MoneyIn one of my favorite storylines to cover in 2013, the Chicago Cubs exploited a loophole in the international free agent signing rules to land a surplus of IFA talent, including top prospects Eloy Jimenez from the Dominican Republic and Gleyber Torres from Venezuela (and they’re still exploiting, even this month). You can read those links to get a more robust sense of what the Cubs achieved and why it worked, but the gist was: the Cubs could go hog wild signing young, international talent this year and not suffer particularly meaningful consequences (the total layout of cash is going to be somewhere north of $10 million). If you’re not going to spend on the big league roster right now, but have money to throw around, that’s one good place to throw it.

And it sounds like that’s precisely what the New York Yankees plan on doing next year.

Scout’s Kiley McDaniel reports – in a very interesting and thorough piece – that the Yankees plan to take the approach up a notch by spending as much as $20 to $25 million when the next IFA period opens up on July 2. That spending accounts both for the bonuses they’d be giving players, as well as the tax they’d pay on the overage (in other words, they’d be inking about $12 to $15 million worth of talent, and then paying the rest in penalties). They would also then suffer the harshest of overspending penalties – the inability to sign any single IFA for more than $300,000 for the following two years. That penalty is more severe than the one-year penalty the Cubs will face next year.

The upshot here is that, if teams were planning on landing top talent on the IFA market next year, it could be tough, since the Yankees are planning on going nuts. That’s not bad news for the Cubs, since they are prohibited from signing any individual player for more than $250,000 next year anyway. The Cubs, as I’ve speculated before, may actually have an opportunity to trade away some of their international signing pool money for prospect(s) next year. Of course, if the Yankees gobble up all of the top talent, signing pool money might not be all that valuable to other teams.

Read McDaniel’s report and ponder the implications. If an international draft is implemented in the next two years, as it very well could be, the Yankees may lose a first round draft pick or two as a consequence of this strategy. That’s another reason I’m glad the Cubs took the approach in 2013, rather than in 2014.

  • DarthHater

    Yep, the Cubs are leaders and the Yankees are followers. Please, don’t wake me up until we win 25 more championships.

    • hansman

      Goodbye Darth. It was nice knowing you.

      • DarthHater

        “It was nice knowing you.”

        I know you’re saying that sarcastically, so Nyaaaaah! 😛

  • hansman

    I wonder if the Cubs jumped on the vaccum where noone else was going hog wild but anticipated someone would do it next year?

    Or if the Cubs were going nuts this year, everyone stayed away and now the Yankees are planning on doing it next year.

    Either way, this is a loophole that is going to get closed soon.

  • Edwin

    I guess I’m not really convinced that the Cubs “exploiting a loophole” in 2013 was worth it. They probably could have signed the top two IFA prospects, and not had the penalties. The other players they signed were nice, but I don’t think it was worth missing a chance at a top 5 IFA this coming season.

    I feel like if the Cubs were going to exploit the loophole, they should have done what the article implies the Yankees might try this year.

    • Chad

      Yes, but now they will have to compete with the Yankees who plan to spend a ton more to get that top prospect, so they got there first last year and now they won’t be competing with the Yanks for the top ones this year, but that may not be a bad thing.

      • Edwin

        They wouldn’t have known that, and who knows if the Yankees actually go through with it.

        • Norm

          The Cubs simply believe that the “other players” were worth spending on instead of 2014’s best IFA’s.

          • Edwin

            Just because the Cubs believe something to be right does not make it the best move possible. I’m sure the Marniers belive that spending big on Cano now is better than spending on FA in 2015/2016.

            • hansman

              It also depends on what the Cubs can get for their extra cap space next year.

              • Edwin

                True. Although if the Yankees go all out, I’m not sure too many other teams will be looking to trade for the Cubs’ cap space.

                Ultimately, I think the Cubs chose an interesting strategy last year for the IFA, but I’m not ready to label it a clear winning strategy, at least until we’ve had more time to see what the overspending actually got the Cubs and what the penalties actually cost them.

