Why 2016 Is The Year To Break Your International Bonus Pool

Every year, more teams join the mix in going over their international bonus pools. First the Rays did it in the inaugural pool year of 2012-13, then the Rangers and Cubs followed in 2013-14.

Last year, the Yankees made the most aggressive push yet, dropping around $17 million in signing bonuses, almost all of which went to 16-year-old kids in Latin America. The Red Sox and Rays also went over their pools for July 2 signings, while the Angels and Diamondbacks followed suit later on with an expensive Cuban signing. Those teams can’t sign anyone for more than $300,000 for the next two signing periods, starting July 2.

More teams are going over this year. The Dodgers, Cubs and Royals look prepared to go over. The Phillies look like a good bet to join them, and the Blue Jays might too. That makes at least 3-5 teams as of now that are going over, and with the wave of young, pool-eligible Cuban talent out there, you can bet more teams are thinking about going over too if they can land one of those players. While righthander Yadier Alvarez looks like he’s headed to the Dodgers as part of their pool-busting period, Norge Ruiz, Vladimir Gutierrez, Randy Arozarena and Andy Ibanez are all still available. Other pool-eligible Cubans such as Eddy Julio Martinez and Alfredo Rodriguez are out of Cuba, with more likely on the way. There’s a good chance the Dodgers and Cubs will be in on those players, but anyone else that jumps in will add to the teams in the maximum penalty territory.

So during the 2016-17 signing period, there could be at least 10 teams in the penalty box, with the clubs that went over last year still restricted to bonuses of no more than $300,000. That’s why a smart team is going to make its move to blow out its international bonus pool next year, when most of the competition will be on the sidelines.

The Red Sox, Yankees, Dodgers and Cubs—four big-market teams that spend aggressively overseas—will be penalized. The 2016-17 bonus pools are determined based on reverse order of 2015 major league records. There’s very little spread at the bottom of the pools—the bottom 10 teams’ pools range from $1.97 million to $2.13 million—so only the teams with the worst 2015 records have a significant pool advantage. The standings will change, but here’s where the pools would stack up if the season ended today:

1. Phillies
2. Brewers
3. Athletics
4. Red Sox
5. Marlins
6. Rockies
7. White Sox
8. Mariners
9. Padres
10. Reds

The Phillies, who are likely to stay in the cellar, might not be able to sign anyone for more than $300,000. The Red Sox are already penalized. The Athletics are the cheapest team in Latin America and didn’t spend more than $1 million total on all of their international signings last year. The Marlins never sign anyone these days for more than $1 million. So right away, the teams with four of the top five bonus pools won’t be factors for seven-figure players.

The realistic competition for players who could command bonuses of at least $1 million will consist of around 15 teams. That includes the Astros, Mets, Rangers and Twins, who should be active but as of now are looking at bottom 10 pools based on their significantly improved major league records this year.

Every team’s list of the top players looks different, but if an organization committed $10-$15 million on international bonuses next year, it could easily come away with at least eight of its top 20 international prospects for 2016. The total cost would run nearly double that amount with a 100 percent overage tax, but a team could grab the equivalent of four to six years worth of top-level talent in one year while facing penalties for the next two years.

There should be plenty of Cuban talent available, too. Due to MLB’s registration rules, outfielder Yusnier Diaz, lefthander Cionel Perez and righthander Ronald Bolanos already have to wait until July 2, 2016 before they can sign. There’s no great way to anticipate when specific players will leave the island, but nearly any Cuban who pops up and is 20 years old or younger would also have to wait until 2016. Some of the best talent still in Cuba—outfielders Jorge Ona, Julio Pablo Martinez and Luis Robert—would all fit into that category. It’s probably a stretch to expect any of the Cuban players who are already off the island and will be eligible to sign this year to wait until 2016, but any other Cubans who leave the country this winter or later should be available.

Where it gets tricky is that the CBA expires on Dec. 1, 2016. The current CBA includes provisions for an international draft, but those penalties were written with the aim of having an international draft in place by 2014, which MLB wasn’t able to pull off. With teams predictably getting around the bonus pool rules, either through creative accounting or strictly blasting through their pools, and especially with the rising level (and prices) of Cuban talent, there’s a growing expectation that MLB will make a stronger push to implement some type of international draft in the next CBA.

If there’s no international draft in 2017 or 2018, the penalties for going over your 2016-17 pool are the same—a 100 percent overage tax and no pool-eligible players for more than $300,000 for two years. That’s not a significant deterrent, since there’s still plenty of talent available under that threshold. But what happens if there is an international draft in one of those years?

In the current CBA, there is a section called “Penalties in Signing Periods Preceding a Draft Year,” which states that, “In any signing period commencing in the year prior to a year in which there will be an international draft, a Club that exceeds its Signing Bonus Pool will be subject to the penalties listed below.” The penalty for going 15 percent or more beyond your bonus pool are “100% tax on all of the Pool overage and loss of loss of (sic) 1st round picks in next two succeeding international drafts.”

Would those penalties carry over into the next CBA? Presumably, if there is an international draft in 2017, but the CBA wasn’t written with that in mind. What if there’s no international draft in 2017 but there is in 2018, a possibility given how the current CBA is structured? On Tuesday morning, I asked the commissioner’s office to clarify what the penalties would be for a team exceeding its bonus pool in the 2016-17 signing period, but they didn’t respond to the request.

These are important questions, ones teams have brought up, and they deserve to have MLB give them answers so they can know the rules they’re operating under when they make decisions. For the purpose of this strategy, however, it doesn’t make a big difference. In a worst-case scenario, there will be an international draft in 2017, and the team that goes over next year loses its 2017 and 2018 first-round international draft picks.

So what? Even if there is an international draft, it’s a guarantee that there will be ways to game the system that someone will figure out within 48 hours of it being announced. Not because the commissioner’s office is dumb, but because implementing an international draft entails so many complicated variables that any system they come up with is going to have bugs in it that savvy teams and trainers will be able to exploit. That’s the history of the draft in the United States, and when you throw the international market into the mix, you’re magnifying the opportunities for people to work around the system. The potential loss of international draft picks should not be a deterrent, not when you could get the equivalent of eight or more first-round international draft picks in one year.

There are signs that some clubs are already looking toward being aggressive in 2016. Several sources believe the Braves are ready for a spending spree next year on par with what the Yankees did in 2014. Some believe the Nationals are also prepared to exceed their bonus pool, while the Padres, who have a former international director as their GM in A.J. Preller, might consider doing it too.

It’s a strategy that makes the most sense for teams with the best records in baseball—the Cardinals, Pirates, Astros or Rangers—since they would have the smallest bonus pools next year, if they can keep up the pace.

There’s plenty of talent available, led by Venezuelan shortstop Kevin Maitan, a 6-foot-2, 175-pound switch-hitter with a sweet swing, already the buzz of the international scouting community. The international market moves extremely quickly, though. To take full advantage of this strategy, a team needs to decide soon whether it’s going to blow out its international bonus pool next year.

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