Yoan Moncada: An International Consolation Prize

For a day, at least, the Yasmany Tomas rumors took a back seat to real, live baseball transactions. On Monday, a flurry of major moves were finalized: Giancarlo Stanton and the Miami Marlins agreed to a crazy (yet oddly reasonable) 13-year, $325 million extension, the Toronto Blue Jays signed free agent catcher Russell Martin for five years and $82 million, and the Braves and Cardinals swapped Jason Heyward and Shelby Miller in a four-player blockbuster.

The last we’ve heard on Tomas:

None of that happened. Apparently, four general managers flew to the Dominican Republic to meet with Tomas’ agent, though a deal obviously hasn’t been hammered out yet. Just after that news about a possible Tomas deal being imminent, we also learned that, according to New York Daily News writer Andy Martino, the Padres are “not a likely fit” for Tomas.

I can tell you one thing that will probably happen: Tomas will probably sign a deal prior the start of the major league season and it will probably be with one of 30 major league clubs.

But we can’t wait forever to find out the specifics. The internet must move on.

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The latest international sensation is Yoan Moncada, a 19-year-old Cuban infielder with five-tool potential. Kiley McDaniel of FanGraphs wrote a must-read piece on Moncada’s unique situation last week that you should check out. Some bullet points of note:

  • Moncada is currently stationed in Guatemala, but unlike most Cuban players, he didn’t have to make the treacherous nighttime escape from Cuba to follow his major league dreams. Apparently, he has a Cuban passport and can fly back to Cuba when he wants. Also, his agent is a CPA from St. Petersburg, Florida who has never negotiated a baseball contract before.
  • On the field, McDaniel describes Moncada as a “6’1/210 switch-hitter with plus tools and a Puig body.” He goes on: “I’ll wait until that happens [he faces live pitching at a workout] to formally toss around scouting grades, but the ability we were all told about is there: plus bat speed, plus raw power, 65 to 70 speed (6.6 in the 60), the feel and hands to stick in the infield and enough arm to play anywhere on the field.” It seems like the only position likely out of his reach is shortstop (and, well, catcher/pitcher).
  • Due to the changes in the latest CBA, Moncada, unlike fellow Cubans like Yasiel Puig, Jose Abreu, and Yasmany Tomas, will be subject to the new (*cough*really dumb*cough*) rules regarding international bonus pools. Moncada will only be able to sign for a signing bonus as opposed to a major league deal, and that signing bonus will count against his new team’s international signing bonus pool, which only reach $5-plus million on the high side. In short, thanks to Moncada’s skill-set and age, a team is going to have to blow away their international bonus pool to ink him, meaning they’ll pay a 100 percent tax on the overage and forfeit the right to sign any international amateur prospects for more than $300,000 for two signing periods.
  • According to McDaniel, scouts feel Moncada is more talented than Abreu, Tomas, and Rusney Castillo, who signed a record-setting $72.5 million deal with Boston in the summer. Therefore, despite the presence of a soft spending cap and harsh penalties for exceeding it, the early estimates for Moncada’s price tag are in the $30-40 million range — an investment that would include a hefty penalty near the price of the contract handed to Moncada, making the total likely outlay for the Cuban infielder’s services in the $60-80 million range. Remember, Moncada would essentially be treated like a normal prospect after signing, with six years of team control, arbitration, etc. So that’s $60-80 million, plus whatever it costs for his first six years of service time.

How many teams are going to be involved in the Moncada sweepstakes?

The short answer: all of them. Well, except for the Cubs and Rangers, both of which are serving penalties for going 15-plus percent over their respective spending caps during the 2013-’14 signing period. (That is, of course, as long as Moncada’s signing isn’t delayed, for any number of potential reasons, until after July 2nd, 2015. In which case the Cubs and Rangers would become eligible to sign him.)

With a player of Moncada’s age and talent, it’s hard to believe any team wouldn’t be interested in his services. Perhaps the better question: which teams are best positioned to sign him? The first response to that question in the usual one — the teams that have the most money, which turns the usual suspects like the Dodgers, Yankees, Red Sox, Angels, and Cubs into their natural front-running positions. And for those big-market teams that have to contend with MLB’s luxury tax — set at $189 million through 2016 — there’s additional incentive to make a power move for Moncada, as his salary won’t count against the cap until he reaches the majors, and even then it’ll be a pittance for his first three years.

The second response to that question involves the international spending limits. When we discussed the Padres four major international signings in early July, we also noted that the Yankees made a huge splash internationally, signing 27 players (four of the top 10) for an estimated $15 million total. Other teams like the Red Sox, Rays, and Angels have also already exceeded their 2014-’15 spending cap by 15-plus percent, meaning that they — like the Yankees — will incur the maximum penalty. These teams are at an advantage for a couple of reasons: (1) they’ve already overspent their bonus pool, so additional big-ticket signings won’t penalize them further (besides being taxed 100 percent). And (2) as Ben Badler notes, they probably haven’t made any handshake deals with prospects for the 2015-’16 signing period.

