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First Pitch: Should the Pirates Spend Beyond Their International Bonus Pool?

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The Pirates have seen two really good results in recent years out of the Latin American signings from Rene Gayo.

Starling Marte, signed in 2007, has been one of the best players in baseball, and is very under-rated. He has averaged over a 4.0 WAR per year in the last four seasons, and ranks 20th among qualified position players in WAR from 2013-2016.

Gregory Polanco signed in 2009, and has had two solid seasons in the majors, averaging a 2.5 WAR. He teased a breakout in early 2016, but faded down the stretch, which could be injury related. I still think the best is yet to come, and the first half of 2016 is what we can expect going forward.

Add to these results some other successful prospects who were either good enough to land MLB pieces (Dilson Herrera for Marlon Byrd and Joely Rodriguez for Antonio Bastardo) or players who haven’t arrived yet (Elias Diaz, Alen Hanson, Willy Garcia, and Jose Osuna are all in Triple-A, and could all be MLB players off the bench or more), and the Pirates have some pretty good results from the international side of things.

That has changed a bit under the current Collective Bargaining Agreement, which went into effect in 2012, and reduced the budget for the Pirates. MLB restricted teams on how much they could spend, adding in harsh penalties if they went over their bonus amounts. The penalties were a restriction on signing players for more than $300,000 the next two years, and a 100% tax on the amount you went over the pool.

This same process worked to curtail spending in the draft, and so far, there hasn’t been a team that exceeded their bonus pool enough to lose a draft pick (although plenty of teams, including the Pirates, exceed their bonus pool up to 5% and pay a 75% tax on the overage). But the process hasn’t worked on the international side. Teams have restrictions and face fines when they go over their limits, but that hasn’t stopped teams — big market and small market — from exceeding those lower bonus pools.

Part of the difference between the draft penalties and the international penalties is that you lose a lot more in the draft. If you have an international bonus pool of $2 M and you spend $5 M, then you get a $3 M fine, and can’t sign a player over $300,000 the next two years. But you still get your full bonus pool the next two years. In the draft, if you exceed your bonus pool by $3 M, you get that 100% fine, plus you lose your first and second round picks the next two years, and all of the bonus money that comes with those picks.

There have been a lot of teams who have taken advantage of this on the international side. The Angels, Diamondbacks, Rays, Yankees, and Red Sox all went over their pools in 2014-15. The Blue Jays, Cubs, Dodgers, Giants, and Royals added to that list in 2015-16, meaning a third of the teams for the 2016-17 signing period couldn’t spend more than $300,000 on a single player. But this year it looks like the Braves, Reds, Astros, Athletics, Cardinals, Padres, and Nationals will all exceed their bonus pools.

That’s 17 teams in the last three years who have exceeded the bonus pools, which has already raised the question about why the Pirates aren’t also doing this. Wilbur Miller has written about his feelings on this a few times, and we talk about this every single time he’s in Florida. We both agree that the Pirates are getting less talent than before under the new system. But we disagree on why, on how much less talent they’re getting, and on what they should do going forward.

First of all, the why for me is explained by looking back at what made the Pirates so good before these rules went into place. Their biggest success stories weren’t big bonus guys who cost seven figures. They actually have only had two of those — Luis Heredia for $3 M and Harold Ramirez for $1.05 M. Their next biggest bonuses came in 2012 with Michael De La Cruz and Julio De La Cruz, and that was under the new system. Three of their other top ten bonuses came under the new rules.

The Pirates had success with smaller bonus guys. Marte only received $85,000. Polanco got $150,000. Hanson got $90,000. Diaz got $20,000. Those make the $280,000 that Willy Garcia and Jose Osuna received look like huge bonuses, and the same goes for the $220,000 that Dilson Herrera received.

I went down to the Dominican last year and had a chance to see all of the academies and hear about how the Pirates compare to other teams down there — both from people inside and outside of the Pirates’ organization. I’ve also spent time over the years discussing how the Pirates operate versus other teams with people who are familiar with those dealings. The Pirates put a lot of effort into their academy and have an extensive scouting presence in Latin America. The difference is stark in comparison to the difference in US scouting and development.

There are some teams in the Dominican that share an academy with another team. Some teams have an academy, but don’t even have basic equipment, such as the cart that lays chalk on the baseline for the games. Their groundskeepers have to do this by hand before every game. And that’s an investment that would be only a few hundred dollars, at most. And then when it comes to scouting, there are some teams that opt to just spend on the players who are widely known, rather than spending a lot on scouts to find players who are just as good, but who don’t have the early attention.

The Pirates work the opposite way. They spend a lot of resources on scouting, which allows them to find players that others don’t find. They’re not alone on this, as other teams take the same approach. But that’s why they’re able to find talent for cheaper prices. They’re spending money on scouting and the academy, which leads to talented players who don’t cost as much, because they’re not as recognized nationally when they sign.

So the theory that the Pirates should load up on top players (and there really aren’t “top players”, just players who are projected to receive the biggest bonuses because of the spotlight they have) and spend big dollars one year kind of works against their approach. They go with a quantity approach, getting ten talented, high-upside guys, rather than just one talented, high-upside guy for the same price. And that’s where I believe the source of their shortage of international talent lies the last few years.

The Pirates have seen some results under the new system. One thing that’s lost is that it takes so much time for international players to make it through the levels. The guys from the 2012-13 period are just reaching A-ball. The guys from 2013-14 are mostly reaching the short-season leagues, with some older players in A-ball. The 2014-15 class just made the jump to the GCL this year. The 2015-16 class just made their pro debuts in the DSL. And the Pirates have had some early results from the early years.

