Aledmys Diaz is that rare bird who does not fit neatly into the ballplayer categories we typically use to evaluate personnel moves. The Cuban at once fits into no such categories and nearly all of them. Diaz is a professional-international-free-agent-prospect. This makes it hard to judge the St. Louis Cardinals’ four-year, $8-million contract with the shortstop. Identifying the various rules and realities of the MLB structure that have created the categories by which we judge personnel moves – from draftee to minor-leaguer to MLB free agent – will help give us an idea of what to think about the Cards’ latest signing and newest prospect.
MLB-MLBPA Collective Bargaining Agreement
Baseball is perhaps the only true monopoly in America. MLB has an antitrust exemption, which means that the rules set forth in the collective bargaining agreement (CBA) between MLB and the MLBPA govern player salaries for nearly all of America's baseball industry.
MLB owners want to keep wages low. The MLBPA wants to increase wages. These goals are in opposition most of the time, but they also result in things the two parties can agree on. MLB doesn't want to give out a lot of money to amateurs and the MLBPA is interested in higher wages only for its members. As a result, the CBA tamps down wages for prospects (i.e., those players not represented by the MLBPA).
In theory, a young factory worker who is getting paid less than more senior workers at a plant can take his talents down the road to a company in the next town, county, or state and find higher starting wages for his labor. In contrast, baseball prospects do not have the freedom enjoyed by workers in other industries (which are subject our nation’s antitrust laws). Ballplayers must work in a labor market entirely controlled by MLB. Each and every MLB club pays its prospects within the same system – a system designed to limit spending on prospect wages. There is no baseball franchise in the next town, county, or state that offers anywhere close to the potential payday MLB does. Baseball’s monopoly status ensures that players play for cheap under the CBA as they strive to achieve six years of MLB service time and the free-agent payday that may set them up financially for life.
MLB Amateur Draft
MLB begins limiting prospect wages with its Rule 4 draft, which is held every June. Residents of the U.S., U.S. territories (e.g., Puerto Rico), or Canada are eligible for the MLB amateur draft so long as they have never before signed a major league or minor league contract. Individuals who have enrolled in high school or college in the U.S. are considered U.S. residents for purposes of the Rule 4 draft. Such players must fit into one of the following categories:
- High school graduate who has not yet attended college or junior college
- Four-year college player who has either (1) completed his junior year, (2) completed his senior year, or (3) turned 21 years old
- Junior college players regardless of how many years of school they have completed
Amateur players selected in the Rule 4 draft have until August 15 of the year in which they were selected to sign with the team that drafted them. If a player elects not to sign with the club that drafted them, he can enroll in or return to college. If a player fails to sign by August 15, he is eligible to be drafted in the next amateur draft. Most players sign with the club that drafted them, agreeing to a bonus within the strict draftee pay structure.
MLB is correct when it states on its website that players drafted in the first round are usually guaranteed "instant millionaire status" thanks to the signing bonus. And to be sure, the $6.35 million bonus the Astros agreed to pay 2013 No. 1 overall pick Mark Appel is nothing to sneeze at. It’s more money than many of us will earn in our lifetimes. Even the $2.21 million bonus that Alex Gonzalez, the 30th overall pick in last June’s Rule 4 draft, got from the Rangers is a healthy sum in the real world. But such contracts are the exception for draftees. The CBA creates a definite bonus pool for signing players selected in the first ten rounds. Bonuses after the tenth round are not covered by a team's bonus pool so long as they are for less than $100,000. If a club goes over its allotted pool total, it faces penalties. The majority of those drafted in the Rule 4 draft do not attain instant millionaire status.
The current CBA also prohibits MLB clubs from agreeing to a major-league contract with a player selected in the Rule 4 amateur draft. Players like Bryce Harper had signed such deals in the past. The CBA's proscription on such contracts means freshly drafted prospects aren't allowed to take up a roster spot that might otherwise go to a more veteran player. An amateur ballplayer selected in the Rule 4 draft must sign for a strictly regimented bonus, play in the minors, be promoted to the big-league roster, and then log six years of MLB service time before he can become a free agent able to sign with the club of his choosing.
The CBA creates clearcut salary tiers. Minor-leaguers are at the bottom. MLB free agents are at the top.
International Amateur Free Agency
While the CBA between MLB and the MLBPA firmly limits the type of contracts amateur draftees can negotiate with the clubs that select them, its provisions regarding international amateur free agents are even more restricting. Beginning last year, MLB clubs were awarded an international amateur free agent spending pool based on winning percentage. The more a team loses at the big-league level, the more money it is able to spend on international amateur free agents. But even the losingest MLB clubs have a paltry sum to disburse among the amateur international free agents they want to sign. Last year, the lowly Astros were authorized to spend just under $5 million total on international amateur free agents. To put it another way, the largest international amateur free agent signing bonus pool in 2013 was almost $2 million less than the single bonus paid to the player selected No. 1 overall in the amateur draft by the same club.
