Clogging The American Pastime’s Anti-American Loophole

I. Introduction

Even the worst teams have their day in the sun. Every

June during a league wide conference call Major League

Baseball teams (MLB) participate in a league wide draft with

the hope of securing the next great player.1 The draft order

is determined by the reverse order of the previous year’s

standings; the team with the fewest wins gets the first bite

of the apple and the team with the most wins gets the last.2

Unlike other major sport’s, a player does not have to

declare their eligibility for the draft in order to be

drafted.3 Anyone can be selected provided that they meet the

eligibility criteria, which requires each drafted player be

(1) a high school graduate who has not yet attended college,

a junior college player or a college player at least 21

years of age who has completed their junior year of college

(2) who has never signed a major or minor League contract,

and (3) is a resident of the United States, the U.S. territories or Canada.4

Once drafted, a player may only enter into a contract with

the team that drafted them.5 If the team and player do not

1

come to an agreement by 11:59 PM on August 15th

(approximately two months after the draft) then the player

cannot sign a major or minor league contract that season,

and may be drafted again the following year.6

Since a drafted player is only permitted to sign with

the team that drafted them and loses a year of their career

if they do not sign with the team, they have significantly

less bargaining power than do amateur free agents who may

sign with any team. Unlike American players, foreign players

are not subject to the draft because they fail to satisfy

the residency requirement. While a foreign player who

enrolls in a United States school or establishes a legal

residence in the United States is considered a U.S. resident

under baseball’s bylaws,7 as long as the player continues

residing in a country that is not the U.S., a U.S. territory

or Canada, they cannot be drafted.8 Unlike a drafted

American player, a foreign player can bargain with all

thirty teams, and increase their compensation by having

teams compete for their services.

Foreign Player Draft Eligibility in Other Major U.S. Sports

2

MLB is alone among major American team sports in making

international players ineligible for the draft. The National

Basketball Association (NBA) only requires that

international draftees turn nineteen at sometime during the

calendar year in which the draft is held.9 NBA teams have

regularly drafted international talent for two decades.10

The National Football League (NFL) also does not limit draft

eligibility to American players. As long as a foreign player

does not enroll in a U.S. college and subject himself to the

NFL’s eligibility rules that pertain to all collegiate

athletes, they may declare for the draft after four NFL

seasons have passed since their high school graduation or

the graduation of the class with which they entered high

school, whichever is earlier.11 Lastly, the National Hockey

League (NHL) draft does not distinguish players based on

residency,12 and it is common knowledge that many of the

sport’s best players have entered the league directly from

Eastern Europe. Cumulatively, America’s other major sports

lead to an inquiry as to why baseball distinguishes based on

residency. The answer to this seemingly arbitrary

3

distinction comes from the unique economics of each amateur

talent market, and the impact that a worldwide draft would

have on the future of baseball.

II. The MLB First Year Player Draft: A Competitive Balance

Necessity

MLB’s first-year player draft was implemented in 1965,

and originally only American citizens were declared draft

eligible. The residency requirement did not exist until much

later for reasons discussed later in this paper. The first-

year player draft, also known as the Rule 4 amateur draft,

was created to promote competitive balance, and limit “out

of control amateur signing bonuses” by only allowing first-

year players to negotiate with the team that selects them.13

This owner-advantageous draft is distinct from the sport’s

player-advantageous Rule 5 draft, which allows any player

who is not on their team’s 40-man major league roster after

playing in the minor leagues for four years (five, if

drafted before age 19) to be drafted by another team who

will place that player on their active 25-man major league

roster.14 While teams sometimes find diamonds in the rough

4

in the Rule 5 draft,15 its purpose is to allow players who

would have an opportunity to play in the majors for another

team the opportunity to do so. Conversely, the purpose of

the Rule 4 draft is to allow teams to acquire first-year

players at a cost much lower than their value on the open

market.16 Teams who have successfully built their rosters

through the draft do not only draft great players, but also

sign the players to long-term contract extensions before

they hit their max value.17 Although the recent success of

small market teams like the Tampa Bay Rays utilizing this

model is well documented, most teams with consistent success

have predominately developed their own amateur talent. Even

the New York Yankees consistently struggled until free-

spending owner George Steinbrenner was suspended, and team

management was able to implement a cohesive farm system to

develop the talent upon which the team’s dynasty of the late

nineties was predicated.18

Although many believe that MLB’s first-year player

draft is more of a crapshoot than other sports’ drafts,

analyzing of the past few decades of the MLB draft indicates

5

that baseball scouting has evolved to a point where the odds

of a team drafting a good player are comparable to the other

major sports. From 1990-2010 over half of players picked

first overall played in at least one all star game, and

52/200 of the top ten picks made at least one all star

team.19 This is a substantial percentage considering that

over 1,500 players are drafted in total each year, and an

appreciable percentage of early pick busts can be linked to

drug addiction rather than lack of ability.20 By comparison,

14/20 of basketball players chosen first overall in the NBA

draft and 71/200 players drafted in the top ten during the

1990s and 2000s have made at least one all star game.21

Additionally, a majority of MLB first round picks “hit”

(i.e. produce a starter caliber season in the majors).22

Although the fact that over 40% of first round draft picks

can be said to fail, this figure is relatively equivalent to

the first round of the NFL draft.23 Lastly, an analysis of

the game’s truly elite players (those who win an MVP or Cy

Young award) reveal that with the exception of Latin

American players who cannot be drafted, the odds of finding

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elite level talent outside of the early rounds approach

lottery ticket type odds. Ten of the last twelve cy-young

awards (awarded to the most outstanding pitcher in each

league) have gone to former first round draft picks.24 Of

the two that did not, one went to a former fourth round

draft pick, which is still relatively early in a fifty-round

draft. The other went to Felix Hernandez, who as a

Venezuelan national was ineligible for the draft when he

signed with the Seattle Mariners as an amateur free agent.

