Overspending on the Cuban Market

The Chicago Cubs have long been connected to Cuban defector Yoenis Cespedes this winter, but last week, they came to terms with another Cuban free agent, 19-year-old left-hander Gerardo Concepcion.

Concepcion flew under the radar for the majority of the offseason. The focus has been on the higher ceiling Cubans, which left much of the baseball community slackjawed at the $7M price tag the Cubs had to pony up to land the southpaw. Teams simply do not spend that much money on a prospect that is largely considered to be nothing more than a back-end starter … tops.

That is, unless one factors in the fact that international spending will now be capped, starting this upcoming July. Rick Hahn, Assistant General Manager of the Chicago White Sox, predicted a week ago that teams would be “extraordinarily aggressive on Cespedes, Soler and Concepcion” due to the upcoming limitations. He turned out to be right on the money.

Kevin Goldstein of Baseball Prospectus told me over the weekend that his “mildly educated guess” regarding Concepcion’s price prior to the new Collective Bargaining Agreement would have hovered around the 1.5 to 2 million dollar mark. The Cuban lefty got almost four times that much from the Northsiders.

To put this in perspective, only five players in the 2011 MLB Draft received signing bonuses above the amount Concepcion received last week: LHP Danny Hultzen ($8.5M), RHP Gerrit Cole ($8M), OF Josh Bell ($8M), OF Bubba Starling ($7.5M), and 3B Anthony Rendon ($7.2M). Granted, teams were not bidding against each other to land these elite prospects, but the fact that 19-year-old Gerardo Concepcion — a potential #4 or #5 starter — received more money than 19-year-old right-hander Dylan Bundy — a potential legit #1 — highlights the inflated market due to the upcoming limitations on international talent.

In some ways, teams have to either buy the young Cuban defectors now while the market can be exploited, or wait until the following offseason and compete on the same level as the rest of the budget-strapped teams in the league. Beginning July 2, 2012, every team in the league will receive $2.9M for international signings; the Cubs just spent more than two times their upcoming international budget on the third-best Cuban defector on the market.

The lofty price tag does not mean the Chicago Cubs made a poor signing, though. Concepcion may not have a high ceiling, but he is an extremely polished young pitcher and is considered a safe bet to reach the big leagues in some capacity. Any big league talent that will be under team control for at least six seasons provides substantial value for a rebuilding club, like the Cubs, and if the organization has money to burn and overpay for a probable back-end starter, more power to them. It will ultimately help.

This signing does indicate that the number needed to acquire Jorge Soler just jumped dramatically. The 19-year-old outfielder is a potential five-tool player — though his baseball skills remain quite raw — and could eventually become an above-average corner outfielder at the big league level. Granted, his ultimate floor is much lower than that of Concepcion, but if a potential back-end starter is worth $7M on the international market, imagine what a potential impact corner outfielder could net this month.

Surprisingly, the Gerardo Concepcion contract may not affect the Yoenis Cespedes market very much. One would suspect that it would, but two separate people — one inside an organization and one well-connected on the outside — opined that Cespedes would not sign for significantly more now that Concepcion has set the Cuban market. One person said Cespedes was “too unique” to be affected by the young lefty’s $7M bonus.

The new CBA will take effect this upcoming July, and it will assuredly decrease the amount of money dished out to unproven teenagers in Latin America. The new CBA is doing the exact opposite this winter, though. Organizations are overcompensating and overpaying for the likes of Gerardo Concepcion and Jorge Soler while the market can still be flooded and manipulated with tons of cash. The Chicago Cubs are the first team to do it this month, but they certainly won’t be the last.