When the international signing period began last July, several teams jumped in with both feet, signing players to significant bonuses.
The Texas Rangers, for example, spent $10 million on three players, including a record-setting $5 million for outfielder Nomar Mazara of the Dominican Republic. The Rangers were not alone, with at least seven seven-figure bonuses being awarded right out of the gate. In the 2010-11 signing period, teams spent a combined $47 million, including $11 million by the Rangers, on international signings.
While First-Year Player Draft spending has escalated over the years, inflation hasn't been exclusive to amateurs involved in that process. The international signing scene has been an unfettered free-market system. After the Draft, only one team negotiates with a player, while all 30 teams can get into the act for an international player who is not subject to the Draft. And there were no constraints on what teams could spend on those players.
The newly bargained Basic Agreement will change that. From putting in bonus-spending rules along with guidelines for the registering of players, an attempt is being made to level the playing field.
The rules for the spending pools are somewhat similar to the Draft spending pools in terms of the penalties that come with going over the limit. Going over by up to five percent will result in a 75-percent tax on the overage. Landing in the 5-to-10-percent range will bring a 100-percent tax and the loss of the right to give more than one player in the next signing period a bonus of more than $500,000. Going over by 10-to-15 percent will lead to a 100-percent tax and the inability to sign any player for more than $500,000 in the next signing period. Any team going over a 15-percent threshold will get hit with a 100-percent tax on the overage and won't be able to exceed $250,000 for any one player in the next signing period.
The pools for international signings will work a little different. The 2012-13 period will be a transition year, with every team getting the same amount to spend: $2.9 million. After that, there will be differentiated pools, from approximately $1.7 million to $4.7 million. Beginning with the 2013-14 signing period (July 2-June 15), the pools will be determined by winning percentage, with the clubs that finish the previous season with the lowest winning percentages assigned the largest pools. If that system were in place in 2012, the Houston Astros would have been able to spend up to $4.7 million without penalty.
"The fact they put something in place like that, I've got no problem with it," an international scouting director said.
The penalties will increase beginning with the 2014-15 signing period if there is not an agreement on an international draft, or drafts, by July 2014.
Not all international players will be subject to these rules. Players in leagues deemed to be professional (those in Japan, Korea, Taiwan and Cuba apply), are at least 23 years old and have played a certain number of years in those leagues can be signed without the money counting against the pool. Yoenis Cespedes, the 26-year-old outfielder who is a free agent after defecting from Cuba for example, would not count against the pool. Neither would Japanese pitcher Yu Darvish, should he be posted by the Nippon Ham Fighters. But the money spent on Cuban left-hander Aroldis Chapman, who was 22 when he signed with the Reds almost two years ago, would have counted against the pool.
While it might seem that the new system could hamstring some teams' ability to be aggressive with players similar to Chapman, there is some wiggle room. Like with the Competitive Balance Lottery, there is the ability to make trades to improve a team's position in the market.
With the differentiated pools, each team's pool is divided into bonus slots. Using Houston as the example again, its $4.7 million is divided into four slots: $3 million, $450,000 and so on. That doesn't mean the Astros would be limited to spending a maximum of $3 million on one player. They could use all of the pool on one player if they wanted to. But the slots are tradeable, and a team can deal away one or more slots. If the Astros decided to include their $450,000 slot in a deal, the receiving team would then have that much more money to spend internationally (no actual money changes hands). One restriction: A team cannot, through trades, increase its pool by more than 50 percent.
It leads to an intriguing possibility down the road: A trade involving a swap of an international bonus slot and a Competitive Balance Lottery pick.
"We'll have to see how it plays out," said Royals general manager Dayton Moore. "I do like the opportunity to have flexibility. Your organization is going to go through different phases, where you can afford to give up slot money because you have another alternative. And there are times when you won't be able to do that, when you try to acquire more pool money. I'm for as much opportunity as possible to be creative."
Finally, there's one more structural change to the market. Any player who wants to be eligible to be signed must be registered with the Major League Scouting Bureau. If that sounds similar to the Draft, it is. The hope is that all of this will be a movement toward some kind of international draft by the summer of 2014. A draft does not sit well with many who work to find good talent in markets like the Dominican Republic and Venezuela. In the end, it may take a while for some international scouts to adjust to a different way of doing business.
"We expect players to compete on the field," the international scout said. "Not all scouts are created equal."
Jonathan Mayo is a reporter for MLBPipeline.com. Follow him on Twitter @JonathanMayo and Facebook, and listen to him on the weekly Pipeline Podcast.