With regards to the MVP awarded to each league’s most

valuable player, eight of the last ten have gone to eight

different players who were selected in the amateur draft’s

first two rounds, including four different players drafted

in the first five overall.25 The remaining two MVP awards

have gone to back-to-back MVP Miguel Cabrera who, like

Hernandez, was a Venezuelan national who ineligible for the

draft when he signed as an amateur free agent.

There are several reasons why teams have become more

successful in the MLB draft. Teams have learned that a great

front office and scouting department is often the most

7

valuable than any one player, and have become more willing

to invest in elite talent evaluators. Additionally, unlike

in generations past when high-school and college players

lacked opportunities to play against professional caliber

competition before entering the minor leagues, “today’s

premier players enjoy a seemingly endless array of

tournaments, all-star games, showcases, USA baseball youth

teams and scout teams sponsored by major league clubs.”26

This not only cuts down on the long developmental process in

the minor leagues for draftees, but also gives scouts a more

accurate perception of a player’s ability than watching a

player in a significantly less stressful situation such as

batting practice.27 Although the draft remains a substantial

risk, it is also a team’s best opportunity to garner elite

production from an American player at below a million

dollars per season. While many would debate the notion that

giving a team the first draft pick in each round gives them

even a puncher’s chance at competing with a team with a

payroll 1,000% larger, in the absence of a draft it is

conceivable the teams with the largest payrolls would also

8

purchase all of the elite young talent. Consequently, the

draft is necessary to have even an appearance of competitive

balance.

The Current Rookie Wage Scale: A Competitive Balance Necessity

Although the American legal system generally supports

freedom of contract and baseball front offices are

presumably experts on player contracts, the experience among

the major sports have shown that league limits on draft pick

spending are necessary for competitive balance. Like

baseball, the NFL draft order is determined by the prior

season’s win-loss record with the team with the worst record

picking first.28 By the mid-2000s the draft had reached a

point where unproven rookies were as much or more money than

the elite veteran players at their respective positions.29

Although unlike MLB teams, NFL teams have the option of

releasing a player from his contract, highly touted rookies

were also receiving the most guaranteed money (the money a

team must pay a player even if they trade or release the

player). While the draft is generally a team’s best

opportunity to land a great player in the NFL, even a first

9

overall pick is more likely to never make the NFL’s version

of the all star game than they are to make it. As sports

agents use the contracts of prior rookies as a starting

point in negotiations, teams were faced with the dilemma of

either continuing to sign imprudent contracts or forfeiting

the pick and alienating their fan bases. Consequently, prior

to the most recent collective bargaining agreement limiting

rookie salaries, teams would frequently be made less

competitive by picking at the top of a draft intended to

make them more competitive.

While rookie contracts is baseball never became nearly

as egregious, signing bonuses increased so substantially

during the nineties that players would often be selected

based more on their anticipated financial demands than their

talent.30 Subsequently, wealthier teams not only had

significantly better ability to acquire other teams’ elite

players in free agency and prevent their elite players from

being acquired in free agency, but also had better ability

to draft elite talent. Thus, the most recent collective

bargaining agreement allocating a draft pick salary cap, and

10

imposing heavy financial fines and draft pick forfeitures on

teams exceeding the salary cap was necessary.31 The new rule

has led to a 15% decrease in rookie signing bonuses.32 Thus,

as long as no team is willing to forfeit future first round

draft choices to sign a given draft selection, teams now

control not only the exclusive right to enter into a

contract with a draftee, but also a de facto cap on how much

money the draftee can reasonably demand.

III. The Caribbean Bargain Bin

While American players face significant impediments to

their freedom to contract, foreign players are free to sign

with any team for as much money as they are able to bargain

for. Although there is no formal explanation as to why draft

eligibility was limited to American players when MLB

instituted the draft in 1965, some might hypothesize that

MLB did not foresee overseas players having a major impact

on the sport fifty years ago. In early NFL drafts, for

instance, only the nation’s top college players were even

mentioned as possible draft selections.33 However, it seems

more plausible that MLB foresaw the possibility of an

11

increasing number of foreign players entering the league,

particularly from Latin America, but had no reason to be

concerned about their compensation. After all, MLB had seen

elite talent enter the sport from abroad dating back to

James McCormick’s pitching dominance in the 1880s,34 and

Latin America had organized baseball leagues dating back to

the nineteenth century.35

So why would the American pastime only subject American

players to the diminished bargaining power that comes with a

draft? Money. While owners were complaining about the

increasing cost of acquiring American players during the

years leading up to the advent of the MLB draft, Latin

prospects were happy to sign for a fraction of the price.36

MLB likely realized that while having a single worldwide

draft would lower the cost of acquiring American talent, it

would have raised the cost of acquiring Latin talent.

