Amid news that the money available to the near-hard capped draft will be a bit lower than expected, I wrote yesterday that the Yankees should pin their hopes, and their money, on a free agency strategy. I admit that a much more creative option did not come to mind until SEHumphrey made the following comment:
I’ve been thinking about the CBA a bit, and it to me that it has limited negative effect on the Yankees. In particular, the international signings seem like a place where they can really just destroy the other teams with limited consequences.
Honestly, this could in theory work. It’ll never happen, for reasons I’ll outline below, but it’s a theoretical strategy. Let’s review the CBA structure:
- For international free agents, teams will get an overall budget based upon last year’s standings. Teams may sign any number of players using that budget.
- If your team exceeds the budget, you face a luxury tax. If your team exceeds the threshold by a certain amount, they will be barred from signing any player for more than $250,000 in the next signing period.
These systems both seem breakable, especially if the Yankees are willing to pay the luxury tax, if the Yankees want to go all-in. What would that look like?
- Year One: Spend like crazy. The Yankees blow the crap out of their budget – they go out and buy every player for as much money as is necessary. They pay their luxury tax and buy as many players over their budget as possible. They outbid their competition at every step.
- Year Two: Suffer the restrictions. Internationally, they are barred from spending more than $250,000 on any player, so they stick to their budget while scooping up as many players are possible.
- Year Three: Rinse, repeat.
Basically, the team would go all-in every other year. The only thing really stopping this from being a no-brainer strategy, besides league politics, is the luxury tax. The Yankees would have to effectively pay double what other teams are willing to pay, within their own budgets, in order to acquire a player. They would be paying through their teeth for the privilege of acquiring far, far more players than their competition in a given year.
How much money would they have to commit to make this worthwhile? Not all that much, to be honest. Let’s say that pay a 100% tax on all money spent over $2 million, for ease of math. This means that if they spend $10 million, they get $6 million worth of players. That’s about how much you would have to spend to have more purchasing power than any other team out there. If you spend $16 million, you get $9 million worth of players. In either of these cases, you lose the opportunity to sign $250k or more players in the following year, but as far as I can tell your budget isn’t decreased. So you don’t really lose the ability to spend money, you are just limited in the types of players you can spend money on. That’s pretty weak teeth right there.
Now, I should make this clear: this will never be attempted. MLB politics would kill the deal. The Yankees are a force in the MLB, but they are one vote at the MLB-level among 30. MLB has the option of an international draft in their back pocket if teams try to game the system, and you can be sure that the draft (and any future CBA negotiations) won’t be kind to the Yankees after they try and break the system. As a New Jersey Devils fan, I think about the crap that the NHL did to the team after the Kovalchuck deal.
But honestly, in a politics-less world, I think this is a winning strategy when foresight suggests a very strong IFA class is incoming. Big time. At least, it will be the first time it is attempted. It’s only a worthwhile strategy if you are the only team attempting it.
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Really can’t imagine why Yanks should fear political consequences of such a strategy.
Selig will push for a draft in any case and it is clear he will do whatever he can to throttle Yanks. New CBA proves point but it’s been going on for years.
This agreement is so harsh in the way it penalizes Latino prospects, along with big market — and successful– tesms I would think it will eventually be challenged in court. First step could be injunction in Dominican and other Latin American courts against introducing such blatantly prejudicial terms limiting signing bonuses..
And the small market tems –despite what some have written — gain big-time in this deal through both more domestic and international draft picks and likely lower signing costs.
Yeah, I’ve been thinking that this could be tested in a foreign court. Guess who would have home field advantage in such a case?
Actually, there may be a reason not to employ this strategy: loss of first round draft picks.
Correct me if I’m wrong about this, but seems to me there were penalties that went as high as two first round picks on the amateur draft for overspending IFA cap. Even so, it may be worth overspending in some years, particularly given the Yanks’ chronically low draft status.
So, the way I read it is that the draft and IFA regime are decoupled. So overspending on IFAs wouldn’t affect our draft picks, just the next signing period.
Well, thanks EJ, that would be good news.
If there is no draft pick issue, sounds like a reasonable strategy to me. And it really doesn’t have to be done to great excess. Yanks don’t necessarily have to outspend the field. But as I understand it, if they just spend to their cap (after this year), they will be well below prior outlays and well below the bottom-feeding teams who’ll be granted far bigger budgets.
True, but since you lose the right to sign a 250k+ prospect in the following signing period, I think the strategy only makes sense if you blow through it – or at least spend double.
You are making the assumption that other teams would be against the Yankees doing this. There seems to be a significant amount of owners that just want to pocket money and the Yankees going over and essentially handing them even more moeny might just be fine with them. These rules all seem to revolve around getting the Yankees and a few other large market teams to give away their money.
The Yankees aren’t alone living and spending above the clouds of Mt. Payroll anymore. All the big market franchises have closed the gap in leaps and bounds, and are all within just one or two big signings of catching them. The truth has always been that all the big market teams COULD spend like the Yankees but chose not to; and recent trends all point to their coming around to the successful product-investment model in the Bronx. Heck, even the small-market teams are getting the message that blatantly pocketing all the profits pisses off their fan bases to the detriment of those profits.
With only a few notable exceptions I know of, there’s been no indication anywhere among the entrenched franchise owners that they view the “Yankees model” as anything negative; and as such would likely have nothing to say — if not outright support and emulate — such a strategy as EJ posits here. Lest anyone forget, this was the one issue that both the owners and the union were in total agreement on. Both sides view draft picks and prospects as a money-siphoning aspect of the modern game that hurts their respective self-interests. There’s no doubt the new arrangement was created to be gamed as owners see fit.
To go one step further — maybe it was intended that this strategy be used by teams like the Yankees and the Red Sox, and that it was a loophole thrown in as a sop to satisfy them.