    • Brett

      Who’s to say the Cubs didn’t try to go ever further? Just because you target 15 kids doesn’t mean you get them all.

      • Edwin

        That’s fair. But I don’t think it changes the fact that they basically wound up sacrificing a shot at a top 5 IFA next season for Tseng (#23), Jefferson Mejia (not in the top 30, unless I’m looking at the wrong list), Erling Moreno (#16), Yohan Matos (again, not in the top 30, unless I’m on the wrong list), and Wladimir Galindo (#25 according to MLB).

        They also gave up Ronald Torreyes, who is probably a better prospect than most of those non-top two IFA’s will ever be.

        • woody

          Edwin we already got Gallindo last week.

          • Edwin

            I know, I’m just including him in the list of players the Cubs netted by going over the cap.

        • Brett

          Mejia didn’t qualify because he was one of those already-signed-a-contract-and-had-it-nullified types. They got $800,000 in actual money for Torreyes, too.

          • Edwin

            My bad, I’m looking up things quickly while at work.

      • DocPeterWimsey

        There is no “try”: do or do not!

  • cubsin

    If that was indeed the Yankees’ plan, it will be interesting to see if the follow through with it. This early leak of their alleged plan could (1) increase the bonuses paid to 2014 IFA’s through more competition for the top prospects, (2) incur the wrath of “Larry” Bud and (3) increase the value of the Cubs’ IFA draft slots.

    Between the overstated bonuses they’ll pay and the 100% tax on most of their spending, it’s hard to see much surplus value going to the Yankees from this approach.

  • jmc

    Darth Haterthat new picture is disturbing

  • cubsin

    The Cubs’ approach last year was far more stealthy. I’m even beginning to wonder if the Torreyes trade for IFA slots was more about concealing their intentions from the other franchises that actually saving the Cubs some extra tax dollars.

  • Charles

    Let’s give the FO some props as we exploited a loophole prior to everyone else and for once, we as fans are not left wondering why our club did not do this. Just think, if Theo did not dramatically expand our scouting department when he got here so we could have had scouts seeing these kids play we never would have been in the position to intelligently pull this off.

  • itzscott

    Too bad, so sad for the Yankees…

    The Cubs skimmed the cream off the top. Yankees get the sloppy seconds.

  • itzscott

    On another score, this puts the Cubs in perfect position to sell their slots to other teams.

    • abe


      Can we trade 2014 money to the Yankees in return for 2015 money? We can’t spend so much this year in 2014 and they can’t spend so much in 2015?

      • Brett

        I believe IFA money doesn’t become tradable until June (preceding the period for which it is used). So, no.

        The money will only be useful to the Yankees as actual money (like the Cubs with Torreyes last year) – so they’d have to value the cash higher than whatever prospect/player you’re trading it for.

    • Edwin

      Of course, if the Yankees go all out and sign everyone, then there will be no need for other teams to trade for IFA cap space from the Cubs.

  • dAn

    The fact that teams are doing this just shows that the system is broken. Scott Boras alluded to this (correctly), when he noted that *some* amateurs are getting screwed out of their market value by the new CBA (certainly not everyone, but at a minimum the guys who go in the top half of the first round of the amateur draft and the top 5-10 IFAs).

    If amateur talent is now a bigger bargain than ever, and if teams are looking for ways to get around the amateur spending caps, then it has to mean that some of these young amateurs are not getting paid what they would be worth on an open market. And that’s a shame.

    It’s a shame that the extra 12 million the Yankees will spend in penalties won’t go into the pockets of the players who are being signed–if they’re really worth that much. That money gets funneled into the commissioners office and the other teams’ FOs, so that they can spend more money on veteran free agents who are already making tens of millions of dollars.

    The reason teams can overpay for the Shin Soo Choos and Robinson Canos is because they can underpay for the cream of the crop of amateur talent. The players’ union doesn’t mind because the amateurs aren’t a part of the union (yet), and they won’t have any clout with the union until they are veterans, so they are willing to throw the amateurs under the bus as a concession to the owners in the labor dealing. The owners are happy because it is a way to limit the cost of certain pools of talent.