Although an American player likely possesses more value than

an equivalently skilled Latin player because they were more

marketable to an American fan base, it is difficult to argue

that nationality alone made an American player worth five or

12

ten times the amount of a Latin player. Limiting eligibility

for the first-year player draft to American talent allowed

the commissioner to give the owners the best of both worlds.

U.S. businesses have exercised a tremendous amount of

control over the mostly impoverished Latin American

economies dating back to the early twentieth century, and

MLB teams have long utilized the impoverished boy’s dream of

getting rich in the majors to their advantage.37 Scouting

personnel had little difficulty attracting young Latin

players, particularly in the Dominican Republic with non-

binding agreements allowing their teams teams to “sign

thousands of contracts on a purely tentative basis,” flip

through them like a pack of baseball cards and keep the

valuable ones.38 Although 10% of MLB rosters comprised of

Dominican players (second only to the US),39 only 2% of

Dominican players signed by MLB teams ever made it to the

majors.40 Even if a player managed to be discovered by

multiple teams, the 98% failure rate discouraged teams from

heavily investing in any one player. While scouts had

seemingly endless array of data on American prospects

13

ranging from competitive amateur leagues to extensive

medical records, they often had to rely on bone structure

and old family photo albums in order to guess how large a

malnourished Dominican teenager could grow if properly cared

for.41

The Caribbean bargain bin and early rounds of the

amateur draft represent two distinct investment strategies.

The first round of a draft represented high priced stocks

significantly more likely to pay dividends, but

significantly more damaging if they flamed out. Conversely,

the Latin market represented penny stocks with each

individual player carrying a high risk of failure, but

relatively little cost. In the words of one former MLB team

executive, “instead of signing four American guys at $25,000

each, you sign 20 Dominicans at $5,000 each.”42 In 2000, for

instance, the Cleveland Indians signed forty Latin players

for barely half of what they paid their first round draft

selection. Although only one of the forty panned out, the

investment was a resounding success.43

To Draft or Not To Draft?

14

As Dominican-born players became a significant minority

of teams’ farm systems in the early 1980s, MLB instituted a

distinct first-year player draft specifically for Dominican

players.44 A separate draft consisting only of Dominican

players not promotes competitive balance in the Caribbean

market, but does so without having teams draft Dominican

players alongside Americans and thereby justify Dominican

prospects demanding equivalent salaries. However, the

Dominican draft was an anarchic disaster. While teams were

already accustomed to issues like false falsification when

signing Dominican players, a lack of league coordination

during the draft led to multiple teams drafting the same

players.45 Former Texas Rangers and New York Mets general

manager, Omar Minaya recounts being told by an MLB official

that the issue would be resolved by the old Pierson v. Post rule

that mere pursuit does not equate to possession – i.e.

whichever team gets to the player first gets the player.46

After rushing to Santa Domingo to notify the prized

shortstop (who would ultimately never make it beyond Class A

in the minor leagues) that he was now a Ranger, Minaya fell

15

into a collapsing manhole and permanently scarred his leg.47

MLB abandoned the endeavor shortly thereafter.

If the purpose of a draft is to promote competitive

balance and keep down the costs of talent acquisition then

MLB was likely better served by not subjecting Dominican

players to the draft. As any prospect could be had for only

a few thousand dollars, the system favored the team with the

best (or luckiest) scouting department rather than the team

with the most money. While there is likely a correlation

between wealth and scouting, teams never had to fear not

being able to sign a player like they did when acquiring

talent through the Rule 4 draft. While wealthy teams like

the Yankees and Toronto Blue Jays struggled to find major

league talent in the Caribbean, perpetually cash strapped

teams like the Montreal Expos and Oakland Athletics acquired

future MVP winners for the price of a home computer.48

Although small market teams never had a realistic chance of

keeping the players they hit big on once they hit free

agency, they enjoyed many of their best years at bargain

rates in baseball terms, and received additional first-round

16

draft picks once these players left under MLB’s compensatory

rules. The small market teams had a forum to acquire talent

where all teams were on relatively equal footing, and the

sport overall benefited from having a deeper pool of talent.

While none of this justifies the systematic exploitation of

impoverished children in third world countries for profit,

from a purely competitive balance standpoint, baseball was

better served by leaving the Caribbean unregulated.

However, the argument that the Caribbean market helps

equalize relies on the necessary condition of all teams

being able to afford all players. If the international and

American talent markets parallel one another then the

wealthier teams have an even larger advantage than they did

previously. While an American player may insist that he will

only play for the Yankees, if drafted by another team he

must either sign with the other team or sit out the season.

Even after sitting out the season he may be drafted by yet

another non-Yankee ball club, and find himself in the same

dilemma one year later. International players cannot be

drafted, and thus can simply go to the highest bidder.

