NEWSLETTER
In 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.
