Nine Questions MLB Must Address For An International Draft

Nothing spreads panic across the baseball community in Latin America quite like talk of an international draft.

Major League Baseball officials won’t address the subject in any detail, knowing how players, trainers and agents react when they hear the word “draft,” and how the scouts who work on the ground in Latin America seem largely opposed to the idea as well.

By Saturday, teams and players might finally have some details on a project that has been on commissioner Bud Selig’s wish list for years. It was February 2012 when Selig told Baseball America’s Josh Leventhal that an international draft would be coming.

“It is inevitable,” Selig said. “I would like to see it. We have made some significant progress to that end. When we went to the draft in 1965, it was to create a more level playing field. We’ve done that, and the same thing will have to happen internationally.”

The language of the current Collective Bargaining Agreement indicates that 2014 has always been the target date for an international draft. Under the section that enumerates penalties for teams exceeding their bonus pools, the consequences for going over the 2012-13 and 2013-14 signing pools are called “interim penalties.” Given that 2012 and 2013 are already covered by the CBA, “interim” is a reference to MLB’s target of a 2014 international draft. The next section lists “penalties beginning in the 2014-2015 signing period if there is not an international draft.”

The CBA also says that MLB must provide the Players Association with detailed rules of the draft by June 1, 2013, if it intends to enact an international draft in 2014. The union has the right to either accept or veto the draft for the 2014 season and subsequent seasons by providing the commissioner’s office official notice by June 15.

Some think an international draft is a done deal. Others think there’s no way MLB can overcome the logistical challenges to pull it off. But every indication over the last several years—the registration program, presence of the MLB Scouting Bureau, MLB putting on showcases, the International Talent Committee—points to the desire of the commissioner’s office to try.

If an international draft is in the offing, here are nine questions that MLB must answer first:

1. Which countries would be in an international draft?

This is the biggest question. The presumption is that the Dominican Republic and Venezuela would be involved, as they represent the overwhelming majority of teams’ spending on international amateur players. A draft for those countries would do the most to help MLB control costs on international players. It seems likely that MLB would include other Latin American countries that produce players on a smaller scale, including Panama, Colombia, Curacao, Nicaragua and Brazil.

MLB would likely have to work out agreements with governmental bodies to make sure they’re complying with labor laws and with the baseball governing bodies in each country. South Korea, Taiwan and Japan have pro leagues that depend heavily on native-born players. Teams routinely sign the top high school prospects from Korea and Taiwan, but in almost every situation they wait until the player graduates from high school. In Japan, arguably the most fruitful source of talent in Asia, Nippon Professional Baseball holds its own draft and won’t be pleased if MLB teams begin drafting Japanese high school stars.

How will MLB treat players who leave Cuba? Right now Cuban players who are at least 23 and have played in Serie Nacional are exempt from the signing bonus pools, so would they be exempt from the draft if they meet that same criteria?

Then there is Europe, Australia and just about everywhere else in the world. If any country is exempt from an international draft, is there anything that would stop a player from taking up residence in that country to get around the draft? Beyond logistics, how would it be fair to subject players from one country to an international draft while leaving players from other countries exempt?

2. What about Mexico?

Aside from all those other countries, MLB could find the stickest situation in Mexico, where the Mexican League has immense power and financial backing.

In Mexico, the majority of the top prospects for July 2 each year are not signed directly as amateurs. Instead, those players usually sign with Mexican League teams, then have their rights sold to a major league club. The Mexico Red Devils have done that with players like Blue Jays righthander Roberto Osuna and Dodgers lefty Julio Urias, while the Pirates went through Veracruz to sign righthander Luis Heredia. While Dominican trainers often take a 30-40 percent commission from their players’ signing bonuses, Mexican League teams keep up to 75 percent. Mexican players occasionally sign without going through the Mexican League, but doing so means they’re not allowed to ever play in the Mexican League once their time in U.S. pro ball is finished.