After an amateur signs, receives his bonus, and becomes a pro, MLB clubs pay him meager wages during his time in the minor leagues. Minor-league players are not members of the Major League Baseball Players Association, so the CBA that governs labor relations between MLB and the MLBPA does not guarantee minor-leaguers the MLB league-minimum salary or arbitration process (let alone free agency). These provisions apply only to major-leaguers – or, those ballplayers who have graduated from prospect status.
The lack of a minor-league players union (and the CBA such a player organization might negotiate) has left MLB to implement a wage system that limits the amount of money clubs spend on prospects. This means minor-leaguers aren't paid much. So low are minor-league wages, in fact, that a group of players have filed suit alleging MLB clubs have violated the Fair Labor Standards Act by paying minor-leaguers less than the federal minimum wage of $7.25 per hour. Our SBN sister site Minor League Ball published an interesting piece on the substance of the lawsuit’s allegations. It appears that minor-league ballplayers might very well be paid less than many fast-food workers when their wages are calculated on an hourly basis.
MLB Free Agency
Free agents are established big-leaguers with at least six years of major-league service time under their belts. The CBA negotiated between MLB and the MLBPA has guaranteed these players the right to sign a contract with the highest bidder. Typically, MLB free agents are ready to contribute in the majors in the first game after they sign. And clubs pay them a handsome salary to do just that.
Aledmys Diaz, Professional-International-Free-Agent-Prospect
Cuban defectors don’t fit easily into the above categories. They've played professionally in the Cuban National Series, which means that, as long as they’ve reached the age of 23 and have played at least three seasons professionally abroad, they’re free to sign with whichever club will pay them the most. They’ve jumped from a Communist island into an American market. So Cuban players like Diaz are in a situation somewhat similar to MLB free agents. A four-year, $8-million contract for an MLB free agent isn't very impressive. For example, the average annual value of Diaz's deal is less than the average annual value of the contract the Cards signed Ty Wigginton to one year ago (but it is also for a term twice as long). The problem with such an analogy is that MLB free agents have at least six years of big-league service time under their belts when they sign a free-agent contract. Diaz has no such experience. This makes MLB free agency an unsatisfying prism through which to view the Diaz deal.
While players like Diaz are former professionals from the Cuban league free to sign with the club of their choosing, many are not major-league ready at the time they sign. They need development in the minors before they will be ready to join a major-league club. This makes them similar to amateur draftees. An $8 million signing bonus for a Rule 4 draftee would make Diaz one of the top talents in the Rule 4 draft. But such a comparison isn't particularly apt either. After all, Diaz inked a major-league deal, which is something no amateur draftee is capable of doing.
Further complicating matters is the Cuban National Series itself. Once thought of as a league the equivalent of Triple-A, many observers note that the Cuban National Series’ talent has dropped off in recent years – so much so that today it is analogized to A-ball. Former player agent and current MLB consultant Joe Kehoskie made this very assessment in the excellent Q&A Joe did with him on Diaz earlier this offseason. Kehoski believes that the Cuban National Series "is no better than a High-A league."
Assessing the Diaz-Cardinals contract requires us to use our imaginations a bit. Somewhere in the multi-verse there is a world in which minor-leaguers are free agents. In this dimension, there is a 23-year-old shortstop with questions about his ability to stick defensively at the position long-term. This player hit .307/401/.440 over 621 plate appearances in High-A. He's a free agent, not yet ready for the majors. For a twist, this infielder has also not played organized baseball for over a year. What is he worth?
It's a difficult question to answer. Now consider some of the other information we've gleaned about Diaz in recent months:
- In mid-February, speculation put Diaz's potential price tag at between $20 and $30 million.
- Per Derrick Goold of the St. Louis Post-Dispatch, the Cardinals were willing bid between $15 and $20 million for Diaz before the Cuban's services would be too rich for their taste.
- The Twins pulled out of the bidding because Diaz was asking for a 5-year, $25-million deal.
- The Yankees decided not to make Diaz a contract offer for some reason.
- Also according to Goold, the Cardinals "had several members of the front office scout Cuban free agents such as . . . Diaz," including at the World Port Tournament in the Netherlands, the last organized ball Diaz played (he defected while the Cuban national team was in Europe).
The Cardinals ultimately signed Diaz for a contract spanning 4 years and worth $8 million. Under the circumstances, that seems like a fair price to pay for a professional-international-free-agent-prospect who is 23 years old and may grow into an everyday MLB shortstop, but who also might ultimately be unable to handle the position defensively.