Jun
24

Upcoming international spending spree gives the Yankees another trade chip

By

As you know, the Yankees are planning a massive spending spree on international free agents when the signing period opens one week from tomorrow. They’ve been connected to almost every notable prospect in recent weeks and are said to be willing to spend upwards of $30M between bonuses and penalties. They want to add some young impact talent to the organization and will do it via the international market this summer, when they can sign any player they choose and aren’t limited by draft position.

The Yankees were assigned a $2.2M bonus pool for international players this summer, which is nothing. It’s less than what they gave Gary Sanchez ($3M) a few years ago. Heck, the Yankees reportedly have verbal agreements in place with three players — Dominican SS Dermis Garcia ($3.6M), Dominican 3B Nelson Gomez ($2.8M), and Dominican SS Christopher Torres ($2.6M) — that are worth more than their spending pool. That $2.2M is relatively meaningless.

Because the pool value means so little in the grand scheme of the spending spree, the Yankees are in position to use it in another way: as a trade chip. The Collective Bargaining Agreement allows teams to trade their international pool money and it’s happened a few times these last two years. The Cardinals traded Mitchell Boggs to the Rockies for a little more than $200k in international cash last July, for example. The only purpose that $2.2M serves is to slightly reduce the penalties, so why not use it as a trade chip instead?

Now, trading international money is a little weird in that you can’t simply offer a team some arbitrary sum of money. The international bonus pools are broken up into four slots — like four rounds in a draft, this was put into place as a precursor to an international draft — and those individual slots are traded. You can’t trade a portion of a slot, the entire thing has to be moved. Here are the Yankees’ four international slot values, courtesy of Ben Badler:

  • Slot #17: $677,400
  • Slot #47: $386,300
  • Slot #77: $260,800
  • Slot #107: $168,600

In addition to the four slots, each team gets a $700k base that can not be traded, as far as I know. Add those four slots with the $700k base and you get the team’s ~$2.2M total pool. The Yankees can’t just trade a lump of, say, $500k in international money, they have to trade Slot #17 or Slot #47. If the $700k base is untradeable, New York has approximately $1.5M in bonus money to peddle. Got it? Good.

There are two other restrictions to trading international pool space. One, a team can only acquire an additional 50% of its pool, so the Yankees can’t send all of that ~$1.5M to one team in most cases. Two, the pool money can only be traded during the signing period, so between next Wednesday and July 1st of next year. That last part doesn’t figure to be a problem, but it does mean the Yankees can’t use their pool money as a chip for another week.

The Yankees will have to work through some obstacles to use their international spending money as a trade chip, but the idea is sound. They’re already going to spend a boatload of cash on players, so rather than have that pool money serve no other purpose than to save a little on the penalty bill — whatever they trade away is how much extra they’ll have to pay in penalties — they can use it almost as another “prospect” in a trade. It’s another asset that can be moved.

The real question is how do teams value international money? Like I said, Boggs was traded for roughly $200k last summer. He was a middle reliever whose control had deteriorated (26 walks and 25 strikeouts at the time of the trade) and been demoted to Triple-A. At least in that one instance, the $200k in international money had small trade value. The Yankees can use their pool money as a trade chip but it isn’t landing them any impact players by itself. Remember, that money will be used to sign 16-year-old kids who are a half-decade away from MLB.

Brian Cashman has already said he expects to make moves before the trade deadline, but making a deal felt inevitable even before he said that. The Yankees are only 2.5 games out of first place and one game back of a wildcard spot. They’re in contention but need help at several positions. Their international spending pool will be made irrelevant by their spending spree, so they can use that money to land help for the big league team at the trade deadline. It’s not much, but it something they should be very willing to offer.

20 Comments»

  1. viridiana says:

    Interesting post. Yanks IMO have to use every means at their disposal to legally circumvent all these new rules put in expressly to throttle them. Otherwise, they’re doomed to remain the 500ish club Selig has always wanted them to be.

    • Scott says:

      you are dead on. Most of these rules were created to stifle the Yanks. Selig couldn’t stand losing to the Yanks when he owned the brewers (and the brew crew were in the AL East) because he felt like he had a disadvantage. Once he became commish he did everything he could to ruin the Yanks financial advantage.

      These new international spending rules are ridiculous, not just because they target the Yanks but they are so confusing. I had to read the article 2-3 times to understand all the do’s and don’ts. Who wrote these ideas anyways? I say the Yanks just go crazy and spend like mad, taxes/penalties be damned. They can reload the farm system and use these guys in the bigs 3-6 years from now, or use them as trade bait in 1-2 years.

    • Kenny says:

      Well, yes, somewhat reluctantly, I guess “legally” has to do. But there’s a new guy coming to the job, and the Yankees ought to begin fighting these restrictions MLB has placed on them. Surely, they can find some other, well-off teams as allies.

  2. Kenny says:

    Excellent post. I’m always amazed at the amount of information, not to mention quality speculation, Mike Axisa brings to this board.

  3. mitch says:

    Pitt just outrighted Tabata…i’d probably eat a chunk of his contract to take him off their hands and stick him in RF

  4. ALZ says:

    Trade it for one of those comp balance picks.

  5. One more thing to consider. Giving that allotment to another team might allow them to swoop in and steal one of the many players the Yankees apparently have deals with.

    • Chip says:

      Many of these deals have been cemented for years already and they’re just waiting out the clock on July 2nd. Maybe that happens towards the lower end but I would be pretty shocked if they lost a brand-name dude at the last minute

  6. Preston says:

    I’d give the Cubs the pool money (they’d probably be able to take it all) and a mediocre pitching prospect (Rookie Davis, Brady Lail, Jaron Long type) for Hammel.

  7. Mike in EV says:

    Could the Yankees sign an IFA targeted by a trade partner who doesn’t want to go over their limits for this year?

    For example, the Rangers & Cubs went over the limits last year (I think) and can’t sign anybody for >$300k or so this year. If one of those teams really liked a $2m player in this year’s crop, could the Yankees sign this guy and send him to the other team as part of a trade later in July?

  8. Jobu says:

    I feel like this could be a tricky negotiation. I imagine things going as follows:

    Cashman – “I would like to offer you this international signing slot money, but you won’t be able to really use it because I am going to buy all the good international free agents.”

    Other GM – “Um . . . Ok? . . . jerk!”

  9. p-----p says:

    Can they include International Free agents as PTBNL?

  10. Steve Sacks says:

    I like that the yanks are being so aggressive international wise. It is the best way for them to bridge the gap until they develop some better players in the minors.

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