    It would be very interesting to see what would happen if–in a year when there was a clear consensus top amateur talent, someone like Griffey Jr. or ARod who only comes along once a decade or so–if that consensus top talent would sue both MLB and the players union for damages, for limiting what they can sign for. That player would have to have balls of steel because they would unfairly be targeted by veteran players, the baseball establishment, and even fans–a world of pressure and nastiness would come against them. But, what could be the defense against such a lawsuit?

    • terencemann

      I agree with all of that not to mention that I’m sure the buscóns are not giving those kids a financial break just because MLB changed their rules.

  • Rich H

    OK lets get a quick fact check on some of this real quick.

    1. The Cubs FO did not do this first. They took what Tampa and Texas did the year before to the next level which was smart but hardly as ground breaking as some are suggesting.

    2. Unless there is a Cabrera or a Manny in the class the money slot does not matter as much because most of these kids are already connected to certain scouts or organizations from the schools these guys are affiliated with.

    3. A high dollar guy is not the end all of Latin America. Just look at Lake and Castro for the Cubs neither of them were top dollar talent but the scouts did a great job of signing them.

    So in closing let the Yankees go overboard to refill their minors. They really need the help in the low minors.

    A good organization should be able to fill the low minors with some “could be”‘s from year to year and be in a position to go all in when a can’t miss becomes availible.

  • woody

    I am pretty impressed by the guys we signed this year. There may not be a guy like Jimenez that comes along for a few years. We got the numer one and number three ranked players in that class. And now reportedly the Gallindo kid has signed also. I am reasonably certain that they will use the number 4 pick in the first two rounds this year to get some good pitching prospects. I think that if Rizzo comes back then Vogelbach is expendble and we have a glut of fine infield prospects to pakage for a trade for pitching if neccesary later on. Regardless I think that Baez and Bryant and Alcantara will be penciled in on opening day 2015. Where Baez and Bryant play will be determined by Castro’s performance this year, I’m not sure that Bryant will ever play third base. Christian Villanueva projects as a better defensive player. But if Baez goes to third as many anaylists think then Villanueva stays down on the farm. I think they plan to let Olt reestaablish himself so he has value. But if Olt had a breakout year I really don’t know what would happen. I have a feeling thaat Castro would go.

    • Rich H

      I agree with a little bit of a twist. Castro’s value is HIGH if he rebounds just a little. There are reports that StL offered Miller and Rosenthal for Castro and were told he wasn’t available. If 2 potential TOR arms that are already in the majors do not start a conversation for Castro what would? I see a scenerio where if Olt cements himself at 3rd then Barney AND Alcantara should probably learn new positions or get those change of address forms ready.

      • Edwin

        I don’t think that was actually ever a real offer, just pure speculation (The cubs need pitching, the Cards need a SS).

      • mjhurdle

        I live in STL and never heard a Miller + Rosenthal for Castro report.
        And if the Cards made that trade, the entire city would be in an absolute riot.
        The Cards shied away from trading for Tulo because Colorado wanted a package designed around Miller and Martinez. If they wouldn’t give Miller and Martinez for Tulo, i cant see them giving Miller and Rosenthal for Castro.

        • Voice of Reason

          Big difference between tulo and Castro. Tulo is on the hook for a ton of cash and cant stay healthy. Castro is under control for a long time at a very cheap price and hasn’t been hurt yet. If I’m the cards and I need a shortstop then Castro would be a great addition.

          • mjhurdle

            not disagreeing that Castro would not be a good addition, but no way is he a better addition than Tulo.
            Tulo comes with risks (2 injured years out of 8), but also with the 6+ bWAR he puts up every year he plays healthy.
            Castro is cheaper and has less of an injury history, but even if you assumed that he would return to peak form is a 3-4 bWAR player.

            Im not saying Castro is a bad player at all. Just that, if the Cardinals are not parting with those specific prospects/rookies for Tulo, then they definitely aren’t for Castro.

