How Trading International Pool Space Works

For the first time, teams will be allowed to trade portions of their international bonus pool allotments once the 2013-14 signing period begins on July 2.

Teams are allowed to trade for up to an additional 50 percent of their original signing bonus pool, so a team with a $2 million bonus pool would be allowed to trade for up to an extra $1 million in pool space.

It’s not quite that simple though.

Instead of one team just being able to take $1 million from its pool and trade that pool space to another club, teams have to trade slot values. Major League Baseball assigned 120 preliminary slot values, with four slots for each team. Teams add their four slot values together, plus another $700,000 as a base allocation, to get the value of their bonus pool. Teams can spend their pool allotment however they want. So while the slot values may be a precursor to an international draft as soon as 2014, the only practical application they have for this year is that trades must be done using the slot values.

Teams are not allowed to start trading slot values until July 2, which some believe is a way for MLB to try to cut down on deals before July 2 or at least make them more complicated, thereby limiting bonuses—though how effective that will be is debatable. Once July 2 is here, teams can make trades throughout the entire 2013-14 signing period, so the only “trade deadline” for making a deal is when the signing period ends on June 15, 2014 (the period between June 15 and July 1 is a “closed period” when teams are not allowed to sign players).

In addition, trades come with a few other stipulations:

• When a team trades a slot value, it must trade the entire slot value. So if the Red Sox wanted to trade slot No. 37 ($433,000) to the Nationals, the Red Sox wouldn’t be allowed to trade $300,000 of pool space to the Nationals and keep $133,000 for their own pool.

• If a team does acquire more than 50 percent of its original signing bonus pool through a trade, the club’s bonus pool will just be reduced to 150 percent of its original bonus pool. So if a team with a $2 million pool trades for $1.2 million in slot values, its bonus pool will be $3 million. The team that traded away $1.2 million in slot values would still have its bonus pool reduced by the full $1.2 million.

• Once a team has signed enough players to spend all its international pool money, it cannot trade for additional pool space. So if a team had $1 million left in its pool on Sept. 1, then on Oct. 1 signed a player for $1.5 million, the club would not be allowed to trade for additional pool space to fit the player into its pool.

• Teams are not allowed to include cash considerations in a trade for slot values, unless that cash consideration is used to offset the salary a team is taking on for a player involved in the trade. That means the Rangers couldn’t just agree to pay the Rockies $456,400 (or any other amount) for the No. 33 overall slot value. But if the Rockies traded a major leaguer to the Rangers and agreed to send Texas the No. 33 slot value as part of the deal, cash considerations could be included in the transaction, pending the commissioner’s approval.

• Once the 2013-14 international signing period begins on July 2, teams can only trade for slot values from the 2013-14 signing period. Trading slot values for the 2015-16 signing period during the 2013-14 signing period is prohibited.

• Teams are allowed to make three-team deals involving slot values, so clubs could get creative to acquire additional pool space.

Here’s one example of how a trade might work for the Yankees, who historically spend more every year than their $1,877,900 preliminary pool assignment. The Yankees would be allowed to trade for additional pool space of up to $938,950—or 50 percent of their allocated pool—and would have to add that space through acquiring other teams’ slot values.

The Marlins, who never come close to spending their $3,395,200 pool assignment for international players, would seem to be a perfect trade partner. One option would be for the Yankees to trade for slots Nos. 36, 66 and 96 from the Marlins, which add up to $932,100. That would leave the Marlins with a $2,463,100 international bonus pool—the No. 6 slot ($1,763,100) plus an additional $700,000 that goes into each team’s pool—which is still beyond what the Marlins typically spend annually on international talent. New York’s new pool space would be $2,810,000.

A second option would be for the Yankees to acquire the Marlins’ No. 6 slot. They could do that, but because the No. 6 slot is more than 50 percent of New York’s original bonus pool, the Yankees’ pool would be $2,816,850—150 percent of their original pool allocation. The Marlins would still lose the entire value of the No. 6 slot and their pool would drop to $1,632,100.

So to even things out, the Yankees could send the Marlins their No. 28 slot ($487,200) and No. 58 slot ($329,000). Now each team’s pool would look like this:

Yankees
Pool allocation base: $700,000
Marlins No. 6 slot: $1,763,100
Yankees No. 88 slot: $221,000
Yankees No. 118 slot: $139,600
Total: $2,823,700

(The total puts the Yankees beyond 150 percent of their original pool by just $6,850, so their pool would be reduced to $2,816,850.)

Marlins
Pool allocation base: $700,000
Yankees No. 28 slot $487,200
Marlins No. 36: $438,800
Yankees No. 58 slot: $329,000
Marlins No. 66: $296,300
Marlins No. 96: $197,000
Total: $2,448,300

This would be more complicated than the first option, but it might be more desirable to the Marlins because they now have five slot values they can still trade and usually don’t spend $2.45 million on international players anyway.

So if the Dodgers wanted to add to their assigned $2,112,900 pool, they could swing a trade with the Marlins for the 28th, 58th and 96th slot values for an extra $1,031,200 to bring their pool to $3,126,100. That would leave the Marlins with their $700,000 base as well as slots No. 36 and 66 for a $1,435,100 pool, which is more in line with what Marlins ownership has been comfortable spending on international players in recent years. Plus, they would presumably receive something in return from both the Yankees and the Dodgers for giving them each an extra $1 million or so in pool space.

Easy, right? Now teams just have to figure out how to agree upon the trade value of bonus pool space.

International | #International rules #July 2 2013

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