cuba featureYesterday, the Chicago Cubs were included among many teams still interested in Cuban shortstop prospect Yoan Moncada, and we once again pored over the difficulty they’ll have in actually being able to sign him, assuming he’s cleared by the U.S. Government any time soon. I won’t go over it all again, but you can read the explanation there. Short version: the Cubs are under signing restrictions until July 2, and Moncada might not wait.

But the Cubs are going to keep doing their diligence on Moncada, because you never know how things might play out. And, as a switch-hitting, 19-year-old shortstop with huge offensive potential, Moncada’s worth the investment of time, even if the odds of landing him are low.

Enter Sahadev Sharma:



If the Cubs do work Moncada out this weekend, hopefully we’ll hear a little something about their take. As it was with the Rangers – subject to the same signing restrictions as the Cubs, but who also worked out Moncada – you can’t take the private workout as a sign that the Cubs feel they will definitely have a shot at Moncada, but clearly it’s not being ruled out.



Ben Badler wrote about Moncada yesterday (also noting the Cubs’ potential interesting, and also noting that it’s hard to see them landing him unless the OFAC clearance takes a little while), and it’s well worth a read. Of particular interest is the discussion on how the financial aspect could play out. We know that Moncada could cost upwards of a $30 to $40 million bonus, plus a dollar-for-dollar tax (though Badler wonders whether the price will actually get that high), but we haven’t really discussed: will the Cubs be in a position to pay $80 to $100 million for a teenage prospect this year?

My gut would have said no, but here’s the thing, according to Badler: bonuses paid to IFA signees can be spread out over the ensuing three years, and the overage tax doesn’t have to be paid until the following July. In other words, in a purely hypothetical transaction: if Moncada’s bonus were $40 million and the overage tax was $40 million, the Cubs could spread out the payments such that they paid $10 million (all to Moncada), $45 million in 2016 (overage tax plus $5 million to Moncada), $10 million in 2017 (all to Moncada), and then the remaining $15 million in early 2018 (all to Moncada). Being able to plan ahead for the huge hit in 2016, and being able to spread the rest around would be huge.



I’m also instantly wondering whether asking Moncada to wait until July 2 to sign – as the Cubs would have to do, coupled with an over-the-top bid – is going to be such a huge disadvantage after all. If the other bidders are planning to spread his signing bonus over multiple years, that’s a whole lot less money he’d be getting right away (which makes waiting a little less painful). OK, having to ask Moncada to wait to sign is still a disadvantage, but maybe it’s not the Cubs-have-to-top-the-highest-bid-by-$10-million kind of disadvantage. Maybe it’s more like a $5 million disadvantage (depending on how soon he’s cleared to sign).

In any case, your official position remains the same: keep hoping for excessive governmental red tape.




Keep Reading BN ...

« | »