17

III. The Market Problem Posed by Caribbean Citizens Living

in the United States

This was the fear in 1985 when Puerto-Rican citizen and

Connecticut high school student Juan Nieve signed a $150,000

contract.49 The Juan Nieve bidding war made it evident that

the market valued Latin players differently when they lived

in the United States. If the best Caribbean players began

establishing U.S. residency while remaining citizens of

their countries of origins then small market equality in the

Latin American market would be threatened. MLB quickly

responded, and changed the citizenship requirement for draft

eligibility to a residency requirement that made any player

attending a U.S. school eligible.50 The residency clause was

later broadened on numerous occasions as additional issues

arose. By 1991, Canadian citizens, citizens of U.S.

territories such as Puerto Rico and Cuban players who

defected to the U.S. were all draft eligible.51

IV. The Loophole and its Profound Impact on Baseball

Economics and Competition

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MLB was well aware that Cuban talent would be highly

valued long before the advent of the residency clause. The

other Caribbean markets were empty canvases; an independent

contractor with connected to an MLB team discovered a

talented teenager, trained him until he turned seventeen and

received a commission if the team signed the player for a

few grand.52 Conversely, Cuban players were seasoned and

polished products who MLB scouts had seen routinely outplay

the very American prospects they were drafting.53 With the

exception of 1982 when Cuba did not participate, the Cuban

national team was in the middle of a thirty-year Baseball

World Cup winning streak (the highest level of international

competition at the time)54 when Rene Arocho snuck away from

his Cuban national team at the Miami International Airport

in 1991.55 While setting up a lottery for teams interested

in acquiring the prized right hander was sensible,56 as

Cuban ballplayers continued defecting, subjecting them to

the draft seemed more logical than drawing straws each time

a player defected. Since Cuban players were not the penny

stocks Dominicans were, a degree of regulation was

19

necessary. However, the physical text of the residency

requirement only applies to Cuban players who defect to the

United States, a United States territory or Canada. Although

a plain meaning interpretation of the text would seemingly

violate its purpose, one need not be Scalia to point out

that the rule is awfully specific in what it covers. Ergo,

the major loophole. As long as a Cuban player defects to a

country that is not the U.S., a U.S. territory or Canada

then he avoids the draft. Sports agent Joe Cubas quickly

exploited the loophole for a client,57 a loophole that Cuban

defectors have continued to use to their advantage for two

decades.

Perhaps the best illustration of the loophole’s impact

on the game today comes from the respective contracts signed

by Stephen Strasburg and Aroldis Chapman, two pitching

prospects who scouts universally fawned over during the 2009

season.58 Strasburg was a native Californian playing for San

Diego State, Chapman was a star on the Cuban National Team.

Although both pitchers were in their early twenties and

threw pitches clocked in the triple digits with remarkable

20

precision, Strasburg was considered “the best pitching

prospect of at least the past twenty years.”59 While

Baseball America ranked Chapman as the twenty-second best

prospect in all of baseball (not only the 2009 class),

Strasburg was number two.60 Strasburg was the archetype that

agents sought to have their clients compared to. For

instance, Chapman was hailed as a “left-handed Strasburg.”61

According to ESPN, Strasburg was going to be the number one

pick of the 2009 amateur draft “barring the mother of all

brain cramps in Washington.”62 Sure enough, no such brain

cramp ensued in the nation’s capital (at least with regards

to its baseball team). Although Strasburg demanded $52

million and would have received far more in a free market,

he ultimately conceded his limited bargaining power and

signed for a record $15.1 million seconds before the August

15th deadline.63 As Strasburg was negotiating with

Washington, Chapman was establishing residency in Andorra.

Four months later, the Cuban defector signed with the

Cincinnati Reds for $30.25 million.64

21

The following year’s draft had another universally

lauded American prospect, Bryce Harper. Sports Illustrated’s

Tom Verducci dubbed the outfielder as “baseball’s LeBron

James.”65 Although there was talk among baseball executives

that Harper was considering establishing residency outside

the United States so that he could bear the fruits of free

agency, his mother stated that the Harper had no intention

of taking Bryce outside the country.66 An American player

leaving America in order to play the American pastime in

America would certainly put MLB in an uncomfortable

position. Ultimately, Harper enrolled in junior college,

drafted first overall by the Nationals in the 2010 draft and

signed to a five-year $9.9 million contract.67 Less then two

years later, Yoenis Cespedes signed a four-year $36 million

contract with the Oakland Athletics after defecting from

Cuba to the Dominican Republic. Four months later, Yasiel

Puig signed a seven-year $42 million contract with the Los

Angeles Dodgers after defecting from Cuba to Mexico.68

Strasburg, Chapman, Harper and Cespedes have all played in

an all-star game. Puig might well be the best player of the

22

five, and likely would have made last year’s all-star game

had he been called up from the minor leagues earlier.69

In addition to the salary discrepancies between top

American and Cuban players, today’s Cuban market has a

profound impact on the sport’s competitive balance. Chapman,

Cespedes and Puig all quickly appeared on MVP ballots, and

were instrumental in their teams winning division titles. As

today’s Cuban players defect in their early twenties, there

is a strong argument they carry less risk than an MLB free

agent who is often ten-years older. There is a reason why

Billy Beane, who developed ubiquitous fame for winning with

low payrolls was willing to give a Cuban rookie a contract

250% larger than that of any other player on his roster.70

Beane likely realized that unless a Dominican lottery ticket

came to fruition, Cespedes was his best opportunity to add a

middle-of-the-order hitter. Even when Beane’s A’s struggled,

they were never quite lousy enough to have the opportunity

to draft a player like Harper, and the team lacks the budget

to compete for top veteran free agents. Cespedes immediately

became the best player on an A’s squad that has won

23

consecutive AL West titles.71 Meanwhile, the Dodgers were in

the NL East cellar when Puig’s arrival coincided with a

turnaround that nearly led them to the World Series.72

Although the Dodgers won the division by 11 wins and Puig

only produced 5 more wins than a replacement level player

would have,73 there is no way of knowing whether second

place Arizona would have had the same lackadaisical

September had the games mattered.

