The Gurriels: Another Problem for MLB’s International System

This morning, news came out that Yuliesky Gurriel, along with his younger brother Lourdes Gurriel Jr, have left Cuba and are in the process of setting up international residency that will allow them to become free agents eligible to sign with Major League teams. The older Gurriel is considered the best player in Cuba, and Baseball America’s Ben Badler has rated him as the top international player not currently in the Major Leagues.

While there have been a steady stream of Cuban defectors over the last year, the Gurriel brothers are perhaps the most interesting, not only because of their talent, but also because of the potential issues that their disparate ages might place on the negotiations.

A quick recap of the international rules, and why they could potentially present some interesting options for teams looking to really exploit the loopholes in the league’s international signing system. Cuban players over the age of 23, with at least five years of professional experience in Cuba, are exempt from the league’s international bonus pool rules, and can sign with any team for any amount with no penalties. Yuliesky Gurriel, as a 31 year old veteran, fits this criteria, and will be an unrestricted free agent, in the same way Hector Olivera was a year ago; Olivera got $63 million from the Dodgers last year.

Lourdes Gurriel Jr. is currently just 22, however, and if he signs before his 23rd birthday — October 19th, for the record — he’ll be considered part of a team’s international spending, with essentially a guarantee that a signing team would have to pay a dollar-for-dollar tax on his bonus, given the expected price tag for a quality young prospect. His signing is complicated even further by the fact that the teams eligible to sign him will change on July 2nd, as the Diamondbacks, Angels, Rays, Red Sox, and Yankees are currently restricted from signing young international players for more than $300,000, and after July 2nd, the list of restricted teams shifts, with the Cubs, Dodgers, Blue Jays, Giants, and Royals entering the penalty box.

Given the significant bonus differences between pool-eligible and pool-exempt players, it would seem to be a fairly easy call for the younger Gurriel to wait until the winter to sign, when every team could bid on him, rather than forcing himself to deal with a diminished market of bidders. Additionally, by removing the tax from his cost of signing, Lourdes Gurriel could almost certainly capture the full amount a team would want to spend to bring him into the organization, rather than going halfsies on his value with the league. Logically, it seems like the younger Gurriel should simply tell teams that he won’t sign until October 20th, and let them negotiate with him under the presumption that he’ll be exempt from the bonus pool structure.

However, because he’s defecting at the same time as his older brother, there is potentially another path here that could allow the younger Gurriel to sign before he turns 23; the Gurriels could package themselves together. As Badler has written previously, “package deals” for prospects have been going on for years.

Package deals have always been a part of the signing process in Latin America, where trainers and Mexican League teams often hold the decision-making power rather than the players and their families. Since a trainer might have a larger commission in one of his lesser prospects than he has in the main prospect a team is trying to sign, the trainer might ask the team to divert some of the money it earmarked for his top prospect to his lesser player, ensuring a greater profit for himself.

With the bonus pools, package deals play a greater role, which is what we said would happen from the beginning. If a team wants to sign a player on July 2 but needs to save money against its 2015-16 pool, it can sign a player from the same trainer during the current 2014-15 signing period with any money left in its current pool, essentially as an upfront payment. Or it can make it up on the back end by promising a signing during the following period.

Then there are the teams facing the signing restriction penalties for exceeding their pools that have the greatest incentive to do package deals. Since these teams can’t sign a player for more than $300,000, they can sweeten the pot by signing several players from the same trainer. A self-interested trainer could make more money by signing his main prospect and three other low-level players with one team for $300,000 each to get $1.2 million in bonuses rather than sign his main prospect for $800,000 with another team. It’s not always easy to detect when it’s happening, since there are often multiple trainers with a commission in a player, and the deals don’t necessarily have to be signed on the same day. A package deal can also be done by signing multiple members of a player’s family.

Essentially, it’s money laundering, except it’s not breaking any laws and it’s not violating any MLB rules. Teams have done these types of maneuvers before to massage their bonus pools before, with MLB already setting a precedent by allowing them.

It’s not too hard to imagine what a package deal for the Gurriels might look like. The older Gurriel can sign for whatever he wants, and because of the vast differences in evaluating older players from Cuba, pretty much any size signing bonus can be rationally defended. Just making numbers up — I have no idea what these guys are going to get — let’s say the market settled on $70 million for the older Gurriel and $20 million as a fair price for his younger brother, which would impute a $40 million total cost to the signing team if he signed before he turned 23. A team signing both would be on the hook for $110 million, but only $90 million of that would go to the Gurriels; that creates an incentive for some creative accounting.

If a team wanted to try to convince Lourdes Gurriel to sign before he turns 23, they could potentially structure the contracts so that Yuliesky Gurriel got an $85 million contract, with Lourdes Gurriel signing for a $10 million bonus with the same club; given what lesser Cuban prospects have gotten recently, $10 million would seemingly be Lourdes’ floor, so as not to make it too resoundingly obvious as to what was happening. In that scenario, the Gurriels gets $95 million between them, while the signing team only pays $105 million in total, as they’d pay a $10 million tax on the younger brother’s signing. The team would save $5 million on the two players, but the brothers would receive $5 million more than if they signed separately while Lourdes was restricted by the bonus pool system.

Of course, there are all kinds of reasons why something like this probably won’t happen. For one, it seems likely that Lourdes’ contract multiplier is much higher by waiting until he reaches free agency, and can compare himself to guys like Yasmany Tomas and Rusney Castillo, arguing for something north of $50 million himself. It’s also not clear that there’s a team out there with a need for both players, since they both profile as near MLB ready infielders; the Dodgers are the obvious candidate to outspend everyone, but it’s not obvious what they’d do with two more guys who reportedly profile best at third base. It’s probably more likely that a win-now team is more interested in the older Gurriel, while a rebuilding team would be motivated to spend more to land the younger brother, so that their best choice is to sign with separate franchises.

But it’s at least an interesting thought experiment that I’d imagine some front offices will work through over the next few months. Because the overage tax on the signing bonuses for pool-restricted players have to be paid up front, only a few deep-pocketed teams could realistically make it happen, but for a team like the Phillies, it might be just the kind of opportunity they were looking for. Sure, Yuliesky Gurriel might not still be a productive player by the time their rebuild is complete, but they could potentially sign him, let him show what he can do at the big league level, then trade him for more prospects once he was an established big leaguer, using his signing as a way to buy more young talent while also reducing the size of the tax they’d have to pay to sign his younger brother.

And given that the next CBA is almost certainly going to tear up the current international signing system, this may be something like the last chance teams have to make a move like this. If the league is going to push heavily for an international draft in CBA negotiations, perhaps teams with money to spend and a desire to add talent will exploit the flaws of the current system one last time before the league overhauls a broken system once and for all.