Luis Robert Cleared: What does that mean for the White Sox?

Luis Robert, widely considered the second best international prospect, was cleared by the MLB last Thursday, as reported by Ken Rosenthal.

Ever since Robert’s name has first come across baseball fans’ Twitter feeds, the White Sox have been one of the teams prominently featured as a potential landing spot for the 19-year-old Cuban outfielder. Baseball America’s Ben Badler, who is always leading the international coverage has reported, "The team that comes up the most in discussions of where Robert might land is the White Sox." There have been more recent reports that the Sox are setting the market on Robert, and yesterday, Scott Merkin (MLB.com beat writer) confirmed the team is seeing him in a private workout soon. He also reported that Kenny Williams will be involved in the workout, further adding to the apparent gravity of team interest.

Given that the White Sox rebuilding efforts are expected to start bearing fruit in the 2019 and 2020 seasons, Robert fits perfectly in the White Sox timeline. Putting that fact adjacent to the relative shortage of position prospects in the White Sox pitching-heavy farm system, the potential marriage seems like a perfect match. That being said, MLB’s international free agency is a very complicated process as is and Robert’s specific situation adds another layer of complexity. Let’s look into all of the moving parts.

Robert was “cleared.” What does it mean to be cleared and why is it so important?

It should be noted that while Robert has already been cleared, he cannot actually sign prior to May 20th - per Jesse Sanchez of MLB.com. Being cleared, for international players, is the process of the Commissioner’s Office verifying and collecting all necessary paperwork from a given player’s representation. That process cannot begin of course until governmental machinations are completed. Once all necessary documentation is collected, the MLB reviews it and in time, clears the player to be a free agent eligible for MLB teams to sign. Baseball America’s Badler gives you the gist of the process:

According to one MLB official, who declined to talk about specific players, each case is different, with numerous factors beyond when a player left Cuba or submitted his paperwork to the league that are relevant and can be determinants to when MLB closes out a case. Sometimes, a player (or the person filing the paperwork on his behalf) doesn’t submit the proper paperwork correctly. Other times, the information submitted on a player is of questionable veracity, which means it takes longer for MLB to look into that documentation. Then there are other legal obstacles that certain players have run into that need to be resolved, which can also slow down the process.

In lesser words, it's a lot of administrative and legal mumbo jumbo that international players have to jump through before being allowed to come play stateside. When players defect from Cuba, the immigration issues associated with the island further complicate the process. Plenty of players are subjected to losing out on a fraction of a payday due to the timing of when the MLB cleared them, but Robert's situation represented a much larger potential loss if the MLB wasn't able to clear him in this signing period. Not only that, but the suitors for the young outfielder would change drastically based on the timing. The new CBA takes effect in the international sphere on June 15th and the new agreement will utilize a hard cap for teams to spend which significantly limits players earning potential. Robert's clearance allows him the opportunity to make far more money in his initial contract, if he can sign prior to that June date.

Does Robert clearing before June 15th significantly hurt the White Sox chances?

Possibly, but not necessarily.

Given the previous CBA's rules, any team who has spent over their allotted pool, will be restricted from signing players for over $300,000 in the next two signing periods - effectively preventing top spending teams from vying for the top free agents in the two subsequent classes. Any dollar spent over your team's allotted pool is accompanied with a 100% tax. So the teams who have gone over have absolutely splurged to mitigate the future restrictions the CBA enforced. Given this stipulation, there are plenty of teams who will not be able to sign Robert on that alone, if they went over in one of the two previous periods. Teams who are going over in the current period are another story, to be covered shortly.

You would think considering Robert will be far more expensive given his clearance date, the White Sox have to have lesser chances of signing the outfielder. However, that's not necessarily true. Given the change in the CBA, Robert being assigned to the next class would have limited the White Sox, a team classified as a large market team, to a $4.75 million dollar pool. Where as smaller market teams would get pools of $5.25 million or $5.75 million. It should be noted that teams could increase their pool and spending limits by trading for up to 75% of the amount of their initial pool. So the White Sox absolute max offer to Robert would have been $8,312,500 where other teams could have put forth offers of over $10 million if they traded for the maximum amount of pool money. The next class would also welcome back the Yankees and Red Sox into competition for top targets. If money's the same, would you rather go play for the White Sox or the one of the two most storied and wealthy franchises in all of baseball?

