July 2 International Signing Period Primer

Saturday is July 2, which marks the start of the 2016-2017 International Free Agent Signing Period. Most people in the industry are now simply referring to it as “J2” because “International Free Agent Signing Period” is a bit of a mouthful and because, as one Scouting Director put it, “that’s what all the kids are calling it now.”

Much has been written here at FanGraphs and in other spaces about J2, its rules and the ways teams try to circumvent them. If you’re unfamiliar with the process and its nooks and crannies — or if you just want a refresher before diving into this week’s content — here is a summary of the basic rules and regulations:

International players who are already 16 years old, or will be by Sept. 1 of 2016 (or the applicable year), are now eligible to sign with teams unless they’re old enough (23) and have the requisite experience (five years) in a foreign professional league to be declared an open-market free agent, the way Yoenis Cespedes was and Yulieski Gourriel will be.

A given J2 period runs from July 2 through June 15 of the following year, at which point there’s a two-week moratorium on any deals before the next signing period begins. Per the current Collective Bargaining Agreement, each team receives its own bonus pool, a cap on how much money the organization can spend on players during each signing period. Pool amounts are distributed much in the same way as they are for the domestic amateur draft in June and teams’ pools are based largely on their records from the previous season, with worse teams receiving more money to spend. Teams can acquire more bonus money — up to 50% of their original pool amount — via trade.

Here is a rundown of this year’s pool amounts.

If a team spends more than their pool amount, they are taxed at 100% of the overage and, if the overage exceeds 15% of their cap, are barred from signing a player to a bonus exceeding $300,000 during the next two signing periods. If a club goes over, but not by more than 15%, they must take a one-year hiatus.

Teams that are in that “penalty box” include:

2016-2017
Dodgers, Giants, Cubs, Royals, Diamondbacks, Angels, Rays, Yankees, Red Sox and Blue Jays

2017-2018
Dodgers, Giants, Cubs, Royals and any team that exceeds their pool this year.

The Astros, Nationals, Braves and Padres are expected to spend more than their pool amounts and are likely to join the latter group this year.

Teams outspend their pools because they think they can acquire more talent by breaking the rules in one year than they can by following them for three. Other clubs cast a wider, more financially conservative net and sign a larger number of players for smaller bonuses with the hopes of developing a big leaguer or two.

Teams have developed other creative and morally ambiguous ways to deal with J2 rules. My predecessor covered those quite well last year. Most of the industry thinks that an International Draft will be instituted, perhaps during the next CBA negotiations, as a way to deal with some of that activity. Industry sources with whom I’ve spoken have mixed feelings about a draft. Some think it will help simplify things and help eliminate some of the sleazier aspects of the current process; others dislike the way a draft will suppress bonus figures or appreciate the way the current rules reward good scouting and creativity. Some, finally, just have no idea how the hell the logistics of an International or Worldwide Draft would work. I fall into the latter two groups.

This week we’ll be publishing a sortable board similar to last year’s as well as scouting reports on the class’ top players.