NEWSLETTER
On Monday, Jesse Sanchez reported that Taiwanese pitching prospect Jen-Ho Tseng was garnering a great deal of attention on the international market, and that the Chicago Cubs had emerged as a favorite to sign the 18-year-old righty. In that piece, I wrote about the Cubs’ international spending this year, and about how signing Tseng could be the final signal that the Cubs intend to blow far past their international bonus pool, regardless of whether they add the maximum additional pool space that they can under the rules (50%).
Today, Sanchez reports that the Cubs are now “closing in” on signing Tseng to a deal that would give him a bonus “just north” of $1.5 million.
You can read more about Tseng in the piece from Monday and in Sanchez’s report, but I’d like to focus on the financial side of things. As I wrote on Monday:
So long as the Cubs do not exceed their spending pool by more than 15%, they will not face the most serious penalty: a 100% tax on the overage plus the inability to sign anyone next year for more than $250,000. Instead, the penalty – if you fall within the 10% to 15% overage range – is a 100% tax on the overage plus the inability to sign anyone next year for more than $500,000. With the Cubs expected to have a large pool again next year, that is a much more manageable penalty (but would still leave the Cubs with the intriguing optional approach of trading away pool space for players/prospects).
Where, then, do things stand assuming the Cubs ink all of the deals that have been reported?
Eloy Jimenez – $2.8 million
Gleyber Torres – $1.7 million
Jen-Ho Tseng – $1.5 million
Jefferson Mejia – $850,000
Erling Moreno – $800,000
Yohan Matos – $270,000
That’s a total of $7,920,000. The Cubs’ pool currently stands at $5,520,200 after considering the trades they’ve already made to add pool space. Per the CBA, the Cubs can add up to 50% to their original bonus pool ($4,557,200), which means they can increase their pool to a maximum of $6,835,800. A 14.999% overage yields a total of just $7,861,100.
In other words, if all of the signings go down as they have been reported, and if the Cubs give Tseng $1.5 million, they’ll fall into the most severe penalty range even if they add the full 50% increase.
Now, we have to make some adjustments to those numbers. First, we’ve got to give Tseng something “just north” of $1.5 million. Is that $1.55 million? $1.75 million? Obviously we can’t be sure until a deal is announced, but let’s go with $1.6 million for the purposes of this exercise – as you’ll see, slight moves in his bonus can make a huge difference.
We also have to adjust Erling Moreno’s figure. Although it was originally reported by all involved as $800,000, Sanchez reports that the actual figure he signed for is just $650,000.
So, let’s do the financial exercise again with the adjusted figures (remember, these deals aren’t necessarily finalized):
Eloy Jimenez – $2.8 million
Gleyber Torres – $1.7 million
Jen-Ho Tseng – $1.6 million
Jefferson Mejia – $850,000
Erling Moreno – $650,000
Yohan Matos – $270,000
That’s a total of $7,870,00. As discussed above, the Cubs can increase their bonus pool to a maximum of $6,835,800. A 14.999% overage yields a total of $7,861,100.
Wow. That’s close. Understanding that I was merely ballparking that Tseng figure, I’m now wondering whether the closeness of these figures is not a coincidence, and the Cubs will try to get Tseng for $1.59 million or less, which would keep them under that most severe penalty threshold.
That all said, remember: the Cubs still have to trade for $1,315,600 in pool space for any of this to matter. If they don’t, they’ll be way over the 15% overage, and will face the stiffest penalty (something, as I’ve discussed, I’m not so sure they’re all that opposed to).
Further, the Cubs can’t trade for any additional space if they’ve already blown their pool. That’s why, for example, we continue to wait on Jimenez’s deal being finalized. The Cubs are wisely leaving open the possibility that they could get everything done that they want and remain under the stiffest penalty threshold.
Regardless of how the financial side plays out, because I am not terribly worried about the penalties involved, this is all going to be one big good story. These are youngsters that likely won’t become relevant in the prospect game for several years (to say nothing of when or if they could ever actually contribute to the Cubs), but the Cubs are loading up on a bunch of talented players. And they’re spending a lot of money to do it. This, folks, is all very good news.