Teams and agents have already tried to find a loophole in the new CBA by signing players through the Mexican League, because those players don’t technically get amateur signing bonuses. A group of Colombians even went as far as to buy a Mexican League team (the Carmen City Dolphins) and put Hugo Catrain, a prominent agent for Latin American amateur players, in charge as team president (he’s no longer involved with the team). Before the first international signing period under the new rules, however, MLB decided that a team that signed a Mexican-born player out of the Mexican League would have only the amount that went to the player (25 percent) count against its bonus pool, but a player brought in from another country (such as a Dominican or Venezuelan player) to sign through the Mexican League would have the full amount count against a team’s bonus pool.

If MLB wants to have an international draft, things get trickier. Would Mexican amateur players be included? Would Mexican League players be subject to the draft? And if not, would there be any spending limits on signing Mexican amateurs or Mexican League prospects? If MLB determines that clubs can sign players from Mexican League teams without having to go through the draft, trainers from other countries have said they will try to send their players to Mexican League clubs to avoid the draft.

3. How many rounds?

The most widespread belief in international circles is that MLB is planning a four-round international draft. Sources have told Baseball America that is one option, and a look at how bonus pools were calculated this year makes it look like the most likely. This year MLB created 120 slot values, with each team getting four slots plus another $700,000 to determine its 2013-14 bonus pool. So the Rockies, who finished with the third-worst record in baseball, get slots No. 3, 33, 63 and 93.

Why bother having slot values in a year when there is no draft? It makes no sense, unless MLB plans to use those 120 slot values for a four-round draft. That’s why a four-round draft is the expectation among many in the international baseball community.

4. What about players who pass through undrafted?

Teams usually sign 15-30 international free agents per year, and sometimes even more. In 2011, the Phillies signed three international players to bonuses of at least $100,000, but 47 international free agents all told. The volume depends on how many roster spots a team has available in its Latin American summer leagues, as some organizations have two teams in the Dominican Summer League, while others (like the Phillies) have teams in the DSL and the Venezuelan Summer League.

Clearly a four-round draft (or even a 15-round draft) would not bring in enough players to meet the needs of teams, so rules will have to be in place for signing nondrafted free agents. Some trainers think they will outsmart MLB by hiding players, having them go undrafted, then having them sign for big bucks as nondrafted free agents. That’s not going to work.

First, players already have to be registered with MLB in order to sign, a procedure that’s likely to stay in place for an international draft. Even registering a player and then hiding him or having him tank workouts to avoid the draft probably won’t pay off because MLB will impose a bonus limit on undrafted players. In the June draft, any player signed after the 10th round or as an NDFA can sign for up to $100,000, after which the bonus counts against a team’s bonus pool.

If an international draft has flexible slots, MLB could use a similar rule, or it could simply put a hard ceiling on bonuses for NDFAs. Given that MLB currently gives teams six signings of $50,000 that don’t count against its bonus pool, the ceiling might not even be as high as $100,000.

5. Hard slots, flexible slots or no slots?

Other than determining which countries would be in an international draft, this decision might have the most significant ramifications. The domestic draft has flexible slots. Teams get slot values for their picks in the first 10 rounds, but their budget is the total of those values and can be spread among the players however a team sees fit. The only caveat is that if a team doesn’t sign one of its picks from the top 10 rounds, that slot value it taken away from the budget.

As an example, last year the Astros drafted Carlos Correa with the No. 1 overall pick and paid him $4.8 million instead of the full $7.2 million slot value. The money they saved from that signing went to players they paid over their slot values later in the draft, like righthander Lance McCullers and third baseman Rio Ruiz.

While American high school players have the leverage of playing college baseball, Latin American amateur players don’t have that option. In most cases, the players and their families are poorer than their American counterparts. The trainers also want their players to sign right away because holding out for a year means another year of expenses with no income.

So flexible slots give all the leverage to the team. If international players are placed into a draft, hard slots would protect them from teams giving them low-ball offers. Domestic amateur players would arguably be better off with hard slots as well, but the issue of hard slotting vs. flexible slots is even more complicated in the international arena.

6. How will investigations be done for players in the draft?

Players born in the United States have birth certificates that are simple to verify. In many Latin American countries, those records are more easily manipulated, and not just in the Dominican Republic, where age and identity fraud cases get the most publicity. If MLB wants to create an international draft, it has to figure out a way to make sure investigations are done before a player gets drafted.

