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Cardinals 2016-2017 International Bonus Update

As many readers know, because of their 2015 regular season success, the St. Louis Cardinals received the smallest international bonus pool allocation of all clubs for the 2016-2017 signing season at just over $2 million.

However, due to favorable external conditions, the Cardinals decided to over-spend significantly and incur associated penalties from Major League Baseball. Contributing factors to making this decision included a number of deep-pocketed clubs prohibited from high bonuses for individual players due to prior year over-spending, a widening Cuban pipeline and the unknowns that go with a new Collective Bargaining Agreement scheduled to be in place next year.

To date in the current period which began on July 2, the Cardinals have officially signed 16 international players, with two more reportedly in process. Sources including Baseball America and MLB.com have disclosed signing bonuses for just seven of the 16 plus both in-process players.

Of those nine, four are receiving more than $1 million with the other five getting between $100,000 and $600,000 each in signing bonuses. The list is topped by Cuban outfielder Jonatan Machado (pictured), the highest-bonused international signee in team history at $2.3 million.

To help put that into perspective, Machado is receiving more than the Cardinals’ entire signing budget for the year.

Five of the 16 have been signed to 2016 contracts and have begun play in the Dominican Summer League. The playing contracts of the other 11 will go into effect in 2017.

Here they are:

Signed – bonus reported (7) Pos Ctry Age Bonus Year
Jonatan Machado OF Cuba 17 $2,300,000 2016
Johan Oviedo RHP Cuba 18 $1,900,000 2016
Victor Garcia OF Ven 16 $1,500,000 2017
Carlos Soler OF DR 16 $600,000 2017
Franklin Soto IF DR 16 $550,000 2017
Carlos Soto C Mex 17 $400,000 2016
Alexander Samuel OF DR 16 $100,000 2017
subtotal $7,350,000
Signed – bonus not reported (9) Pos Ctry Age Bonus Year
Rodard Avelino RHP DR 17 2017
Allinson Benitez RHP Ven 16 2017
Diomedes Del Rio OF Ven 18 2016
Joyser Garcia C Ven 16 2017
Ivan Herrera C Pan 16 2017
Luis Montano OF DR 16 $200,000 2017
Erik Pena SS Ven 16 2017
Yowelty Rosario SS DR 16 2017
Enmanuel Solano RHP DR 17 2016
In process (2) Pos Ctry Age Bonus Year
Randy Arozarena OF/SS Cuba 21 $1,250,000
Roy Garcia RHP DR 15 $200,000
subtotal $1,450,000

Now, let’s roll up the numbers – for those players whose bonuses have been disclosed. As a result, these numbers are low, not high.

Signed players $7,350,000
In process players $1,450,000
Signed + in process players $8,800,000
Pool allocation $2,027,300
Pct over pool
Overage signed players $5,322,700 162.6%
Overage signed + in process players $6,772,700 234.1%
$ penalty Signing penalty
Penalty signed (over 15% over pool) $5,322,700 100% tax No player over $300K in 2017-18 and 2018-19
Penalty signed + in process (over 15%) $6,772,700 100% tax No player over $300K in 2017-18 and 2018-19
Pct pool
Total cost signed players $12,672,700 625.1% No player over $300K in 2017-18 and 2018-19
Total cost signed + in process players $15,572,700 768.1% No player over $300K in 2017-18 and 2018-19

As noted, if the two in-process players are signed without a hitch, the Cardinals will have spent at least $8.8 million against their budget allocation of just over $2 million.

The reason for this is that the system is set up with low bars. The highest penalty rate possible is incurred at a 15 percent overspend. Going beyond that has an immediate financial impact, at the rate of one penalty dollar per dollar of overspend, but with no additional penalties in the future.

As the table above indicates, if everyone is signed, the Cardinals will overspend by just under $6.8 million. The club will owe that same amount to MLB, a 100 percent financial penalty. In addition, St. Louis will be prohibited to sign any individual players for more than $300,000 each over both of the next two signing periods.

