Monday, July 6, 2015

Trying to Explain The International Signing Period

This whole mess has been confusing from the get-go. I tried to explain it a little the other day, but I want to focus a bit more on how much money the Braves could spend, how much they have spent, and why the Braves traded a half-dozen players away to be able to spend it.

Initial Bonus Pool = $2,458,400
Where does that figure come from? Each team is assigned four slots and each slot comes with a signing bonus value. This is not too dissimilar from the MLB draft where the first several rounds come with signing bonus values for each pick (this is where the idea of signing for slot comes from). The slots are assigned, again much like the draft, by reverse order of last year's standings. That gave the Braves the 15th, 45th, 75th, and 105th slots.

Note that you don't have to use all four slots. It's just a method to assign a team an initial bonus pool from which to sign from. You could sign 20 players for $20K each if you wanted to. You are limited financially by the slots, but no player will be "picked" or signed for their individual value. They're just placeholders.

Maximum Bonus Pool = $3,687,600
Here is where the idea of trading for international slots comes into play. The Braves agreed upon four different trades. They traded Cody Martin to the A's for the 53rd slot, Jordan Paroubeck and Caleb Dirks to the Dodgers for the 87th slot, Garrett Fulenchek to the Rays for the 73rd and 103rd slots, and today, the Braves moved Aaron Kurcz to the A's for the 113th slot.

So, let's add that up.
53rd - $388,400
73rd - $299,000
87th - $249,000
103rd - $195,200
113th - $167,000

Those five picks give us a total of $1,298,600. Let's add that to the initial bonus pool of $2,458,400 which gives us a total of $3,757,000. Wait, something doesn't add up, right? I underlined maximum bonus pool so it must be important, yet the Braves, according to my math, have more than that. What gives?

Your maximum bonus pool is actually decided when your initial bonus pool is allotted. How's that? The maximum is found by taking the initial bonus pool and adding 50% of that bonus pool. That means you start with $2,458,400 and you cannot go beyond that total plus half. Atlanta essentially added nearly $70K in theoretical money that they cannot use.

Except that they kinda can in a different sense...

Maximum Bonuses Without Future Penalties = $3,871,980
Okay, what the hell is that? We just decided a maximum on completely arbitrary means and now we're moving the goal posts?

You may know that some teams have spent so much money in international bonuses that they are limited to a maximum individual bonus of $300,000 to any given player in this year's signing period. Why that total? Because the whole system is made up. But anyway, Arizona gave Yoan Lopez $8.27M last signing period. That's went well beyond their maximum pool. So despite having four slots worth nearly $3,36M to start with this signing period, they weren't going to come close to reaching it because all they could offer any player was a signing bonus of $300K and not a cent more.

The Braves do not want to have to deal with a similar problem because they are already preparing to blow by whatever their allotment is next year with the signing of Kevin Maitan, a prospect some have compared to Miguel Cabrera.

But they can go over their maximum bonus pool. Just not very far. 5% actually. Again, I don't make up the rules, I'm just reporting how ridiculous they are. Call this a grace period if you want. A team can spend 5% beyond their maximum bonus pool and not suffer similar penalties like Arizona is. This additional bonus-bonus pool for the Braves is $184,380 added onto their maximum bonus pool. The caveat to spending beyond your max is that you have to pay an overage tax on each dollar you go beyond that maximum. I'm not real sure where the money goes. But I digress.

So, to recap...based on your record from the previous year, you are assigned four slots with the other 29 teams in baseball. Those slots each carry a signing bonus value. Once you add those signing bonus values together (oh, and add $700K for reasons unknown), you arrive at your initial bonus pool available to sign international prospects during the year.

You can add "money" to that initial bonus pool by acquiring slots that belong to other teams. You can acquire as many as you want, but the cap on your maximum bonus pool is limited to the sum of your initial bonus pool + 50% of that initial bonus pool.

If you spent beyond the maximum, you will be penalized. If you spend up to 5% beyond it, you will be charged an overage tax for the money you went over. If you spent beyond 5%, you will be limited during the next TWO signing periods to a max individual signing bonus of $300K.

NOW, back to the Braves...Atlanta could spend up to about $3.87M. They spent $3.85M. They will not suffer any restrictions for next season, but they will owe an overage fee of $162,400 to the MLB Overlords.

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