            There was talk of trading for Castro, but locally here the talk was always centered around 1 of their prospects not named Martinez, Wacha, Rosenthal, or Miller.
            They even debated if a Matt Adams – Castro swap straight up was too much to give for Castro.

            • Voice of Reason

              Dude in 8 seasons tulo has played in 150+ games just twice. He is owed $145mil over the next 8 years.

              He is injured a ton.

              If im the cardinals and need a shortstop i’m in on Castro.

              • Pat

                There is no way they would want Castro over Tulo. There’s a reason Tulo is owed much more going foreword. It’s because he is a much more valuable player.

              • Edwin

                In the 2006 season, he wasn’t called up till August, so maybe he should get a pass for not playing in 150+ games that year.

                Playing in 150 games doesn’t tell the whole story. What’s his production been in those seasons?

                • Voice of Reason

                  It doesn’t matter what his production was when he is injured when you are in the playoffs.

                  • Edwin

                    It doesn’t matter if he’s healthy if you don’t make the playoffs.

              • mjhurdle

                Im sure the Cards inquired about Castro, but they aren’t going to give up a ton for a -.6 bWAR player, no matter how friendly his contract is
                Tulo has finished with under 5.3 WAR only twice in his career (aside from his initial callup 100 PA season).
                The year he played 45 games he put up a better bWAR than Castro did.
                I love Castro, and I feel that perhaps i overvalue him a bit because of that.
                But think of it this way. If Theo called Colorado and suggested a Castro-Tulo swap straight up, do you think Colorado would even take the time to laugh before hanging up the phone?
                Injuries or no, Tulo has a higher value on the market than Castro. Which is my whole point. Not to rip Castro but just to say if the Cards aren’t giving up Miller+Rosenthal for Tulo, they aren’t doing it for Castro, because his value is not the same. It isn’t bad, but it isn’t as high as Tulo’s.

                • mjhurdle

                  The year he played 45 games he put up a better bWAR than Castro did. *last year

  • Fastball

    We have been heavily invested in scouting the LA youth for many years. The one thing Oneiri Fleita and Hendry seemed to be wise too. Theo and the boys have been into this area heavily as well. These guys on the ground know what is there and what is coming eligible. Might very well be that this year doesn’t project as well as this past years talent. Just because it’s the DR, PR and VZ doesn’t mean they have kids rolling off the assembly line.
    I just think Theo was much smarter and better invested in LA. He was smart to see the loophole and pounced while his brethren were so engrossed in the American Draft they missed out. There are ways to get some pretty decent average kids for the money they have to spend. They just have to look a little harder and find some gems not manner others are wise too. I think they have loaded up on position players the past 3 years. But they have also drafted a ton of pitchers. Chances are we will have several start to rise to the top. Pitchers don’t always come at the top of the draft board. It’s the hardest position to get an educated guess on. The can’t misses blow up with physical or mental make up problems, the ones you aren’t looking at shock the crap out of you. Compared to the past I think we have improved out pitching evaluator’s 100%. The best we had was Casey Coleman or whoever. In 2 years we will be more flush with pitching coming out of this system than we are with position players. This year’s 1st round pick has to be a the top pitcher in the country though. I just hope there are 3 position players that the Sucks, Astros etc got to have.

  • B_Scwared

    Aren’t there still more IFA prospects that weren’t eligible when the signings started but will turn the appropriate age before the next signing period begins? I remember reading that theCubs still had a chance for even more.

  • Adarecub

    I thought the reason we blew the cap this year was because the 2014 IFA class was so poor. Are the Yankees getting desperate given the abject state of their farm

    • gocatsgo2003

      That and the fact that the penalties kick up after this season.

    • BWA

      Its possible we liked the 2013 class more than the 2014 class, but I’d say year to year the skill and likelihood of success of the top 16 years olds is probably fairly similar.

      • Adarecub

        Very true. Taking a shot on Jimenez is a real shot in the dark no matter physically well developed he is

  • woody

    Just curious. Are Puerto Ricans subject to International signing rules? If so then why? Considering that they were born U.S. citizens.

    • Brett

      Puerto Ricans are included in the Draft.

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