Cespedes and Puig are not exactly feel good stories of

players limited in skill but not in heart overcoming the

odds to succeed in the majors. They were mammoth superstars

who had performed at the highest stages of international

competition, and were projected as five-tool offensive

players with gold glove caliber gloves. If Chapman, Yespedes

and Puig were subject to the first-tear player draft they

likely would have been selected at the top of the first

round by a struggling team. However, because of the

residency loophole contending teams were able to acquire

them. Additionally, teams are incentivized to acquire Cuban

players over equally regarded American players in free

24

agency, because acquiring international free agents does not

require the team to forfeit their first round draft pick.74

Forfeiture of the first round pick is designed to provide

compensation to the team losing the free agent. However, if

a player is signed from overseas then no MLB team loses the

player, and thus no team is compensated. As previously

discussed the first round of the draft grants teams slightly

better than a coin flips chance at acquiring a starting

player for a substantially lower cost than the open market,

and thus has at least some impact on teams’ decision making.

The impact on MLB of Cuban amateur free agents signing major

deals, and immediately performing as some of the best

players in the game will not stop on its own. Contrarily,

the trend is only growing. Some baseball insiders consider

the Chicago White Sox the most improved team heading into

the 2014 season largely based on their six-year $68 million

investment in defecting Cuban first baseman, Jose Abreu.75

Despite being an amateur free agent, Abreu received the

second largest contract given to any MLB infielder this

season. Abreu’s $68 million rookie contract is more than

25

ten-fold the $6.35 million that 2013 first-overall draft

pick Mark Appel received.76

V. MLB’s Stalemate

Bud Selig had stated in 2012 that he sought to

implement an international amateur draft in 2014 before

retiring in 2015.77 However, Selig reneged on the idea

before the 2013 amateur draft and baseball will not revisit

the idea for at least the next three years.78 Although many

books and law review articles propose an international draft

to put all players on equal footing, this significantly

understates the complexity of the issue. While an

international draft may put an end to the windfall Cuban

players receive under the current system, it is likely to

have catastrophic consequences on the future of player

development elsewhere in the Caribbean. At the same time,

any formal changes that only pertain to Cuban players may

subject MLB to legal problems.

The Problem With Making Cuban Players Draft Eligible

Even if an international amateur draft of some sort

were implemented, MLB teams would be unable to sign the

26

Cuban players they drafted unless these players defected.

Under Cuban Assets Control Regulations (CACR) it is illegal

to make any payment or transfer to Cuba or any Cuban

national.79 Even drafting a Cuban player who has not yet

defected would arguably violate the law as draft picks are

consideration MLB teams regularly used in trades, and the

team would be using that draft pick on a Cuban citizen who

has their bargaining position changed by being able to

negotiate with an American team. At the very least, being

drafted prior to defection would presumably complicate the

player’s defecting as it would certainly put Cuban

authorities on notice. Moreover, it would appear difficult

for teams to be able to predict which players would defect

during a given year. If passed by Congress, The Baseball

Diplomacy Act would have solved the issue by exempting Cuban

players from the embargo. However, the bill was rejected as

were similar bills before it.80 Conversely, as virtually

only Cuban amateur free agents are being signed to massive

deals (as compared to American amateurs), implementing an

27

international draft but exempting Cuban players from it

would not resolve the issue.81

However, MLB could simply make all players who are

residents of countries where the league is legally able to

conduct business draft eligible. This would ultimately allow

defecting Cuban players to continue entering MLB, but place

them on equal footing as American players. Although the fact

that top Cuban players purposefully defect to countries that

do not trigger the residency clause evidences their

preference for free agency, as even the best Cuban player

earns less than $50082 a month reducing their bargaining

power by subjecting them to a draft is unlikely to change

the financial incentive for Cuban players to defect.

In September of 2013, Cuba introduced new regulations

that effectively ended the country’s legal limits on

employee salaries for baseball players. Additionally, the

new regulations permit some players to sign contracts with

foreign baseball leagues without defecting as long as they

fulfill their duties to the national team (generally lasting

from November to April), and pay a percentage of their

28

salary to the Cuban Baseball Federation.83 These new

regulations appear to have very little direct impact on MLB.

The anticipated 2,000% increase in salaries for the

country’s top players, though significant still only

produces a salary of $120,000.84 Moreover, even assuming

teams would tolerate a player missing spring training and

the increased risk of injury from playing what amount two

full baseball seasons each year, the embargo prohibits MLB

teams from signing them. Consequentially, these new

regulations can only have an indirectly detrimental impact

on teams’ ability to acquire top Cuban talent. As some Cuban

players valued loyalty to the country over salary even under

the old regulations,85 the ability to make a few million

dollars per year in the Japanese leagues while maintaining

their citizenship could be an attractive option for many

players.

However, many Cuban players will continue to try to

play MLB baseball even if subjected to the draft because

even with a large cut in salary for players subjected to the

draft, they would still likely earn more in MLB and the

29

league presents them with marketing opportunities and

freedom they can not get anywhere else. In all likelihood

the top Cuban players who choose to defect will still choose

to play in America even if they could be drafted. However,

unless the residency clause explicitly applied to players of

Cuban origin entering MLB (potentially subjecting MLB to a

Title VII discrimination lawsuit under The Civil Rights Act

of 1964), making the Cuban talent market more equitable

threatens the largest non-U.S. source of MLB talent, the

Dominican Republic.