This is very important to understand. While the Cardinals are fattening up their minor league system this year, they will face an international famine in the 2017-2018 and 2018-2019 July 2nd classes. So it is especially crucial to get the right players this time around.

The bottom line

To secure the services of these 18 young men, the Cardinals will have to spend a grand total of over $15.5 million or 768 percent of their pool allocation. Plus, the signing year is far from over. The Cards could decide to keep spending.

To put that $15.5 MM into perspective, it is over 50 percent more than the organization spent on this June’s First-Year Player Draft. It is also falls in between what Yadier Molina and Matt Holliday make in salary in 2016.

With that kind of financial commitment, it would not be surprising for the Cardinals to expect one or two new core players to one day emerge from this group.

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Brian Walton

Brian Walton runs The Cardinal Nation and The Cardinal Nation Blog, covering the St. Louis Cardinals and minor league system.
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24 Responses to “Cardinals 2016-2017 International Bonus Update”

  1. JumboShrimp says:

    For one more perspective, rookie sensation SS Diaz was recruited as a free agent with a four year contract that would pay him $8mm. Diaz commanded much more money than recent signees because older and closer to ML ready than kids 16 or 17, who will need many more years of development. The more years of development, the greater the chance for serious injuries, hence teams bid less for younger talent to incorporate this risk.
    Diaz may have received his money via a contract rather than as a lump sum bonus. This makes it accurate to mention machado got a large bonus. It is also accurate to say the cards have much moola to Diaz. He has made Mo look like a super genius during 2016.

    • Brian Walton says:

      Diaz was a different type of free agent, not a July 2nd player, more akin to Jose Abreu or Yoenis Cespedes than Jonatan Machado. Diaz received a Major League contract and was immediately placed on the 40-man roster.

      These international bonus pools only apply to players under the age of 23 and with fewer than three years of professional experience.

      • JumboShrimp says:

        The problem with the adult Cuban ballplayers market is it’s virtually the same as the ML free agency market. It’s absurdly expensive, with the Dodgers routinely giving Cubans $25-45mm, if they can put on a uniform.
        The cards got lucky because Diaz must have tried so hard at showcases that he injured his arm and looked bad. So the cards were able to win a bidding war, which does not happen everyday.

  2. JumboShrimp says:

    Another useful perspective are the massive offers made to LHP David Price and OF Jason Heyward. These were rejected and both men have not been stellar during 2016. Does Mo like shelling out big bucks to veteran free Agents? Why should he?
    The salaries of vets make the kids seem smart investments.

  3. JumboShrimp says:

    Kudos to Brian on this essay.
    It’s hard to imagine any other cards reporter carefully going thru available facts to assemble as much information as is now available about international recruiting post July 2 2016

  4. JumboShrimp says:

    it seems like $300k may be a tipping point in the international market. 9 players above, their bonuses are unrumored. Maybe they signed for less than $300k? Or less than $100k, as in the United States, this is a tipping point for information release from MLB.

    The table above helps put the Red Sox problem with MLB in some perspective. The Red Sox scout Latin America well, turning up Hanley Ramirez and Bogarts and Carlos Martinez among others.
    The Red Sox also spent their brains out some years, so we’re hit with penalty fees and a cap of no more than $300k on any single signing. Apparently MLB decided they would cheat on the $300k cap by signing a second useless talent for sure $275k, so as to get more money to the buscone. This would have been cheating and disrespecting MLB, as a corporate decision. The commissioner socked it to them, and reasonably so. It was corporate malfeasance, not bad behavior by a rogue employee.

    The cards will have carefully studied the penalties associated with going over budget. There is plenty of established precedent. We should understand the full price that has to be paid. We are making a carefully well informed deliberate choice to greatly exceed our tiny budget. This is not to disrespect MLB, rather it is a cost benefit calculation based on having a good sense of the future penalties, based on precedents with other teams that have already done the same thing. This respects MLBs penalties and accepts them as a predictable cost of doing business.