So while the conception may have been Robert's clearance date harmed the White Sox, I would argue the contrary. If Robert was cleared in the next spending period, the White Sox would very likely be forced to cajole Robert to take less money or to go to a less desirable, less marketable situation - and likely both. I like Rick Hahn's negotiation history as much as anyone, but those factors wouldn't leave him much of a chance. At least in this period, the White Sox can put the biggest check in front of Robert (however likely that may be) and force the 19-year-old to buck what would be his representation's preferred destination.

And to be clear, the White Sox probably knew Robert was more than likely going to be cleared before June 15th barring an MLB investigation snafu.

Who are the biggest contenders for Robert?

Given past spending, there are ten teams that are effectively eliminated from signing Robert. The following teams will not be a factor in Luis Robert's free agency:

Teams that over spent their pool in the 2014-2015 period:

Diamondbacks, Angels, Rays, Red Sox and Yankees.

Teams that over spent their pool in the 2015-2016 period:

Dodgers, Cubs, Giants, Royals and Blue Jays*. (*only a one year restriction).

Perhaps the more important figures, are the spending numbers from this current period. As the teams who have already surpassed their pool in this current spending will not have an opportunity cost signing Robert compared to a team, like the White Sox, who would surpass the penalty threshold by signing Robert. Of the twenty teams in play, seven of them are incentivized by the fact that they have no opportunity cost associated with Robert.

Teams that already have over spent their pool in current period:

Cardinals, Padres, Reds, Athletics, Braves, Astros and Nationals.

And no surprise, some of the teams listed above are looked at as the top contenders for Robert, alongside the White Sox, are all teams that have already overspent their pool. Jesse Sanchez of MLB.com reports that the White Sox, Padres, Cardinals, Reds and Astros are the top five favorites to sign Robert.

The Cardinals may have an increased willingness to spend on young talent because of their forfeiting of draft picks due to the their hacking scandal as well as their unforeseen troubles with recent top prospects in Oscar Taveras and Alex Reyes.

The Padres have already spent close to $80 million dollars in this spending period so it is hard to imagine them bursting the into the $100 million+ threshold. That being said, they have cut their MLB payroll 40% year-over-year and have the fifth least amount of future obligations. You can't count out GM AJ Preller on any move especially those that fall in the international sphere.

The Astros have had a private workout with Robert already but they have two outfielders under lock for at least three more years and a disproportionate mix of outfielders filling up their top prospect list.

Just how much is this going to cost?

When asked this, I typically posit my guess by turning to players from the past who compare similarly to the player at hand. There aren't many for Robert. I should say, there is no shortage of manipulation and puff pieces in these types of situations. Even with these players hailing from a second world and largely removed country like Cuba, the media still finds it's way to influence. I am sure people remember more of the hype of the of "Cuban Bryce Harper" Lazaro Armenteros than they remember him actually signing for a $3 million dollar deal with the A's. While $3 million is no pittance for an international amateur, Michael Lewis will have to write a Moneyball 2 if Armenteros sniffs Harper's production for Oakland.

That being said, assuming the scouts are somewhat in line with all of the hype the touted five-tool player has received, I look to past precedent to put a number down. The top two signings are the White Sox own Yoan Moncada who signed for $31.5 million, and the Dodgers' pitching prospect Yadier Alvarez who signed for $16 million. I would guess somewhere between those two numbers. Both signings result in a 100% dollar-for-dollar penalty once a team spends over its pool. Again, in Robert's sweepstakes, it's important to remember that the Yankees, Dodgers, Red Sox, Giants and Cubs - five of the six top spenders in MLB - are effectively barred from the bidding.

