The penalties for exceeding the international bonus pools are harsh, but for certain teams this might be the year to ignore them.
The Rays did just that last year when they went well beyond 15 percent over their $2.9 million bonus allotment. In addition to having to pay a 100 percent tax on the overage, the Rays won’t be able to spend more than $250,000 on an international signing during the 2013-14 international signing period that begins on July 2, but their aggressiveness last year helped them net three of the Baseball America Top 20 international prospects for July 2, 2012.
The Rays could have still landed two of those players and left themselves more flexibility this year, so the wisdom of the decision to go over their pool allotment is debatable.
This year, however, might be the year where it makes the most sense for certain teams to go all-in on international signings. It all depends on two major factors:
1. Whether there will be an international draft in 2014
2. Whether teams will be allowed to trade international draft picks
Teams don’t know yet whether an international draft is coming next year (and Major League Baseball is doing a good job of keeping both the public and their own teams in the dark), but many expect it will happen. MLB has to officially inform the MLB Players Association by June 1 whether it intends to proceed with an international draft, at which point the union has until June 15 to either accept or veto the draft.
If there is an international draft in 2014, the penalties for a team going beyond its pool space change to:
• 0-5 percent over pool: 75 percent tax on the pool overage.
• 5-10 percent over pool: 75 percent tax on the pool overage. Team loses first-round pick in the 2014 international draft.
• 10-15 percent over pool: 100 percent tax on the pool overage. Team loses first-round and second-round pick in the 2014 international draft.
• 15 percent or more over pool: 100 percent tax on the pool overage. Team loses first-round picks in both the 2014 and 2015 international drafts.
The most significant penalties are the loss of draft picks. MLB was particularly smart to make it cost a team its top picks for multiple drafts rather than one.
For the Astros or Cubs, who already have the two biggest international pools and have terrible major league teams that will likely result in them having a top-five pick next year in the event of an international draft, giving up those potential draft picks would be a poor idea.
But take the Rangers and the Yankees, two historically aggressive spenders on the international market. Both teams have 2013-14 bonus pools near $1.9 million and could get up to around $2.8-$2.9 million by trading for more slot values. With $1.9 million, depending how an organization approaches its pool strategy, a team should be able to sign at least one or two of the top 30 players on its board. Trading up to $2.9 million should be enough for at least three of its top 30 players given how much teams’ preference lists diverge on international amateur players.
Right now, the Yankees and Rangers have two of the four best records in the major leagues. If a draft comes into existence next year, there’s a good chance that both teams are looking at having picks in the 26-30 range, which means that when their picks come around in the second round they’ll be in the 56-60 range.
In that scenario, both teams are going to get one of their top 30 players, maybe two if they’re lucky. Barring something unusual (or corrupt), however, they won’t have a chance at one of the premium players who are consensus top 5-10 prospects.
So if we assume there will be an international draft next year and that the Rangers and Yankees are going to be choosing at the end of each round, why not go nuts this year for international players? Instead of the Rangers signing two or three of their top 30 players, then probably only getting one more from next year’s top 30 in the draft, why not flex some financial muscle and try to sign six or eight players from their top 30 and forget about the pool penalties?
Yes, they would lose their top picks from the 2014 and ’15 international drafts, but they would have six to eight of their top 30 international prospects for 2013 with a chance to go after guys at the very top of their list. If they signed just two or three guys this year, then held on to those 2014 and ’15 draft picks, they’re looking at probably getting two or three of their top 30 from 2013, one in 2014 and one in 2015 if they continue to have one of baseball’s best records next season. That’s still just four or five of the top 30 international prospects in total that they’re adding to the organization from 2013-15, and the players available to them picking 26-30 probably won’t be one of their top 10 guys.
Here’s where this strategy could become even more palatable. Nothing in the CBA says a team that loses its first-round pick would be prohibited from trading for another team’s first-round pick.
Teams aren’t allowed to trade picks in the domestic draft other than the competitive balance lottery picks. However, MLB might allow teams to trade picks if there is an international draft. This year teams have bonus pools that are comprised of four “slot values” (plus another $700,000). Those slot values, which some believe will be used to create a four-round draft next year, can be traded, which may be a sign that MLB will let teams trade international draft picks.
It makes some sense that MLB would allow picks to be traded. The biggest signing bonus the Marlins gave to an international player last year was $85,000 to Dominican third baseman Alberto Sanchez. If the Marlins have the second overall pick in next year’s international draft, are they really going to pay $2.87 million (or whatever the slot value would be for the No. 2 pick) for an international signing? Unlikely.
If teams are allowed to trade international draft picks, now a team like the Yankees could sign six to eight of their top 30 prospects in 2013, then make up for losing their 2014 and ’15 international draft picks by trading for another team’s first-round pick or even multiple first-round picks. If they do this in 2014 and ’15, they could come away with eight to 10 (or maybe more) players who they consider the equivalent of first-round draft picks in a three-year window. Compare that to the six or seven top prospects they might otherwise sign if they had obeyed the 2013 pools and still traded for a first-round pick in 2014 and ’15.
Of course, there’s a chance that MLB won’t allow teams to trade picks. Or if they do, they might alter the rules so that teams that go more than 15 percent beyond their 2013-14 pool allotment also lose the right to trade for another team’s draft picks from the first two rounds.
Even without trading picks, as long as there is an international draft in 2014, it’s a strategy that a team like the Rangers, Yankees, Reds, Cardinals or others in a similar situation should consider. A team with corrupt international decision-makers looking to get one last easy chance at kickbacks could also use this strategy, but there are legitimate baseball reasons for employing it as well.
“Where MLB has done kind of a clever job is not announcing (a draft) yet,” said one international scouting director. “Once they do, I think several teams will make that decision.
“I agree with that line of thinking. Why not go out and get all the top guys you can get this year, especially if you consider those guys in your top 10 this year that you’re not guaranteed of getting next year? Say, ‘(Forget) it,’ then next year I’ll lose my first pick and lose my second pick.”