The Problem With Making Other Caribbean Players Draft

Eligible

24.2% of players on MLB opening day rosters this past

season were born in Latin America, and 10% of all MLB

players were born Dominican Republic.86 It is important to

realize that there is nothing special in the Caribbean

seawater that has allowed the Dominican Republic to produce

10% of all MLB players with a population smaller than that

of Ohio. Dominican Republic players compose a

disproportionate percentage of MLB rosters, because they

30

compose a disproportionate percentage of players signed by

MLB teams. They compose a disproportionate of percentage of

players signed by MLB teams, because they are so damn cheap

to sign. The stories of Dominican Republic players who

succeed in MLB is very different from those of Yasiel Puig

and Jose Abreu. Dominican players were not obliterating

international competition when they wound up on scouts’

radars. Dominican players are like Nelson Cruz. They are

boys who worked instead of attending school so that they

could help support their families until a scout discovered

them, trained them and helped them get signed for peanuts.87

Cruz explains that for players coming through the ranks in

the Dominican Republic, it is not about winning gold medals,

World Series rings or MVP awards. While these

accomplishments might motivate a player, they are secondary.

As Cruz explains, “Some kids…have to find a way to get out

of the situation by playing baseball.”88

The buscones (street agents) and MLB scouts are

not investing in Caribbean players, because they are

concerned with the plight of third world children. They are

31

investing in these children because they present teams with

the best opportunity to get starter-level production at the

lowest rates that MLB allows. A draft would in effect limit

any incentive that MLB teams have to invest in and develop

these players until they are drafted. Under the current

system only one team will generally know that a particular

player even exists until they turn seventeen, and MLB rules

permit the child to be signed. These players are starting

intensive baseball training in their teens, and by delaying

this training until they are drafted their odds of having

any level of professional success are significantly

diminished. Moreover, the Dominican Republic has evolved

slightly in recent years, and the buscones are often

investing ten to thirty thousand dollars in developing each

player. Without the likelihood of a commission they would

not make this investment, and teams would be unlikely to pay

him a commission if they are drafting the player as they

would be the only MLB team permitted to sign the player.

Additionally, if Dominicans are drafted in Americans it may

be harder to justify paying them substantially less money.

32

This further decreases the incentive to invest in a market

whose best strength is their ability to produce low cost

talent. Although the treatment of Dominican Republic

teenagers by MLB officials seems abhorrent to many, most of

the Latin voices in MLB are opposed to a draft simply

because a lack of regulation is necessary to Caribbean

players continuing to have opportunities in the majors.89

Puerto Rico has provided an all too familiar display to

the Latin display to what happens when Latin America is

subjected to the draft. Puerto Rico was once a booming

epicenter for player development, and much of the Texas

Rangers success in the early nineties was predicated upon a

lineup composed of Puerto Rican superstars.90 However, once

subjected to the draft under the U.S. province provision of

the residency clause, the number of Puerto Rican players in

MLB dropped significantly. With lower investments from MLB

teams, the island’s baseball infrastructure depleted and

players no longer practiced as often. Additionally, MLB

teams will sign an American players over comparable Puerto

Rican players if the salaries are equal.91

33

As the signing bonuses have skyrocketed into the

SOURCES

34

1 Official Major League Baseball Rule Book, First-Year Player Amateur Draft.2 Id.. The draft originally considered the standings of each team in deciding its order. The team in last place in each league had the first pick with the picks fluctuating between the leagues (i.e. the worst American League team would pick first, then the worst National League tem and so forth). Whether an American or National League team picked first alternated each year with the AL’s Oakland Athletics picking first in the first draft. 1965 Amateur Draft: First Round Picks, Baseball Almanac, available at: http://www.baseball-almanac.com/feats/1965draft.shtml (last visited January 19, 2013). Deciding the draft order this way was more reasonable than assigning draft order based solely on record, because interleague play did not yet exist.3 Rachel Newman Baker & Kris Richardson to Division I Baseball Student-Athletes with Remaining Eligility, NCAA, Indianapolis, IN (June 11, 2013). 4 Supra note 1.5 Id.6 Id. Note, however, that a team may not draft the same player twice without the player’s consent. Additionally, players that go undrafted are declared amateur freeagents, and like foreign players are free to sign with any team.7 Daniel Haupman, The Need for a Worldwide Draft to Level The Playing Field and Strike Out The National Origin Discrimination in Major League Baseball, 30 Loy. L.A. Ent. L. Rev. 263, 265-66 (2010).8 Id.9 Article X Section 1 Part (b) of the NBA’s most recent Collective Bargaining Agreement, available at: http://web.archive.org/web/20080227065646/http://www.nbpa.com/cba_articles/article-X.php (last visited: January 19, 2014).10 Heather E. Morrow, The Wide World of Sports is Getting Wider: A Look at DraftingForeign Players Into U.S. Professional Sports, 26 Hous. J. Int’l L. 649, 666 (Summer 2004).11 Official National Football League Rule Book, Eligibility Rules.12 Hockey Operations Guidelines, Entry Draft Eligibility.13 Eric Michel, Amateur Draft “Signing Bonus Pools”: The Latest Inequity Made Possible By Baseball’s Archaic Antitrust Exemption, 11 Williamette Sports L.J.46, 49 (Fall 2013). 14 Rule V Draft, Baseball-Reference, available at: http://www.baseball-reference.com/bullpen/Rule_V_Draft (last visited: January 20, 2014).15 Andrew Ball, Rule 5 Draft Preview: Digging for Diamonds, Beyond The Box Score (December 11, 2013), available at: http://www.beyondtheboxscore.com/2013/12/11/5187026/rule-5-draft-preview-mlb-winter-meetings16 Gary Rausch, Evolution of the Draft, MLB.COM (May 16, 2012), available at: http://mlb.mlb.com/news/article.jsp?ymd=20020516&content_id=26646&vkey=news_mlb&fext=.jsp&c_id=null17 The Rays have won over 90 games in five out of the past six seasons (more than any other AL team). Their success has come largely through the draft. See: Jonathan

