Big Money for Little Time: Part 1

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Feb 19, 2014; Tampa, FL, USA; New York Yankees pitcher Masahiro Tanaka (19) throws during spring morning practice at George M. Steinbrenner Field. Mandatory Credit: Tommy Gilligan-USA TODAY Sports

Back in early January, with all the talk about how much money Masahiro Tanaka would get without throwing a single pitch in North American affiliated baseball, I wrote a post at my own site, Blue Jays from Away, called “The Value of Prospects” that discussed why it was a good idea for the Blue Jays to hold off on trading two of their top prospects to Chicago for Jeff Samardzija.

I’m going to look at the repercussions of some major signings in the international market as well as some big, recent contract extensions for young players in order to examine current market trends and what it means for minor leaguers and young major leaguers. Part 1 will examine the international players while Part 2 will look at extensions.

The following table is a list of most of the significant international free agents out of Cuba or Asia from the past several years. Note: I have left off all previous Japanese imports because of the difference in the posting rules.

Term (yrs)
Money (Millions)
Masahiro TanakaJapanNew York Yankees7155
Jose AbreuCubaChicago White Sox668
Yasiel PuigCubaLos Angeles Dodgers742
Yoenis CespedesCubaOakland Athletics436
Hyun-Jin RyuKoreaLos Angeles Dodgers636
Aroldis ChapmanCubaCincinnati Reds630.25
Jorge SolerCubaChicago Cubs930
Alexander GuerreroCubaLos Angeles Dodgers428
Erisbel ArruebarruenaCubaLos Angeles Dodgers525
Miguel Alfredo GonzalezCubaPhiladelphia Phillies312
Adeiny HechevarriaCubaToronto Blue Jays410
Suk-Min YoonKoreaBaltimore Orioles35.575

There has always been a desire for major league teams to find the best possible talent and lately, teams have spared no expense scouring the corners of the earth (in what is an increasingly a global game) to find the best players who aren’t already in affiliated baseball. The “young” international free agent market (what I’ll call the July 2 IFAs) has less money going into it since the 2012 Collective Bargaining Agreement was signed which imposed limits on how much money could be spent yearly on these mostly Latin-American players. Outside of this market, also referred to as the “July 2″ market because the window to sign players (and have that money counted against a particular year’s cap) opens on July 2, there are two other significant markets that have allowed major league baseball to pursue players who are older and have more experience in professional baseball but still lack easily translatable track records: Asia and Cuba.

Cuban players, of course, have to defect to another country and become eligible to be signed by US-based teams, which usually takes some time and diplomatic wrangling. Many players coming out of Cuba haven’t played in some time and even if they’ve been playing a lot, it’s very difficult to tell how a player’s game will translate to the higher competition levels of North American affiliated baseball. That said, it hasn’t deterred major league teams from awarding Cuban players big-money contracts in order to secure their services.

So far, the track record has been generally good for players who have come over and have been paid extremely well by MLB teams. Yoenis Cespedes and Aroldis Chapman are two of the players with a bit of a longer MLB resume and both have done very well (and will be discussed further below) while Yasiel Puig has been an extremely exciting young player for the Dodgers. As for the Asian players, Hyun-Jin Ryu is making the Dodgers look smart with over 3 WAR in his rookie season (at the age of 26) and, if we want to look at Yu Darvish, he’s been nothing short of outstanding for the Texas Rangers and appears to be a gigantic bargain at six years and $56 million when compared to Tanaka. None of the others on the list have played a single game in major league baseball. There are a few more players who may sign soon including two more Cubans, infielder Adelmys Diaz and catcher Yenier Bello.

When signing these long-term, big-money contracts, the team is taking two major risks. The first is that the player is as good as advertised and is able to play in the major leagues within about one year. The second risk is that the player stays relatively healthy for the life of the contract (just ask the Red Sox about Daisuke Matsuzaka). Because the numbers we’re talking about are generally about ten times higher than what teams pay (on the high side) for signing bonuses to draft picks and July 2 IFAs, teams are sinking huge amounts of guaranteed money into players who have no proven track record in the best baseball league in the world. If a team drafts a player, gives him a $3 million signing bonus and he turns out to be a bust, the team is out $3 million. If the team coughs up $30 million over a four-to-six-year deal and the player turns out be a bust, the club is on the hook for that salary for the rest of the life of the contract (unless they can trade him away).

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