Limiting the total amount of money that can be spent on prospects will reduce the total amount of money that will be given to them. I can’t think of a way to have some resemblance of competitive balance and still allow as much money to be diverted from billionaire owners to players.

Cool Lester Smooth
Member
Cool Lester Smooth
1 year 7 months ago

Not really, if you raise the limit above the absurdly low current one.

Jerry
Guest
1 year 7 months ago

If the international draft worked anything like the domestic draft, players would still be able to help their families ‘escape poverty.’ We are still talking about multimillion dollar bonuses. Even a low 6-figure bonus would make a family set for life, assuming that sketchy trainers aren’t taking half of the money.

But it would restrict rich teams from hoarding talent, as the Yankees did this year. The Yankees signings this year are a perfect example of why the current system is broken.

Its not just the fact that teams are free to crap all over the spending limits, but the well known strategy of ‘hiding’ players and pre-July 2nd agreements is a joke.

Why should the international amateur market be any different than the domestic one? It only makes sense to the people who want to circumvent the intention of the system.

Paul
Guest
Paul
1 year 7 months ago

Do you think the recent impressive track record of Cuban players outplaying their initial projections will affect the future of how teams evaluate Cuban players?

Joser
Member
Joser
1 year 7 months ago

That will correct itself. There isn’t an infinite pipeline of insanely great players in Cuba or anywhere else. Sooner or later one of these guys will significantly underplay their projections and everybody will take the team that sank millions into him as an object lesson.

John C
Guest
John C
1 year 7 months ago

It’s a gamble, just like Japanese players are a gamble and U.S. draft picks are a gamble. You never know how a player will perform at the highest level until they do. But you can make a good guess with these Cuban players, because the Cuban league is about as good as high-A ball. If a guy is putting up Ruthian numbers there, like Jose Abreu did, then you can conclude that he’s pretty darn good.

TIF
Guest
TIF
1 year 7 months ago

There’s already been numerous underperofrming or lackluster Cuban players in MLB’s history, including recently. And, up until Cespedes and Puig, nobody really considered Cuban players to be the kinds of major impact talents that we’re NOW throwing on top of them as expectations.

In history, the Jose Abreu’s of Cuba are more rare than the Yuniesky Betancourts.

j
Guest
j
1 year 7 months ago

I have to disagree with your “game theory” article on scout. The Tragedy of the Commons is inapplicable to this situation.

The tragedy of the commons refers to a situation where a group acts in their own individual best interests, but contrary to the entire groups interest in the long run. The example used specifically is the depletion of a long-term resource, i.e. a herd of game animals.

Here, the Yankees blowing past their budget does nothing to deplete the resource – the latin american talent pool. It is not as if a player from DR is going to say “well, the Yankees just spent 30 mil, guess I’ll start playing soccer”. Further, an international draft would do nothing to deplete the talent pool. Its not that much different from the slotting system we have now.

Even on the abstract level, if you want to use the Tragedy to describe a situation where individuals act in their own best interests to group detriment, this is simply not happening here. The imposition of a International Draft would do nothing to deplete the international talent pool, it would just reallocate who gets access to the talent pool. There is no group detriment – certain teams would suffer from an International Draft (big market teams), but certain other teams would benefit(small market teams).

I believe we have already had this discussion on scout, and I wish you would stop misusing a simple concept.

Jerry
Guest
1 year 7 months ago

It would be detrimental to some people: corrupt trainers who milk very young payers for insane percentages of their bonuses, sketchy team personnel who make pre-deadline deals and ‘hide’ players, and big-market teams who benefit from strategically violating the rules.

j
Guest
j
1 year 7 months ago

The only way this works is if you use the Tragedy to describe a situation where a subset of a group (big market teams) acts in their short term interests to the subsets long term detriment(International Draft). Which simply doesn’t work – again because there is no destruction or loss value, only value reassignment.
Not only that, but using the Tragedy that way would eviscerate its meaning.

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