Mayo, How They Were Built: Tampa Bay Rays, Rays Baseball (October 4, 2013), availableat: http://tampabay.rays.mlb.com/news/print.jsp?ymd= 20130930&content_id=62262400&c_id=tb18 Andrew Marchant, Winning Winter Isn’t Yankees’ Goal, ESPN New York (December 3, 2011), available at: http://espn.go.com/new-york/mlb/story/_/id/7307111/new-york-yankees-winter-meetings-preview19 Cliff Corcoran, Breaking down what each draft pick has yielded from 1990-2010, Sports Illustrated, available at: http://sportsillustrated.cnn.com/mlb/news/ 20130605/draft-pick-by-pick-breakdown/#all (last visited: January 21, 2014).20 Id.21 Scooper1030, Just How Valuable Are NBA Draft Lottery Picks?, SB Nation (February10, 2013), available at: http://www.brightsideofthesun.com/2013/2/10/3974638/just-how-valuable-are-lottery-draft-picks.22 Sky Andrecheck, Draft Picks and Expected Wins Above Replacement, Baseball Analysts (June 15, 2009).23 Matt McGuire, Matt McGuire’s Draftology: The 10 Year NFL Draft Study, Round 1, Walter Football (July 12, 2010), available at: http://walterfootball.com/nfldraftology408_1.php24 See Most Valuable Player MVP Awards & Cy Young Award Winners, Baseball Reference,http://www.baseball-reference.com/awards/mvp_cya.shtml (last visited: January 18, 2014). The 10/12 figure represents 8 different first round draft picks as both Clayton Kershaw and Tim Lincecum have won the cy-young award twice.25 Id.26Tom Verducci, Baseball’s LeBron, Sports Illustrated (June 8, 2009), available at: http://sportsillustrated.cnn.com/vault/article/magazine/MAG1156215/3/index.htm27 Id.28 Official NFL Rulebook, NFL Draft Rules, Draft Order.29 Nick Mordowanec, NFL Draft: A Closer Look At How Rookies Are Wildly Overpaid, Bleacher Report (April 8, 2010), available at: http://bleacherreport.com/articles/ 375493-nfl-draft-a-closer-look-at-how-nfl-rookies-are-wildly-overpaid30 John Manuel, The History and Future of the Amateur Draft, 39 Baseball Research Journal 1 (Summer 2010), available at: http://sabr.org/research/history-and-future-amateur-draft.31 Michel, supra note 13 at 52-53.32 Id.33 1936-37 NFL Draft, 7 The Coffin Corner 5 (1985), available at: http://www.profootballresearchers.org/ Coffin_Corner/07-05-238.pdf34 Jim McCormick, Baseball Reference, available at: http://www.baseball-reference.com/bullpen/Jim_McCormick (last visited: January 20, 2014).35 Timeline 1864 to 1909, Cuban Ball, available at: http://www.cubanball.com/ timeline.html (last visited: January 21, 2014).36 Compare the $4,000 paid to Roberto Clementewith the $108,000 paid to Carl Yastrzemeski. Roberto Clemente, Britannica, available at: http://www.britannica.com/ hispanic_heritage/article-9024324 (last visited: January 20, 2014); Herb Crehan & Bill Nowlin, Carl Yastrzemeski, SABR, available at: http://sabr.org/bioproj