That second point might not seem like a big one, but according to Badler, despite MLB’s attempt to curb the practice, teams routinely come to oral agreements with players well ahead of the opening of the July 2nd signing period. Badler:

Yet there are still several teams that have already struck deals with players for at least $1 million, and many other players have agreements more than $300,000. If a team signs Moncada during the current signing period, those deals are going to be wiped off the table. That would create an ugly situation for a team that had to renege on its agreement with a high-end player, or multiple players. Trust and honoring your word are paramount in the small world of Latin American scouting, where relationships are critical, especially with MLB’s new rules, and a team would rather not infuriate some of the most influential trainers in the region.

So, the most likely teams to sign Moncada, based on our parameters here (big market/already over international pool), are the Yankees, Red Sox, and Angels.

What about the Padres?

This puts the Padres in an interesting situation. First of all, they likely haven’t approached their international spending cap for this signing period, which sits at $2.5 million. Unfortunately, international spending data can be hard to come by, but given that the Padres only signed one top 30 prospect and that another one of their big four, shortstop Elvis Zabala, signed for $500,000, it’s reasonable to assume they haven’t reached that $2.5 million mark. Further, while Josh Byrnes was fired in late June — just before the July 2nd signing period opened — you have to wonder, based on the idea that teams verbally lock up players well ahead of time, how many handshake deals Byrnes and the former Padres regime orchestrated for next year’s signing period. Either way, it seems like Byrnes’ dismissal would be sufficient circumstance to wipe those deals clean without too seriously offending any international relations.

The second interesting factor for the Padres is, of course, AJ Preller. It’s hard to find another high-ranking major league executive more lauded for work in the international arena than Preller, who has already added a foreign flair to the Padres by aggressively promoting Rymer Liriano to the majors last year, heavily scouting the aforementioned Yasmany Tomas, and winning the bargaining rights to Korean lefty Kwang-Hyun Kim last week.

We already discussed how the Rangers aren’t allowed to sign any players for more than $300,000 this signing period, thanks to the spending spree they went on in 2013. With Preller leading their international efforts, the Rangers paced the league in spending on foreign amateur talent in 2013, doling out $8.42 million. At Baseball Prospectus, Nick J. Faleris raved about the Rangers strategy last year:

While the Rangers are forfeiting the right to spend big next year, any team hoping to follow suit in gobbling up a bunch of top talent in a single signing period will have to forfeit big spending for a two year period. By acting first in this manner, the Rangers have effectively claimed an advantage on the international amateur scene that no team can match. Strategically, it’s a home run; scouting and development will ultimately determine whether that impressive first move results in an on-field advantage for the big club.

In many ways, Rangers fans might consider 2013 a disappointment. To me, it was another example of a an impressive organization operating at the forefront of the talent acquisition game. It’s moves like this that should keep Rangers fans confident their org is going to do what it takes to keep the talent pipeline stocked for the foreseeable future.

It wasn’t a one year thing, either. With Preller as a key point man on international scouting, the Rangers consistently ranked near the top of the majors in spending in recent years:

Year International Spending MLB Rank
2013 $8.42 million 1
2012 ?? ??
2011 $12.83 million 1
2010 $3.57 million 8

Data from Baseball America, spending is per calender year

Major League Baseball first put the international spending caps in place in 2012, giving each team a $2.9 million pool that year. Baseball America, perhaps discouraged by the changes, didn’t report the team-by-team spending in 2012 (at least that I could find). BA’s report on the Rangers that year concludes that they were relatively quiet after July 2nd, signing four players for a total of $300,000-plus. However, 2012 was also the year that the Rangers controversially signed Jairo Beras for $4.5 million in February, after he claimed that he was 17 instead of 16.

In 2011, the Rangers out-paced the second-place spending Blue Jays by over $5 million, with a class led by two 16-year-old outfielders who signed deals that, at the time, were the first and third largest bonuses ever handed out to international amateur free agents (Nomar Mazara for $4.95 million and Ronald Guzman for $3.45 million). It was more of the same last year, as the Rangers and Cubs nearly doubled the bonus total of the third-place Dodgers. And the Rangers international bent hasn’t been a recent development, but rather a steadfast area of success when Preller was employed, highlighted by other major coups like Jurickson Profar (2009) and Martin Perez (2007).

We can probably deduce, then, that Preller doesn’t just specialize in scouting international talent, but that he also likes to invest a lot of money in it. Further, the Rangers spending spree in 2013, blowing away their bonus pool and incurring major penalties indicates that he’d be willing to do the same in San Diego. Of course, different team, different situation, different financials.

Is Moncada worth the price?