The 2012 season is looking disappointing for the De La Cruz’s, but Tito Polo ($25,000 bonus) emerged as a trade chip for Ivan Nova, while Pablo Reyes and Dario Agrazal (bonuses unknown) have both been interesting players in A-ball.

The 2013 season looks like the best of the group so far. The highlight here is Yeudy Garcia ($30,000), who made it to Bradenton this year after breaking out in West Virginia last year. He had some shoulder issues at the end of the year, but didn’t have any issues after getting them checked out in Pittsburgh. This class also has Luis Escobar ($150,000), who is already hitting 97 MPH, and looks like one of the best arms in the lower levels. Adrian Valerio ($400,000) was the big signing, and has shown some potential with great defense at shortstop. Edgar Santana made an aggressive move through the system, going from the DSL to Indianapolis in two years. This group also has some interesting guys in Hector Garcia, Edison Lantigua, and Jeremias Portorreal, who is on my early list as a sleeper to watch in 2017.

We really can’t tell much from the 2014 group, but Victor Fernandez had some good numbers in Bristol, while Yondry Contreras had some of the hardest hit balls during instructs. Miguel Hernandez, Domingo Robles, and Brian Sousa are all interesting arms in the lower levels.

The Pirates are still getting talent, and still getting that talent at low prices. But when you look at their approach, and the change in their budget, you can really see why they have seen fewer prospects emerge. They used to have a budget of $3 M per year, and that didn’t count guys like Heredia and Ramirez, who were special expenses, separate from the normal international budget. They have recently been around $2 M per year. If you look at the success stories above, they’re averaging about $100,000 bonuses or less for most of the low-key signings. If you reduce the budget by $1 M, which the CBA did for the Pirates, then that’s ten fewer players you can sign. That amount every year, over four years, means the Pirates may have had about 40 fewer players in their system from 2013-2016. And when your approach relies on getting a large quantity of high upside guys, you can see how losing 40 of those high upside guys would reduce the amount of players who emerge as prospects.

I don’t think the answer to this is to change course and sign a lot of high-priced players. In theory this sounds good — go big one year and sign a bunch of prospects, and then revert back to the low-budget approach the next two years, which fits into their normal strategy. But when you’ve got at least five other teams taking this same approach, you’re going to be getting into a bidding war, and the prices are going to be high. Those prospects with big price tags offer no greater guarantee of working out than the guys with the smaller price tags.

What this would result in is the Pirates spending more on the international side when they’re already limited in the majors. I believe they can spend more than they’re spending now in the majors, but I don’t think it’s an excessive amount. It’s still a situation where a few million dollars can make a big difference.

I don’t think anyone is arguing for them to do what San Diego is currently doing, by spending $20 M over their bonus pool, which will result in another $20 M in taxes. I do think the calls for them to exceed the bonus pool are similar to what the Athletics have done, signing five players for $6.7 M total, when their pool is only $3.8 M. That’s at least a $3 M fine, plus the extra $3 M in spending. And the difference comes down to a 17-year-old Cuban outfielder who they signed for $3 M. I don’t think a scenario where spending $6 M on a 17-year-old outfielder is a wise move for the Pirates. They still have success signing lower bonus guys, and they still have a tight budget at the MLB level, with expectations to contend.

An approach that would make sense is keeping their low bonus approach, but expanding it in a big way. Their bonus pool was $2 M this year. So maybe you sign a lot of players and spend $3 M. You get the $1 M in fines, but you get a lot of high upside players with this approach, which fits with their system. This could allow them to return to their success from before. Although, looking at the early results above, especially with that 2013 group, I’m not sure they’ve really departed from their trend of finding talent in Latin America.

All of this might be moot in about a month. The Collective Bargaining Agreement expires this off-season, and I can imagine one of the biggest things to be addressed will be the international signing rules. The rules in place now have done nothing to deter teams from spending, and I can’t imagine that the player’s union is happy that a team like San Diego is paying $20 M in fines, rather than using that money toward actual players. There’s also the changing situation in Cuba that could eventually impact the price tags of Cuban players on the market, and the way those players are signed.

I’d imagine there will be some changes to this market over the off-season. There should be a draft, allowing teams a shot at the best available player with exclusive negotiating rights, rather than the situation now where one team can sign multiple players out of the nationally known lists. This approach would work very well for the Pirates, as it would give them a shot at the top well-known guys at a reasonable price, while also still having the ability to go for the lesser known players that they do such a good job at finding.

**2016 DSL Pirates Season Recap and Top Ten Prospects. Speaking of the international players, John Dreker recaps the best players from the 2016 DSL Pirates.

**AFL Preview: Pirates’ Group Highlighted by a Pair of Third Basemen. The AFL starts tomorrow, and we’ll have reports each day. Here is the preview, with details on the players representing the Pirates.

**Who is Remaining For the Pirates to Protect From the 2016 Rule 5 Draft? My look at the upcoming Rule 5 draft, and who the Pirates still have left to protect.

**Winter Leagues: Action Begins in Venezuela with a Big Day From Jose Osuna. Some of the winter leagues have started up, and Jose Osuna is off to a good start.

**Pirates Have Off-Season Money to Spend in the Initial 2017 Payroll Projection. I took an early look at the 2017 payroll, and feel the Pirates have money to spend this off-season.

Tim Williams
Tim Williams
Tim is the owner, producer, editor, and lead writer of PiratesProspects.com. He has been running Pirates Prospects since 2009, becoming the first new media reporter and outlet covering the Pirates at the MLB level in 2011 and 2012. His work can also be found in Baseball America, where he has been a contributor since 2014 and the Pirates' correspondent since 2019.

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