New international signing rules: who they benefit and who they hurt

With almost two weeks of ink-drying, the new Collective Bargaining Agreement has been agreed upon and has begun getting fully dissected.

We started this series on the implications of the new disabled list rules, having the 15-day DL get shortened down to a 10-day DL. We now move to the signing of international prospects.

Leading up to the CBA, there was a lot of conjecture that owners would require an international draft. It has been on Rob Manfred’s agenda since succeeding Bud Selig as MLB’s Commissioner. Thanks in large part to a protest held by latino players during negotiations though, an international draft never came to fruition.

Unfortunately however, the system put into place instead of a draft doesn’t seem much better. Let’s dive in:

The Original Rule

International Bonus Pools were decided upon through a series of determining factors primarily around team record, and then additional stipulations based on previous spending on international free agents. Penalties for overspending were convoluted to say the least.

0-5% overage: MLB taxes the overage at a 100% rate.

5-10% overage: (1) MLB taxes the overage at a 100% rate. (2) The offending club loses the right to sign any player to a bonus exceeding $500,000 during the following international signing period.

10-15% overage: (1) MLB taxes the overage at a 100% rate. (2) The offending club loses the right to sign any player to a bonus exceeding $300,000 during the following international signing period.

15%+ overage: (1) MLB taxes the overage at a 100% rate. (2) The offending club loses the right to sign any player to a bonus exceeding $300,000 during the following two international signing periods.

The Amendment

Now, instead of many complex way to penalize teams for over-spending, there is only one very simple rule: over-spending is strictly prohibited.

That’s right, international bonus pools are set where they are set and are a hard-cap. Salary caps are not an easily agreed-upon thing from a player perspective, but there are some good reasons to make this concession. That’s right, international bonus pools are set where they are set and are a hard-cap. Salary caps are not an easily agreed-upon thing from a player perspective, but there are some good reasons to make this concession. This means deals like Yoan Moncada’s or even Lucius Fox’s, who signed for $31.5 million and $6 million respectively, are things of the past.

Furthermore, the age at which an international prospect is no longer subject to these rules has increased from 23-years-old to 25-years-old. This means deals like Lourdes Gurriel’s, who just turned 23, are a thing of the past.

Who it hurts

Relatively straight-forward, the new international signing rules hurt international prospects. But especially the best of the best.

Of course, Moncada’s record-setting $31.5 million deal will never be broken. Widely considered the best prospect in baseball, the first overall pick in the most recent draft was valued at just over $9 million. While it is no doubt unfortunate that even a $9 million deal will be out of the question for international prospects—even for the best prospect in all of baseball—it does make sense to end gargantuan deals like Moncada’s.

Other notable deals that wouldn’t have happened under the new system include Yadier Alvarez’s for $16 million, Yusniel Diaz for $15.5 million, Adrian Morejon for $11 million, Alfredo Rodriguez for $7 million and the aforementioned Fox for $6 million. Of course, trading for additional bonus pool money is still an option and could make deals like Rodriguez’s or Fox’s conceivable.

That’s a huge detriment to the game, no doubt. International prospects should be subject to the same contract perks that domestic prospects are. Under this new system, there just isn’t enough money to go around to make that the case.

Who it benefits

Of course though, looking at spending $6 million on Fox doesn’t seem that great anymore in retrospect. While the 19-year-old shortstop could still absolutely amount to something in the big leagues, the young shortstop ranks well outside of the top-100 prospects. He currently sits seventh in the Rays organization by MLB Pipeline after being traded from the Giants.

While there is absolutely no guarantees that players drafted domestically and guaranteed $6 million amount to anything, teams will no longer get into potential bidding wars for players. Teams will gain a great deal from this. But there is a particular type of team that will benefit most.

Of the six international prospects mentioned in the previous section, four signed with either the Dodgers, Giants, or Red Sox—three big market teams. The others signed with the medium market Padres and the small market Reds.

Let’s put it another way. Of those small sampling of six players, $87 million was spent signing them. $63 million of that is the Red Sox and Dodgers alone. Two teams and three players dictate 73 percent of the top international prospect signings.

With the new hard cap, smaller market teams are now going to be able to compete in a more level playing field. This could be incredibly good news for teams like the Rays, Royals and Athletics—teams that have largely sat out of the international prospect market.

In the coming years, building a competitive team with limited payroll will likely have a lot to do with focusing on international prospects because of this new rule. While bigger market clubs may spend extra money to deploy more and more scouts in foreign countries to make sure they spend money on the right international prospects, the cost of doing business should now easily involve 30 teams.