The International Bonus Pools Don’t Matter

International baseball has been in the news often lately with the ongoing saga of Yoan Moncada (he’s in America now), the signing of Yasmany Tomas and yesterday’s news that Cuba-U.S. relations could be getting much better.  In recent news, at the yearly international scouting directors’ meeting at the Winter Meetings last week, sources tell me there was no talk about the recent controversial rule change and no talk about an international draft, as expected.

So much has been happening lately that you may have temporarily forgotten about last summer, when the Yankees obliterated the international amateur spending record (and recently added another prospect). If the early rumors and innuendo are any indication, the rest of baseball isn’t going to let the Yankees have the last word.

I already mentioned the Cubs as one of multiple teams expected to spend well past their bonus pool starting on July 2nd, 2015.  I had heard rumors of other clubs planning to get in the act when I wrote that, but the group keeps growing with each call I make, so I decided to survey the industry and see where we stand.  After surveying about a dozen international sources, here are the dozen clubs that scouts either are sure, pretty sure or at least very suspicious will be spending past their bonus pool, ranked in order of likelihood:

Almost Definitely (3): Cubs, Blue Jays, Phillies
Expected/Likely (4): Rangers, Padres, Dodgers, Diamondbacks
Possible/Rumored (5): Braves, Mariners, Nationals, Royals, Twins

The list at this point last year was pretty accurate, with the Yankees coming in as an emphatic yes and a handful of other teams like the Rays, Brewers and Red Sox tied to one or multiple players that would likely send them over to a much lesser degree. That is pretty close to exactly what happened, with the Yankees, Red Sox and Rays all going over on or near July 2nd, the Brewers trading for cap space to stay under, then the Angels going over much later in the period for Cuban 3B Roberto Baldoquin.  As a result, the Yankees, Red Sox, Rays and Angels are ineligible to spend over $300,000 on any player for two years, starting July 2nd, 2015.

How 2015 Is Different

While last year’s group was reasonably clear at this time, the multitude of teams circling the strategy this year makes it harder to predict.  Expecting a club to go over their pool usually means they are coordinating multiple signings, lining up secondary options, getting multiple high-level scouts not normally in the international realm involved, etc. It’s not that hard for rival clubs to notice these things, and pick up gossip from various agents, trainers, friends and family.

The problem is that with this many teams in this mix, it makes for quite a margin of error.  One or two players agreeing to a verbal deal can end another club’s pursuit of the overall strategy, once their top option is off the board.  So, look at this more of a snapshot during a horse race than a done deal.  Of course, the whole thing could be upended by Moncada doing something other than what is expected: signing with the Red Sox or Yankees in the next few months (more on Moncada here).

As explained in that Moncada piece, teams now are at a consensus that an international draft will start with the next CBA; the current CBA expires on December 1, 2016.  If things go as clubs expect, that would give them the upcoming 2015 signing period that opens on July 2nd, then the 2016 period as the only two chances to spend big, beyond the six months or so in the current period.  I’ve already covered the many reasons why this strategy is generally a good idea and here are some reports/video on some of the top 2015 prospects.  I will scout/write about many more of the 2015 July 2nd prospects in January/February.

A Strategic Choice

With a dollar for dollar penalty for everything spent over your pool, along with a two-year $300,000 bonus maximum as punishments for going over your international pool, these assumptions mean that every team in baseball has one chance to spend like crazy, with the one chance for the Yankees, Red Sox, Rays and Angels ending in about six months.

While talking to scouts for this article, an interesting strategic question came up.  If four teams from this period are in the penalty and somewhere between six and ten teams will spend into the penalty this year, that means somewhere from 10-14 teams (all of which are inclined to spend big internationally) will be knocked out for 2016, which would be the last signing period before the CBA expires.

This means if clubs that are circling the over-spending strategy this year start seeing prices going to high and too many teams going all in, those clubs are incentivized to push back their over-spending until 2016, when there would be little competition for the top players.  It’s worth mentioning that the best July 2nd prospect for many scouts is Venezuelan SS Kevin Maitan (Video).  He’s currently 14 years old, has been compared to some all-time greats already and isn’t eligible to sign until the 2016 period, presumably the last before an international draft would be instituted.

We hoped you liked reading The International Bonus Pools Don’t Matter by Kiley McDaniel!

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Kiley McDaniel has worked as an executive and scout, most recently for the Atlanta Braves, also for the New York Yankees, Baltimore Orioles and Pittsburgh Pirates. He's written for ESPN, Fox Sports and Baseball Prospectus. Follow him on twitter.

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Miguel
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Miguel

Can someone remind me: where does the penalty money go? Just into MLB’s coffers?

John F
Guest
John F

From Kiley McDaniel’s post:
http://www.fangraphs.com/blogs/yoan-moncada-is-affecting-all-of-international-baseball/

“During the 2012-2013 and 2013-2014 signing periods, any tax proceeds generated as a result of a Club exceeding its Signing Bonus Pool will be used by the Office of the Commissioner, after considering the recommendations of the Committee, to offset the cost of international reforms. Thereafter, unless an international draft becomes operational, the Office of the Commissioner may use the tax proceeds to further the international development of baseball.”

Adrock
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Adrock

This shows how corrupt the system is. Every single one of those dollars should be going into the pockets of the international signees. The pool limits are so far below the ‘market’ value of the players that teams are lining up to blow past them, even if the kids will see less than half the money spent on them.

It’s a sad joke, that is unlikely to be improved by an international draft.

Pithy GM
Guest
Pithy GM

then they should unionize and negotiate the same rights that MLB players have fought for over 50 years because the current group of players and owners aren’t looking out for their best interests.

Doug Gray
Guest

Pithy GM….

You think a bunch of 15-year-olds from countries all over the world should unionize?

jfg
Guest
jfg

The point of an international draft would be to reduce how much money teams would spend on international players. If you think it’s unfortunate that the players aren’t getting all of this money, an international draft isn’t just unlikely to make it better, it’s guaranteed to make it worse.

Which prompts me to ask: why wasn’t an international draft established years ago? It seems like such an obvious way for teams to save money.

chuckb
Guest
chuckb

@Doug Gray…

“Prospects of the world, unite!”