Tuesday, January 28, 2014

A Brief Note on the Equity of the International Free Agent Market

 Talking the equity of Southeast Asia versus Latin America as it pertains to MLB franchises in the mid- to low-payroll/mid- to small-market tiers.

What we as fans have witnessed in the past few years is an increase in the talent that has been coming out of Latin America and Southeast Asia (primarily Japan, but also South Korea and some from Taiwan as well). Increasing in tandem with this is the amount of money being spent by major-league ball clubs on talent that may or may not translate to success in the United States. While the Latin American market remains a product of who has the best scouting in the region, it remains a crap-shoot insofar as where talented players will land.

This is the most positive outcome that the MLB could have, as the talent spreads fairly evenly across the major league landscape. There is equity, to some extent. Yasiel Puig energized the fiscal leviathans the Los Angeles Dodgers and Jorge Soler signed with the big-market Cubs, while Yoenis Cespedes made a big splash for the small-market Oakland A's. Other small-market teams such as the Colorado Rockies, Minnesota Twins, Kansas City Royals, San Diego Padres and Pittsburgh Pirates all bolstered their farm systems by bringing in some talent from Latin America.

The equity we see in Latin America does not transfer over when discussing Southeast Asia, however. For years, it was presumed to partially be due to the posting system, wherein the team with the highest bid received exclusive negotiation rights with a given NPB player. We saw this occur with many Japanese players over the years (Ichiro Suzuki, Kei Igawa, Yu Darvish, Daisuke Matsuzaka, to name a few). Generally players ended up on big market teams: the Yankees, the Red Sox, the Mets, the Angels, the Rangers, the Mariners (Seattle more so when they were a highly competitive team at the beginning of the aughts).

Although the posting system between MLB and NPB has been adjusted (now all thirty teams can place a $20,000,000 posting bid), the rules of the game therein still remain fixed in the favor of the large-market clubs: players with premium talent will be chased by the teams with the deepest pockets. While no one player can be guaranteed to perform as billed when coming over from a foreign league, what we essentially have in place is a Monopoly-esque division of talent distribution: the big-market teams get to the highest-valued pieces on the board, the small-market teams the lowest-valued, and the mid-market teams get the more moderate prospect pool, both in terms of dollars/years and potential talent.

We saw this occur with the Tanaka bidding process, as four of the five primary teams came from the largest baseball markets in the country (Chicago, New York, and Los Angeles), with Arizona making a valiant effort as the dark horse from the mid-market clubs.

We saw this occur with the 2007 Matsuzaka Sweepstakes: the primary bidders were the Texas Rangers, New York Mets, Boston Red Sox, and Chicago Cubs, all large-market teams (although the Mets made some draconian cuts to payroll in the next few seasons in the wake of the Bernie Madoff Ponzi scheme that the Wilpon Family was said to be involved in).

It's an issue unique to baseball, as it remains the primary American professional sport without a salary cap. Mending such a problem will be a major point of contention down the road. One proposal, which can be expected to be tabled by the MLB, is likely to be a compensation system similar to the new compensatory-pick system tied to certain free agents. While this has benefited the clubs that held the free agent player, it has hurt the market for that player (good recent examples include Kyle Lohse in the 2012 off-season; Ervin Santana, Kendrys Morales, and Ubaldo Jimenez in the 2013 off-season). Consequently, it would be a measure likely to be rejected by the Players' Association. The compensation system has thus far proven to narrow an already-rigid market for players with a specific or limited skill set; adding an international component to this would likely compound the issues.

Another proposal would be to set a ceiling for which teams could pay international players (say $100,000,000 plus the posting fee), but this would set an unsettling precedent for domestic players as well as the Players' Association, and large-market clubs such as the Yankees, Dodgers, and Angels would all cry foul over such an idea.

The most likely outcome is perhaps the most simple: international players should be subject to the MLB Draft. Current rules differentiate international players from collegiate and high school players, which creates different markets for franchises to channel their budget through. Some teams prefer to chase talent through the draft (often the least costly route), while others prefer to chase talent in the Latin American international market (second cheapest route). The larger-market teams tend to shape themselves through free agency (the most expensive route) and the Southeast Asian international market (the second-most costly route). Adding international players into the draft pool would simplify the entire equation and make the playing field slightly more level.

The one major impediment to such an idea is the fact that a sizeable number of players coming from Japan, South Korea, and Cuba all have had a few years of professional experience as baseball players. While their experience is not of MLB's caliber of play, they still have an important quality (pro experience) that differentiates them from their amateur counterparts.

What may eventually come, at least as a passing idea, is the notion of two separate drafts: the Collegiate MLB Draft and the International MLB Draft. This would eliminate a lot of the clutter and overlap involved in the international market, and would turn the signing of prospects from one premised on the "right of discovery" (I scouted Player X first, therefore I have the right of primacy in signing him to a contract) to one premised on draft order. This would probably also make scouting somewhat less territorial, although scouts will always have an area of expertise, be it Taiwan, Puerto Rico, Cuba, Japan or the Netherlands.

The last remaining issue in discussing an idea would be what the NPB teams would receive in exchange for acquiescing to such a draft. They spent more than a decade reaping the benefits of the previous incarnation of the posting system, and the majority of NPB ownership was none too pleased with the deal they agreed to during this current off-season. A large cash settlement would probably be the easiest route, but finding common ground could be difficult.

Ultimately, what may end up being the most sensible agreement as to the international free agent market may be one that is less chaotic, but also less appeasing to all parties.

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