Suspension Helped Former Diamondback Net $1.1 Million From Yankees

In Latin America, unsigned 20-year-olds rarely sign for more than a few thousand dollars, if teams are even willing to sign them at all.

Juan Carlos Paniagua, who signed with the Yankees on Thursday for $1.1 million, is no ordinary 20-year-old, and that’s not just because of his high-90s fastball. He managed to convert a suspension into a payday.

Paniagua, a 6-foot-1, 175-pound righthander from the Dominican Republic, originally agreed to terms with the Diamondbacks for $17,000 on May 8, 2009. At the time, however, Paniagua was presenting himself as Juan Carlos Collado. Players at that time were allowed to play in the Rookie-level Dominican Summer League while their contracts were still pending league approval—a rule that Major League Baseball changed after the 2010 season. So, Paniagua pitched for Arizona’s DSL club in 2009 with a pending contract while MLB conducted its investigation into his age and identity.

Paniagua made 18 appearances out of the DSL Diamondbacks’ bullpen, posting a 4.66 ERA and a 33-15 K-BB mark in 29 innings. Paniagua’s contract was pending league approval for more than a year, and he made three more relief appearances for the DSL Diamondbacks last year in June.

What happened after that has sparked both confusion and frustration at the system from club officials across the game.

Paniagua made his final DSL appearance on June 7, 2010, but his contract never became official. According to Diamondbacks vice president of scouting and player development Jerry DiPoto, MLB informed the Diamondbacks around that time that the league had suspended Paniagua for one year due to fraudulent paperwork. Paniagua’s suspension ended on March 8, however, eight months after his final DSL outing. An MLB official explained that Paniagua’s suspension “was applied retroactively as the result of an administrative issue.”

When Paniagua had signed with the Diamondbacks, he was a raw arm who had been throwing around 88-90 mph, touching 92. During his suspension, Paniagua joined one of the top academies in the Dominican Republic, the Arias and Goodman academy run by Alfredo Arias and Gary Goodman. Their players last year included Astros outfielder Ariel Ovando ($2.6 million), Mariners outfielder Phillips Castillo ($2.2 million), Cubs third baseman Jeimer Candelario ($500,000) and Yankees righthander Reynaldo Polanco ($450,000), among others.

While training at the Arias and Goodman academy during his suspension, Paniagua’s velocity skyrocketed. Multiple scouts who have seen Paniagua recently reported that he sat around 93-95 mph and touched 98. Some scouts said they had heard Paniagua may have even topped out even higher, though Baseball America could not confirm those reports.

Paniagua’s situation is similar to that of Dominican righthander Carlos Martinez (previously known as Carlos Matias), whose low six-figure agreement with the Red Sox was voided when he was suspended for fraud. While he was suspended, Martinez’s fastball shot up and he started throwing up to 99 mph. Since Martinez’s contract with the Red Sox never received official league approval, Martinez was able to become a free agent after he finished his suspension last year, then signed with the Cardinals for $1.5 million last April.

Like Martinez, Paniagua became a free agent after his suspension, though unlike Martinez, Paniagua had already spent more than a full season working with Diamondbacks coaches, living at their academy and playing for their DSL team. And, like Martinez, Paniagua’s last name changed, but his date of birth—April 4, 1990—is the same that he originally presented to teams and used to sign with the Diamondbacks.

Several team officials have complained in the past that MLB’s suspension rule has had unintended consequences that have punished teams and benefited players who have committed fraud, and a rule-change proposal that would offer the original signing team the right of first refusal to sign the suspended player for the original terms was never passed, according to team sources.

“We were connected to this throughout,” DiPoto said. “I’ve received phone calls dating back six months from various teams who’ve scouted Juan who were curious about what his circumstance was. We couldn’t get him approved. We had him, we were anxious to get him across and start his development in the U.S. in short-season ball, but we couldn’t get him out of Dominican Republic and get him approved.”

Paniagua’s case has brought out further frustration from teams who contend that MLB’s rules can enable a player to use a suspension to make 65 times his original signing bonus, leaving the original signing team with nothing.

“He was probably working out with the Diamondbacks, getting instruction, eating better and then they lost the rights,” one scout said. “It’s crazy.”

Had a rule change from last year gone into effect earlier, Paniagua might still be with the Diamondbacks. Teams and players previously were at the mercy of MLB when a player’s investigation came back inconclusive. Under a rule change that went into effect last fall, according to team officials, teams can now tell MLB that they are willing to assume the risk on a player with an inconclusive investigation, pay the player his bonus, do the work to try to get the player his work visa and the league will approve his contract. According to various industry sources, teams are still likely to wait for an investigation to be completed for a high-priced signing, but a team would likely be willing to assume the risk for a $17,000 signing.

“The kid’s got a good arm, he’s got upside, he’s got potential to come over to the U.S. right now,” DiPoto said. “We thought he had potential to go to the U.S. while we still had him. Right up until a month ago we didn’t have clear answer on that. There were other clubs interested in signing him, but there was such convolution with his background that nobody knew quite what to make of it.”

The Yankees, meanwhile, are excited about their new prospect, though like nearly any high-dollar international signing, Paniagua’s contract is still contingent upon his ability to secure a work visa. According to one source, the Rangers also showed strong interest in Paniagua, supposedly even offering him a spot on their 40-man roster. The Yankees acted quickly when Paniagua became eligible to sign on Tuesday, however, agreeing to terms with him on Wednesday, then signing the contract on Thursday.

“He can spin the ball and throw a changeup with arm speed for strikes,” said Yankees vice president of baseball operations Mark Newman, who oversees the club’s international efforts. “His secondary stuff is advanced, we think, and we’ve seen it improve over the course of the year.”

Some scouts from other organizations had more reservations about Paniagua’s offspeed pitches, but Newman said the Yankees see above-average potential in his curveball and his changeup.

“He really has good arm speed on his changeup,” Newman said. “There’s some bottom to it and he has feel to throw it in the strike zone. He has feel to spin, the slider and curveball rotation is solid. Sometimes the shape or angle is a bit off, but those things are correctable and we feel good enough about his feel for spin and feel for the changeup that we’re comfortable with what his secondary pitches will look like down the road.”