I'll use Moncada as point of comparison given that Robert is the same age Moncada was when he signed and they both were/are considered five-tool prospects. However, Robert isn't as athletic nor is he scouted as polished a hitter as Moncada so that would theoretically knock him down a peg. Accounting for salary inflation in the past two years since Moncada has signed, you'd bump up the number a tad. Using this quasi-educated methodology to put forth some sort of expected price tag, I'd put the over/under at $22.5 million. So the total expenditure for Robert would be $45 million for most teams and  roughly $44 million for the White Sox given the first fraction of a million dollars or so that they spend would not be subject to the penalty as a team that has not overspent their pool.

But the White Sox never do anything big in the July 2nd spending period?

The White Sox have never been confused as a top spender in the International Amateur Free Agency periods. It's been written upon ad nauseam, including by me, that the club had been significantly affected in an adverse fashion when their principal scout in Latin America was incarcerated for his role in a bonus-skimming scandal. The White Sox had produced next-to-nothing following this scandal, for about four years. It wasn't until Marco Paddy was brought aboard that the White Sox became relevant again in Latin America. The goal was to build an infrastructure, a pipeline and a reputation that entices the handlers to want to deal with the White Sox. They have been better in procuring top talents there, but still haven't overspent their pool like many teams have and some teams even doing it twice within the last CBA.

So I asked Rick Hahn in January of 2015 if they have ever considered going over their pool internally. Hahn responded:

To forfeit two years of signings, for one guy, would really require someone special. That doesn't mean we wouldn't do it because occasionally someone special comes along.

Robert, the most highly touted prospect in Latin America, would be considered special by many. What's interesting about the White Sox and their behavior in the international sphere is some pundits and writers refer to them as irrelevant, and others, including MLB.com's Jesse Sanchez, refer to them as "one of the most aggressive teams on the international market." Well the White Sox have never blown their pool and before this most recent CBA, they were essentially irrelevant so where is the disconnect?

For starters, all of the White Sox issues in South and Central America had led them to consider giving up the operation as a whole according to one White Sox official. Obviously that didn't happen, but it gives you some insight on how they may feel about this method of talent procurement against teams like the Padres, Rangers and Cubs. 

But speaking towards the disconnect in the White Sox reputation internationally, I would guess the disconnect lies in the fact that the White Sox have always been one of the most bearish teams on 15, 16 & 17-year-old prospects. Players of those ages are typically the ones filling up the prospects for the July 2nd spending period and are also the hardest to evaluate and project. Robert, given that he is 19-years-old, is the exception to that generality. As was Moncada (Baseball America's #2 prospect), and Yadier Alvarez (Baseball America's #26 prospect) before him.

The difference is, the White Sox international reputation stems from being heavily involved in older, relatively speaking, international talents. The team had no problem giving then 26-year-old Jose Abreu a franchise record $68 million before he saw a single MLB pitch. They had no problem investing in Alexei Ramirez and Dayan Viciedo when they were 19 and 26 respectively. Nikkan Sports reported nearly all teams in the bidding for Masahiro Tanaka, which included the White Sox, offered 9-digit contracts with 6 year pacts on top of a $20 million posting fee. The White Sox bid over $25 million for Jorge Soler in 2012. The White Sox were reported to be the runner-up for the Dodgers' Yasiel Puig. The White Sox were reported to offer more than the $48 million dollar contract Kosuke Fukudome signed with the Cubs. The list goes on I am sure.

So while the White Sox have little history and willingness to give high school-aged Latin American teens in the midst of puberty seven digit contracts, they seem to always be a player in the international market once the players get to voting age. Their history indicates they prefer to wait until the player is older, is closer to the MLB if not MLB ready and in turn, carries less risk than their minority peers.

But the White Sox are cheap and Jerry Reinsdorf?

