Contract snafu leaves lefty Omar Luis exposed in Rule 5 Draft

Managing Brian McCann's workload
What Went Wrong: The Entire Roster

Last year, the Yankees signed 21-year-old Cuban left-hander Omar Luis to a $4M signing bonus, their last big money international pickup before the new spending restrictions were implemented. A visa issue kept him in Haiti for several months, but the southpaw made it to the United States this summer and pitched for one of the team’s two Rookie Gulf Coast League affiliates. He is one of their better pitching prospects at the moment.

According to Ben Badler, a contract snafu leaves Luis exposed in next month’s Rule 5 Draft even though he signed his first contract just last year. Players typically are not eligible for the Rule 5 Draft until they’ve played at least four and usually five years professionally. It’s complicated, so I’ll let Badler explain:

The Yankees signed Cuban lefthander Omar Luis last year for a $4 million bonus, with an official contract date of July 1, 2012, the day before the inaugural $2.9 million international bonus pools went into effect.

However, Luis and several other Cuban players also represented by Praver Shapiro Sports Management who were claiming permanent residency in Haiti ran into visa issues and were unable to get into the United States. When Luis arrived in the U.S. this year after spending eight months in Haiti, an unknown issue popped up in his physical, which led the Yankees to void the contract.

Luis signed a new contract with the Yankees for a reduced bonus—$2.5 million—on April 9, 2013. Since Luis signed his second contract with his original team and the Yankees did not place him on their 40-man roster, he is available in the Rule 5 draft, which is Dec. 12.

The timing of Luis’ two contracts also forced MLB to make a decision regarding whether his contract would be subject to the international bonus pools. While his April 2013 contract falls within the 2012-13 signing window where every team had a $2.9 million bonus pool, because his initial agreement came just before the new system kicked in, MLB determined that Luis’ new contract was exempt from the bonus pools.

Badler notes this is not unprecedented. The Brewers, Reds, and Mariners have had players go through similar situations in recent years.

The immediate impact is negligible. Luis had a 5.68 ERA and 43/29 K/BB in 31.2 innings at lowest level of the minors this past season, so even if a team loves his stuff grabs him in the Rule 5 Draft, it’s extremely unlikely he’ll stick in the big leagues for all of next season. Jumping from the rookie ball to the big leagues almost certainly will not happen, at least not successfully.

This is a problem long-term, however. Luis will be Rule 5 Draft eligible every offseason from here on out, so even though he won’t be able to stick in MLB right now, that might not be the case next year. The Yankees will likely have to add him to the 40-man roster and start burning through his minor league options sooner than expected. That means they might have to try to develop him pretty quickly.

Furthermore, if Luis is selected in the Rule 5 Draft and returned to the Yankees at any point, he will have been outrighted off the 40-man roster. The first time that happens is no big deal, but the second time will allow him to elect free agency over returning to New York. He could leverage that into a new contract, which two-time Rule 5 Draft guys have done before (though none were as good a prospect as Luis). That too could force the club to add Luis to the 40-man sooner than they would like.

This sounds like a really unique and unfortunate set of circumstances. I suppose the Yankees could have kept him on the original $4M deal rather than negotiate a lower bonus, but if there’s something in the physical they didn’t like, then they should protect themselves. We’re talking about a ton of money here. It sounds like their options were either deal with the contract/40-man headache or not get the player. Seems like an obvious choice to me.

Managing Brian McCann's workload
What Went Wrong: The Entire Roster
  • TWTR

    If they trade him, would the same roster contingencies be assigned to his new team?

    • Mike Axisa

      Yep, absolutely.

  • Ghost of Joe Dugan

    If the original contract was voided how is the current contract a 2nd contract? That makes zero sense.

    • Dan

      I think it could be seen as kind of a bait-and-switch where you “promise” the prospect $4M before the pool goes into effect and then “say oops… something came up we can only give you $2.5M now”

      It’s like the new NFL rules where sometimes clean hits get penalized just to make a point that they won’t tolerate dirty hits.