For the Yankees or Red Sox to sign Moncada, the formula is pretty simple: Moncada’s cost of acquisition equals his bonus + 100 percent tax on that bonus. So, let’s say he goes for $40 million; for that Yankees, he’d cost $80 million. For the Padres, since they haven’t exceeded their bonus pool and almost certainly wouldn’t if not for a hypothetical Moncada signing, the cost is his bonus + (a near) 100 percent tax on that bonus + the inability to sign any individual international amateur free agents for more than $300,000 for the next two years.

Let’s discuss Moncada’s value first. Below are three separate scenarios that roughly (stress: roughly) estimate how much surplus value he might provide his team, using 5 percent inflation per year and the 40-60-80 arbitration rule:

Moncada value

Remember, this doesn’t include Moncada’s signing bonus and the accompanying tax, which means that assuming a $40 million price tag, even if Moncada turns into a perennial three WAR player during the first six years of team control, he’ll only net his club something like $10 million in total surplus value. That’s before you factor in the opportunity cost lost by forfeiting the acquisition of any major international amateur free agents for two signing periods. The point is, once you include the initial bonus (if it ends up being in the $35-$45 million range) and the spending penalties, Moncada has to be really good to be worth much, in terms of surplus value.

That doesn’t mean he isn’t a good investment for a team that believes in him. While 18 WAR over six years is a bullish projection for any prospect, there’s still plenty of room on the high side if Moncada is the real deal. Mike Trout‘s been worth 28.2 (Baseball Reference) WAR in just three-plus years (but he’s Mike Trout). Andrew McCutchen‘s been worth 33.2 WAR in six years. And fellow Cuban position players like Yoenis Cespedes (9.6 WAR, three years), Yasiel Puig (10.4 WAR, two years), and Jose Abreu (5.5 WAR, one year) provide additional potential comps.

The $40 million signing bonus we’ve used here might be on the high side. If Moncada signs for $20 or $30 million, the outlook becomes brighter. Regarding the forfeiture of big spending internationally for two signing periods, there are caveats there, too:

  • There are plenty of hidden gems to be found at the $300,000 price range or below, as history in the international free agent market hasn’t necessarily shown a strong correlation between signing bonus and future major league production. Evaluating 16- and 17-year-old kids is tough, and there are many prospects that fall through the cracks at signing time but end up developing into productive major leaguers. AJ Preller, with all of his experience in the area, might feel perfectly capable of finding diamond-in-the-rough types for two years while sitting out on the nationally hyped talent.
  • Even when teams aren’t allowed to spend over $300,000 on a single player, they still keep their entire bonus pool. That means they can either sign a bunch of $200,000-300,000 players or, more likely, trade some of the excess international budget to a team looking to stay out of the penalty zone. The Cubs, for instance, just made an interesting swap with the Braves, picking up a solid middle infield bat in Tommy La Stella for right-handed reliever Arodys Vizcaino and around $800,000 in international slot money.
  • The looming presence of an international draft might end up wiping the slate clean on the penalties, making this year or next year one of the last times to truly go overboard and stack up on foreign talent. Like the Rangers did last year, sometimes it’s best to break the rules first and get a jump on the competition before those rules change again.

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If there’s one thing for sure, it’s that the Padres will be interested in Moncada. It’s clear from Preller’s early tenure as general manager that the Padres are going to — wait for it — kick the tires on just about everybody, whether it’s out of habit or serious interest. Heck, on Sunday night we learned, via the magical world of Twitter, that the Padres are the mystery team in on the Pablo Sandoval Derby (a race that, by the way, could reach the field size of the Kentucky Derby by the winter meetings).

Last week at Baseball America, Ben Badler reported that the Padres were one of eight teams with a “significant” showing at Moncada’s most recent showcase. Overall, according to Badler, “there were 80-100 scouts there to see Moncada, including several top-level evaluators.” Which leads us back to an earlier talking point: every team is going to have interest in Moncada, some of them with deeper pockets than the Padres. It’ll be an intriguing situation to follow, both to track Moncada’s likely destination and price in general, and to keep tabs on the Padres presence in the affair. It’s hard not to get behind a move that could instantly infuse the organization with such a young, controllable talent, but it’s also a move that’ll come with major costs.

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  • GoldenBoy

    I’d be more excited about a Moncada signing than a Tomas or Sandoval signing.

    • Dustin

      I’d agree with that, though any of the three would be something out of the ordinary.

      • ballybunion

        Any signing seems out of the ordinary for Padres fans. That’s what happens when the owner, John Moores, gets divorced, loses interest in baseball and turns cheap, forcing a Matt Bush signing, then turns over the club to Sandy Alderson, then sells the club to Jeff “no-money” Moorad on layaway, then sells his controlling 50.6% for even more, taking $200 million in TV money with him. This century has not been kind to Padres fans. We’re all like victims of spouse abuse, or maybe we’re suffering from something like Stockholm Syndrome.