MLB now investigates most of the players it considers to be the top prospects for July 2 before they sign, which has expedited the contract approval process for those players. Most of the top international signings have their contracts approved within a few weeks after signing.

Still, one player who signed for more than $1 million last year had to wait two months before MLB approved his contract, even though he was a well-known, high-profile player coming into the year. Simon Mercedes, who had previously been suspended by MLB and had a history of sketchy paperwork, signed with the Red Sox for $800,000 last year in March, then waited five months for his contract to be approved. Teams need to have some level of confidence that a player they draft will be able to sign and get on the field in a timely manner.

Then there are the players who get caught lying about their ages. What if there’s a player whose investigation isn’t complete before the draft—perhaps a pop-up player who rises suddenly as the draft approaches—and a team drafts him, only to find out the player was lying about his age? Would the team be compensated with a pick the following year?

It gets even trickier. In the case of Dominican righthander Juan Carlos Paniagua, he used a different surname (Collado) to sign with the Diamondbacks, but his date of birth was the same on all three contracts and his identity was the same on his signed contracts with the Yankees and Cubs, yet MLB terminated his deals with Arizona and New York and declared him ineligible to sign for a year both times. If a team drafted a player in a similar situation, would MLB really either terminate his contract and ban him from signing for one year?

Then there are MLB’s “age undetermined” or inconclusive rulings, a rule that in theory is designed to give teams the opportunity to continue with a contract even though MLB has said it cannot verify the player’s age.

“What if a kid’s undetermined?” said one international director. “You take him in the second round and he might not be able to get his work visa. Then what? If it’s a really good international player with questionable paperwork history, how much are you going to step up in the draft and pull the trigger?”

7. What happens if a team doesn’t sign one of its draft picks?

There are a variety of reasons a team might not sign one of its draft picks. The player could have failed his investigation. He could have tested positive for steroids. Or maybe there was simply an issue during a player’s physical, like with Venezuelan shortstop Luis Castro last year, when his $800,000 deal with the Blue Jays fell apart. Maybe the two sides just can’t agree to a deal.

In the domestic draft, if a team doesn’t sign one of its draft picks from the first two rounds, that team gets a pick in the same position in the next year’s draft, as in the case of the Pirates not signing 2012 first-rounder Mark Appel. MLB would need to figure out some way to compensate teams in the international draft as well.

8. Will teams be allowed to trade picks?

In the first year of tiered bonus pools, teams are allowed to trade for up to 50 percent of their allocated pool space. To trade for more pool space, a team must acquire slot values from another club, perhaps an indication that MLB is willing to let teams trade picks if it goes to an international draft.

The idea of trading international draft picks makes sense. If the Marlins have the No. 1 overall pick in the international draft, it’s a potential disaster for MLB because the Marlins rarely spend more than $100,000 on an international player, let alone more than $3 million.

Teams could also have baseball reasons for wanting to trade down in the draft. If MLB wants to reward teams for losing at the major league level by giving them the highest picks in an international draft, why not give the organization the flexibility to use that asset however it sees fit?

Take a team like the Rockies, who have the No. 3 slot value ($2.54 million) for the 2013-14 bonus pools. For more than a decade under international scouting director Rolando Fernandez, they have built a formidable Latin American talent pipeline with a modest budget. If they picked third in an international draft next year, should they be forced to pay $2.54 million for a player ? Or if there are flexible slots, shouldn’t the Rockies be able to trade down?

9. When will the draft take place?

The international signing period opens annually on July 2, the first day when teams can sign players who are 16 or older. If a player turns 16 by Aug. 31, he can sign on his birthday. Anyone younger than that has to wait until the next year.

Those players who sign on July 2 all sign contracts for the following season, so they can’t play in official games right away. But under the current system, international signings are a year-round process. So if a team signs a 17-year-old player in February, he can play later that year when the Dominican Summer League season begins (assuming his contract is approved).

If the draft is held on July 2, that means that, unless the player signs as a nondrafted free agent, he wouldn’t be able to sign until after July 2. Maybe he signs in time to play the second half of the DSL season, maybe not. Teams also have roster spots they need to fill out on those rosters, so holding a draft on July 2 makes things even more complicated.

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