Fully aware of the narratives that have followed the White Sox, obviously money is a significant object here that needs to be addressed. In terms of investing in homegrown talent, the White Sox have changed their course. Obviously both systems are capped, but relatively speaking, the White Sox have increased their spending activity throughout the past CBA following Marco Paddy joining the club on the international front and both before and after Nick Hostetler becoming the the scouting director. However, this expenditure alone would cost the White Sox more than what the White Sox have spent in the draft and in the amateur international period combined in any year.

Where the White Sox spending has stagnated is the MLB roster. The White Sox payroll reached an all-time-high in 2011 when they spent $127.8 million. In 2017, the White Sox payroll is $97.8 million - roughly $30 million less than their all time high. During the six years between, salaries league-wide inflated to the extent of 40.2% increase. The White Sox, bucking the league's pervasive and TV-money-fueled trend, have decreased their payroll by 23.5%. Obviously these numbers in isolation only tell you so much, but the league is making much more money as a whole, the TV contracts are a game changer and still, the White Sox are spending less. Just this past offseason, the White Sox have had the second biggest decrease in payroll year-over-year.

Of course, the White Sox are a private company. I don't have access to their balance sheet or their income statement. Forbes does estimates for all thirty teams and they should be taken for what they are - estimates. But let's use them as a hypothetical benchmark.

This exercise of deductive reason is in no way definite, but all things considered, I don't know how you could make an argument that the White Sox don't have money. While I wouldn't advise to take Forbes' financials as gospel, they paint a pretty good picture of the financial security of the White Sox. While the Sox have very low fixed costs largely in part to a team-friendly stadium contract, they haven't really had an issue turning a profit as the figures below would signify. Factoring in the extra money from the eventual new TV deal following the 2019 season will bring to the club to the past performance on the club's projected operating statement and you'll see, the money has been coming in, and there's little reason to believe it will keep coming in.

White Sox P/L 2011-2016. Figures courtesy of Forbes

White Sox P/L 2011-2016. Figures courtesy of Forbes

So narratives be damned, if the money isn't there for the White Sox there must be something nefarious going on behind the scenes. And plenty of people who follow the White Sox would tell you just that based on the White Sox past history. While it's just my opinion, I expect the White Sox to be willing to take their savings on the MLB payroll and invest it in the future. Of course, this is not a fool proof way of looking of projecting an MLB team's spending. Although, White Sox officials have been on record numerous times saying any profit the team makes is put towards baseball operations. If the White Sox are as high on Robert as the international scouting community would indicate, here's the opportunity for the club to show it they use those profits for baseball operations.

When it comes down to it, the financial cost for Luis Robert could be a relatively significant burden, but it could also turn out to be an incredible value. The international market as a whole typically offers significant opportunity for surplus with all of the risk discounting price tags. Even with the White Sox as the team in focus, there's an argument that the opportunity cost of forgoing two years of high-value amateur prospects internationally is more significant than the expenditure itself. But given the lottery ticket nature of signing 16-year-olds, there is most definitely a rationale it's worth the risk. Even if the White Sox do sign Robert, we wouldn't have the answers to these questions for at least two or three years anyways.

What is evident is that the White Sox have the money, the fit is there and the timing, in the grand scheme of things, is entirely ripe. The immediately pertinent question and determining factor is whether the White Sox evaluate and value Luis Robert as much as the media reported and if they do, does their financial assessment of this young outfielder surpass the values assessed by the other suitors? Unfortunately, we won't know until May 20th.

Until then, stay up to date on all information surrounding Luis Robert, by following @FutureSox on Twitter and...

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**Special thanks to the FutureSox team members Matt Cassidy, Rob Young and James Fox for their help in putting this article together.

Filed under: News and notes

Tags: Luis Robert, Marco Paddy

Comments

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  • When they actually sign the guy, then I'll react, not a minute sooner!

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    In reply to HHH Is My Hero:

    Agreed. I do like what Brian Bilek said about the Sox preference for signing international players 18 years or older. I have been keeping track of all international signees and their performance in the minors and majors. It isn't good. Lots of money wasted.

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