The Yankees IFA Strategy: Sign Them All!
The Yankees recently made waves by spending about $12 million more than their allotted two million dollar International Free Agency (IFA) bonus pool. Dermis Garcia, Nelson Gomez, Juan DeLeon, Jonathan Amundaray, Hyo-Jun Park, Wilkerman Garcia and Miguel Flames all benefited from the Yankees’ IFA largesse to the tune of $1 million or more each in signing bonuses. As a keeper league owner, how many of these names do you need to know?
During the summer of 2008, there was a great deal of concern in the executive offices at Major League Baseball. The IFA signing period was about to open and while the exact sum was unknown, it was rumored Michael Ynoa would receive a record-breaking contract. As a result, MLB began researching the return on investment of IFA signing bonuses and I assisted as part of the team. The conclusion was while some of these large dollar contracts were successful, Miguel Cabrera comes to mind, a team could do just as well by spreading smaller bonuses amongst a larger group of prospects. Eventually, teams would figure this out and bonuses would stop escalating.
However, rather than waiting for this process to play out naturally, MLB instituted a cap on IFA spending with the advent of the 2011 Collective Bargaining Agreement. From the management side, the optics of 16-year-olds signing multi-million dollar contracts was not worth the public relations hit of waiting for a seemingly inevitable market correction. From the MLB player side, this had no effect on the finances of an active players so who cares?
Typically, an elite prospect will reach the majors between the ages of 20 and 22. Since the overwhelming majority of minor leaguers signed through international free agency are 16, top bonus babies from the 2008 and 2009 signing periods are breaking through. Or are they? Below is the list of international free agents who received bonuses of approximately $2 million or greater in that period:
No nifty WAR table is required to gauge the approximate MLB value of this group because none of them have debuted. Michael Ynoa is a struggling reliever in High-A. Rafael Rodriguez is spending his third consecutive year in Single-A. Yorman Rodriguez has a .661 OPS in his second shot at Double-A. Juan Duran has shown power, but he also has a sub .300 OBP and a six-to-one strikeout to walk ratio in Double-A. Adys Portillo is a Double-A reliever with a WHIP closer to two than it is to one. Guillermo Pimentel has played in 21 games above Single-A. Jose Vinicio has a batting average below .200 since the start of 2013.
In contrast to the struggles of his bonus peers, Gary Sanchez has a MLB future and Miguel Sano was compared to Mike Schmidt reincarnate before needing Tommy John surgery. Of note, Xander Bogaerts was signed in 2009 for a bonus of $410,000 and Yordano Ventura was signed in 2008 for a bonus of $28,000.
The examples in the 2008 and 2009 class are instructive when considering how to handle international free agents. The bonus a player signs for is less indicative of his talent than in any other model of player acquisition in baseball. Few things are more valuable to an MLB team than having a talented young player whose earnings are restricted in their pre-arbitration years. As a result, teams are willing to spend in international free agency because they are secure in the knowledge if one of their signees fulfills his potential, the team will have profited financially.
The Yankees’ IFA Advantage
Despite the large dollar figure, the Yankees IFA actions reinforce the conclusions reached when Ynoa had the scouting world abuzz. Rather than bet big on one prospect to make it, the Yankees are signing as many prospects as possible at a time when few other organizations can or will do the same due to adherence to the IFA cap. When news of the IFA cap in the CBA first broke in December 2011, Mike Newman was concerned the ability to trade portions of the international budget would lead to wealthier teams, such as the Yankees, trading for an increase in budget and leveraging their existing connections in Latin America to sign more prospects. Instead, the Yankees have taken an additional step and determined the financial penalties which come with overspending are worth signing as many players as possible.
Unlike the structured domestic draft where players can only negotiate with the teams that drafted them or where almost all clubs have the same or similar information on top prospects due in part to the role of the MLB Scouting Bureau, international free agency is a relative free for all. The result is wildly divergent player valuations often times based not on talent, but on scarcity and leverage. The Yankees IFA spending is just as much evidence of their affinity for a particular prospect as it is evidence another team may have highly valued the same signee and targeted him as their top guy. So while a fantasy baseball owner will keep big names from the Yankees IFA spending spree in mind, it’s difficult to label any IFA as a “must own”. Relying too heavily on toolsy Latin American teenagers will hurt, not help a team.
11 Aug 2014 / Fabian McNally / 2
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