Fielkow's Law: Lifting the Embargo

Since August, the Boston Red Sox have spent a whopping $135 million on two hitters who have not played a single inning in the major leagues. That's more than the total 2015 payroll of 21 MLB teams. For two players who have never set foot in a major league batter's box. Wow.

Red Sox general manager Ben Cherington made his first big splash last August by inking 27-year-old Rusney Castillo to a seven-year, $72.5 million contract. After defecting from Cuba in December 2013, Castillo established residency in Haiti over the winter and arrived in the United States in June 2014 on a tourist visa. Thereafter, he successfully obtained his work visa from the U.S. government and was immediately eligible to be signed by any major league team.¹

Surprisingly, Cherington managed to land an even bigger fish only a few months later. Nineteen-year-old Cuban sensation Yoan Moncada has been heralded as the "most exciting teenaged prospect to leave Cuba since Jorge Soler in 2011" and described as "the Next Cuban Baseball Star ... a player with exciting tools and dominance of the Cuban junior leagues on par with what Yasiel Puig did at the same age." According to Cherington, the second basemen is "one of the few most talented 19-year-olds in the world."

Castillo has quite a few years of experience on the much younger Moncada. Yet, it's not as if Castillo has been continuously honing his game in live-action settings. He was a notable omission from the Cuban national team that was sent to the World Baseball Classic in March 2013 and did not play in Serie Nacional –- Cuba's professional league -– at all that year, after being suspended for previously trying (and failing) to defect. The last time international scouts saw Castillo play in a game was 2012.

So why then is Castillo starting 2015 in Triple-A Pawtucket -- and likely to reach the big leagues later this year –- while Moncada was assigned to extended spring training, which will soon be followed by a stint at Low-A Greenville? Aside from development, a significant reason is MLB's rules surrounding international free-agent signings.

Under the current collective bargaining agreement, which took effect in 2012 and runs through 2016, Major League Baseball and the MLB players' association agreed to cap money clubs could give to amateurs. In addition to a slotting system applicable to the June amateur draft, a signing bonus pool cap was implemented for international amateur free agents. Because of this, there can be great differences between the amount of money an international free agent stands to make and his contractual status. The key: whether that player qualifies as an "amateur."

The CBA does not expressly define what makes a player an amateur. Rather, the rules set forth exemptions to amateurism:

1. A player who has previously signed a contract to play in MLB or the minors
2. A player who is at least 23 years old and has played as a professional in a league recognized by the MLB Commissioner's office
3. A player who is at least 23 years old and has played professional in a Cuban league for at least five seasons

If an international player meets one of the three exemptions to amateurism, he is considered to be a "professional," and can sign like any free agent. If a player does not meet any of the exceptions, however, he is considered an amateur.²

If it's not clear by now, for our purposes, the focus is on the third prong. Castillo clearly meets the third exception, as he was at least 23 years old at the time of his signing last August. As a professional under the CBA, Castillo was free to sign for almost any amount of bonus or salary, and the Red Sox snatched him up to a huge, major-league deal.

Meanwhile, Moncada does not fall under any of the exemptions, relegating him to amateur status under the CBA. Don't pity Moncada, however, as the Boston front office exploited a loophole in the enforcement mechanism of the signing bonus pool cap. Teams are typically limited to spending $2 million to $5 million on signing bonuses of international amateur free agents. But, it's a "soft" cap, meaning teams can exceed limited allotments if they pay a tax on the amount over the cap -- up to 100 percent of the pool overage. To sign Moncada, the Red Sox forked over an incredible $31.5 million signing bonus -- shattering the previous record signing bonus for an international amateur of $8.27 million paid to Arizona's Yoan Lopez earlier this offseason. In addition to paying Moncada, the Red Sox were taxed 100 percent by MLB for exceeding the cap -- another $31.5 million owed to the league -- meaning Moncada's signing cost the team $63 million.

But, here's the kicker. Under the most recent CBA, all amateur players, including international free agents like Moncada, must sign a standard minor league contract; no major league deals are allowed. In essence, this allows the Red Sox to "reserve" Moncada's services for up to four seasons in the minor leagues before even having to place him on the team's 40-man roster, at which point he could theoretically spend another three years on the farm before reaching the show.

Even once Moncada makes it to the big leagues, he is scheduled to follow the traditional earnings trajectory of a prospect who makes something close to the major league minimum for three years of service time, then enjoys raises through arbitration in his fourth through sixth seasons. The combination of minor league reserving and major league service time allows the Red Sox to potentially control Moncada's rights for more than a decade.

Although the Red Sox spent nearly equal amounts to secure the services of the two young Cubans, their respective timelines to the majors could not be more different. Whereas Castillo is a ticking time bomb in terms of Boston's need to promote him as soon as possible -- he's already occupying a spot on the 40-man roster and is being paid eight figures each of the next six seasons, after which he would become a free agent -- there's little pressure for the Red Sox to rush Moncada to the majors while he's under a minor-league deal. Moncada's signing bonus was an outrageously large number compared to that doled out to other international amateur free agents (especially once you consider the 100 percent tax), but it's still only a signing bonus. It's not his annual salary. Now that Boston has agreed to swallow that one-time, bitter pill, Moncada's salary will look like a bargain for years to come -- even if Moncada's time to shine will have to wait.

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^{1. President Obama's December announcement that the U.S. would normalize relations with Cuba has already resulted in the relaxation of rules for defectors to be allowed to sign with major league teams. Previously, defecting players, such as Castillo, were required to go through a lengthy process of getting a specific license from the Treasury Department's Office of Foreign Assets Control. Now, all players have to do is present a signed affidavit stating that they have established residency in a third country. Yoan Moncada is the first known beneficiary of the new rules, as he received the go-ahead to sign with whatever team he pleased this February -- a rule change, which had a significant impact on his landing spot.}

2. The Cubs managed to sign 20-year-old Jorge Soler to a nine-year, $30 million contract just days before the new CBA restrictions regarding amateurism took effect.