  • RetroRob

    Have to wonder if it was worth the $1.5M they saved, considering it could impact his development as well as the Yankees overall flexibility.

    • Robinson Tilapia

      Look at it this way: as a 21 year-old with a fat signing bonus in Rookie ball, his clock was never going to be the slowest anyway.

  • Preston

    I think this is putting the horse before the cart. He has to get to full season ball and pitch well before any of this becomes an issue. Quite frankly I think we all hope that someday Luis is a good enough prospect for this to be a cause for concern.

  • Frank

    Not surprised this happened to Yanks. Just seems to be the way things have been going for this organization over the past few years.

    • TWTR

      Beyond the negative consequences for the Yankees, this outcome is not fair to a young player who deserves a greater sense of predictability about his future.

      I would guess that Selig has the power to change that; he should.

    • Robinson Tilapia


      • BFDeal


  • gageagainstthemachine

    Wow. MLB really likes to complicate things, don’t they? Next, we’ll be exposed to a loophole that makes Yankee fans root for the Red Sox *uncontrollable shakes* I think I just threw up a little…

  • Robinson Tilapia

    The next Jose Quintana, obviously. ;)

    I mean……just keep on exposing him until he shows reason for you not to. There’s not much reason to do anything too prematurely here.

    Strange loophole, I must say.

  • pc

    i see now where hal didn’t see the need to make changes involving the minor leagues and scouting, must be friends making these mistakes.

    • Robinson Tilapia

      What exactly did the team do wrong here?

      • Dr. TJ Eckelberg

        Cashman obviously failed.

      • RetroRob

        Perhaps he’s assuming the Yankees were unaware of the issue and are at fault, which is not necessarily the case. They might have decided the $1.5M was more to their liking, and were willing to accept the risk.

    • TWTR

      Yeah, this is just an odd set of circumstances.

  • PunkPitch

    Slap some gills on him, package him in seaweed, and sund him to the Cubs and Theo for Anthony Rizzo, and Jed Heyer. Then fire Oppenheimer.

  • Ed

    It’s a bizarre set of rules. I don’t see how anyone benefits from it. The Yankees risk either losing him early, or using up a 40 man roster spot and burning options.

    It sucks for him too, as it likely means he’s going to be rushed thru the minors and not get the development time he needs.

    • Robinson Tilapia

      Agreed, but also remember that this is a 21 year-old in rookie ball with a fairly big bonus. There was going to be some want of a microscope on him no matter what.

  • Lulz

    A loser team like Astros will grab him and stash him as lefty specialist all year he’ll do ok out of the bullpen with limited exposure and yanks lose him. Bummer.

    • Preston

      He walked nearly a batter an inning in the GCL, he isn’t going anywhere this off-season. If and when he pitches well at full season ball they will protect him, just like they did with Campos this season. Sure options and 40 man flexibility are nice, but if the guy turns into a legitimate prospect you protect him and deal with it.

  • CashmanNinja

    This ruling is BS. I can’t see how a voided contract counts as a “second” contract. It’s basically like ripping up the original contract and having a new one. It’s not like he got paid $4 mil AND $2.5 mil in bonuses. He got 1 or the other (the lower) because of some physical problem. $1.5 mil is a lot of money so you can’t blame the Yankees for not wanting to put so much money into an unproven kid. Having him exposed to the Rule V draft doesn’t hurt in the short term because he simply isn’t ready and no team is going to commit a spot to him. But that’s why the long term effect will suck. Is he worth the roster spot? Eventually they may wind up having to cut ties with him because they can’t commit a valuable spot on the 40 man roster for him and then who knows what could happen to him. The most likely scenario is that he simply fades away and becomes a career minor leaguer or quits baseball. Plus he got his money so what does it matter for him…it’s more money than any of us will ever see.