  5. JumboShrimp says:

    It used to be that signings of international kids was open market. Teams could bid as much as they wanted.
    Before 2005, the cards spent little and achieved less.
    Luhnow got brought in to change this unacceptable situation, for instance bidding 2.1mm on Wagner Mateo, before his eye problem was discovered.
    MLB loves to curtail signing bonuses. It’s as reliable as death and taxes. It’s what they do, so teams make more money and players less.
    This gets marketed as helping losing teams by giving them much bigger budgets for signing kids. This has the effect of screwing over successful teams like the birds and starving their minor league systems of stud athletes.
    While the cards have been docile model citizens for years, this year we have rejected the status quo that MLB wants to use to starve us. We have instead stepped up and said our little budget is nonsense and intended to turn the cards into lovable losers. We are going to spend some money on talent and reject losing lovably.
    Good.

  6. JumboShrimp says:

    Mlb’s miserly budget is annual, with a new fiscal year starting July 2. This means we have 11 more months during which to lasso more talent, before the good times have to come to a close.

    It would make some sense to add a second squad in the DSL for 2017 and 2018, so we can accommodate the one year long signing surge.

  7. JumboShrimp says:

    Exciting though the 2016-2017 signing blowout is, success is not assured.
    Luhnow gave $1mm to a third baseman out of San Pedro de macoris. The best hitter of July 2008 claimed Jeff, who predicted Roberto Delacruz would begin at Johnson city. He flopped.
    Jeff handed $460k to switch hitting muscular Cuban Ryde Rodriguez. Ryde peaked at palm beach.
    The Diamondbacks gave $500k to Wagner Mateo, after the Cards diagnosed his eye problem.
    Just giving a kid and his buscones money does not alone make a major leaguer. It’s a long climb from the barrios to the majors.

  8. JumboShrimp says:

    Glad to see we signed a Venezuelan CF whose first name is Diomedes. Recalls pitcher Arquimedes Nieto from Panama, now a scout or coach. The Diamondbacks have OF Socrates Brito. Good to keep using great names out of Ancient Greece.

  9. JumboShrimp says:

    Glad to see we signed a Venezuelan CF whose first name is Diomedes. Recalls pitcher Arquimedes Nieto from Panama, now a scout or coach. The Diamondbacks have OF Socrates Brito. Good to keep using great names out of Ancient Greece.

  10. JumboShrimp says:

    It would behoove the cards to sign as many talents worthy of a bonus above $300k as possible. After we are suspended from such signings for two years, we are still free to ink kids who cost under $300k. This year is the window for landing high priced kids.

    • JumboShrimp says:

      This partly means signing more Cubans because their organized baseball is more advanced, so they are higher floor talent. The success of Diaz makes Arozarena look more appesling

  11. JumboShrimp says:

    Of 18 initial signees, 8 hail from the Dominican Republic, 5 from Venezuela, 3 from Cuba, 1 each from Mexico and Panama.

  12. JumboShrimp says:

    Baseball America reports $200k as the signing bonus for Dominican OF Luis Montano. The bonuses of 10 of the first 18 are now known.
    While the Cards have uncharateristically blown past what MLB wants them to spend, they are also being vastly out splurged by the Padres, where Preller is above $60mm in bonus outlays.

    • JumboShrimp says:

      Baseball America tends not to report signing bonuses for players within Venezuela, owing to the security and others concerns within this troubled nation.

    • Brian Walton says:

      Thank you for the update on Montano. I added it to the table, but did not redo the totals.

      • JumboShrimp says:

        One of the takeaways for me is the Padres may be deliberately seeking a $50mm fine. Genius or madness?

        The bevy of trades by Preller before 2015 seemed unlikely. He made a lot of other teams happy.

        Then this winter Mo stole Jedd.

        Now, the Padres are pursuing an international signing blowout, while the Yankees dump stars. The world turned upside down.

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