/person/a71e9d7f (last visited: January 20, 2014). 37 Samuel O. Regalado, “Latin Players on the Cheap:” Professional Baseball Recruitment in Latin America and the Neocolonialist Tradition, 8 Ind. J. Global Stud. 9, 11-12 (Fall 2000).38 Id. at 12.39 Opening Day: Over 28 Percent of MLB Players Are Foreign-Born, Fox News Latino (April 3, 2013), available at: http://latino.foxnews.com/latino/sports/2013/04/03/over-28-percent-players-were-foreign-born-in-mlb-opening-day/40 Sean Gregory, Baseball Dreams: Striking Out in the Dominican Republic, TIME Magazine (July 26, 2010), available at: http://content.time.com/time/magazine/article/0,9171,2004099,00.html41 Marcos Breston and Jose Luis Villegas, Away Games: The Life and Times of a LatinBaseball Player pg. 36 (1999).42 Angel Vargas, The Globalization of Baseball: A Latin American Perspective, 8 Ind. J. Global Legal Stud. 21, 27 (2000-2001).43 Jose Arangure & Luke Cyphers, It’s Not All Sun and Games, ESPN The Magazine, available at: http://sports.espn.go.com/espnmag/story?id=3974952 (last visited: January 30, 2013).44 Alan Schwarz, Pressure Building for draft of Players from Outside U.S., NY Times(July 13, 2009).45 Id.46 Id.47 Id.48 See id. (detailing the Expos signing of Vladimir Guerrero for $3,500) and Breston & Villegas, supra note 41 at 32-33 (detailing the Athletics signing Miguel Tejada).There have been hundreds of Dominicans who were initially signed for only a few thousand dollars, but produced at high levels in the major leagues. Guerrero and Tejada are merely two of the most storied examples. 49 Rausch, supra note 22.50 Id.51 Id.52 Breston & Villegas, supra note 41 at 27-33.53 Milton H. Jamail, Full Count: Inside Cuban Baseball pg. 7 (2000).54 Baseball World Cup Past Winners/Editions, IBAF, available at: http://www.ibaf.org/en/tournament/ baseball-world-cup/faf4ffe6-b5f3-4913-851c-d4dcf7b9927d?view=halloffame (last visited: January 30, 2014). Although only held once every two years, the Cuban winning streak represents a significant accomplishment. It is alleged that Cuba’s absence from the 1982 tournament in Japanmay have had something to do with player gambling (source: Bruce Brown, Cuban Baseball, The Atlantic Monthly (June 1984), available at: http://www.theatlantic.com/past/docs/issues/84jun/8406brown.htm).55 Matthew Piehl, Double Play: How Major League Baseball Can Fix The Amateur Draft and International Player Acquisition With One Swing, 8 Williamette Sports L.J. 13, 17-18 (Fall 2010).

56 Id.; Rene Arocha, Baseball Reference, available at: http://www.baseball-reference.com/players/a/arochre01.shtml (last visited: January 17, 2014). 57 See Piehl, supra note 55 at 18.58 Id. at 13-14.59 ESPN Scouts Inc., MLB Draft Tracker: Stephen Strasburg, available at http://insider.espn.go.com/ mlbdraft/player? id=18793&draftyear=200960 Compare Aroldis Chapman, lph, Reds, Baseball America, available at: http://www.baseballamerica.com /statistics/players/cards/34470 with Stephen Strasburg, rph, Nationals, Baseball America, available at: http://www.baseballamerica.com/statistics/players/cards/5409061 Buster Olney, A left-handed Strasburg, ESPN The Magazine, available at: http://sports.espn.go.com/ mlb/news/story?id=4302422 (July 3, 2009). 62 ESPN Scouts Inc., supra note 60.63 David Sheinin, Strasburg Negotiations Between Nationals, Broad Could Result in Historic Signing, Washington Post, available at: http://www.washingtonpost.com /wp-dyn/content/article/2009/06/08/ AR2009060803123.html?sid=ST2009060803151 (June 9, 2009).64 Associated Press, Chapman signs six-year contract January 12, 2010, available at: http://sports.espn.go.com/mlb/news/ story?id=4816007. Note that the Chapman deal isfor six years where as the Strasburg deal is only for four years. Still, Chapman earns $1.25 million more per year (roughly 33% more) than Strasburg.65Tom Verducci, Baseball’s LeBron, Sports Illustrated (June 8, 2009), available at: http://sportsillustrated.cnn.com/vault/article/magazine/MAG1156215/3/index.htm 66 Id.67 Nationals Pick JUCO Player First Overall, Associated Press (June 8, 2010).68 Enrique Rojas, Dodgers have deal with Puig, ESPN Deportes (June 29, 2012), available at: http://espn.go.com/los-angeles/mlb/story/_/id/8107121/los-angeles-dodgers-deal-yasiel-puig-sources-say69 Papelbon not impressed by Puig, ESPN (July 3, 2013), available at: http://espn.go.com/mlb/allstar13/ story/_/id/9445536/jonathan-papelbon-says-yasiel-puig-all-star-team-joke70 Tyler Kepner, A Gamble With No Regrets, NY Times (March 23, 2013), available at: http://www.nytimes.com/2013/03/24/sports/baseball/athletics-yoenis-cespedes-a-gamble-with-no-regrets.html?pagewanted=all&_r=071 Id.72 ESPN, supra note 70.73 The 5 wins figure comes from ESPN’s Wins Above Replacement (WAR) metric that is compared with the season standings. Compare Yasiel Puig Stats (http://espn.go.com/mlb/player/stats/_/id/32574/yasiel-puig) with MLB Standings -2013 (http://espn.go.com/mlb/standings).74 Paul D. Staudohar, Franklin Lowenthal & Anthony K. Lima, The Evolution of Baseball’s Amateur Draft, 15 Nine: A Journal of Baseball History and Culture 27, 30(Fall 2006)75 Dave Cameron, The White Sox Awesome Winter, ESPN Insider (December 29, 2013), available at: http://insider.espn.go.com/mlb/hotstove13/story/_/id/10199706/chicago-white-sox-improved-more-team-winter-mlb?ex_cid=espnapi_public

76 Marc Weinreich, Mark Appel to officially sign contract with Astros today, SportsIllustrated (June 19, 2013), available at: http://tracking.si.com/2013/06/19/mark-appel-astros-sign-contract-pitcher-mlb/77 Jeff Passan, Souces: MLB will not implement national draft, Yahoo Sports (May 31, 2013), available at: http://sports.yahoo.com/news/sources--mlb-will-not-implement-international-draft-for-2014-154952417.html78 Id.79 Piehl, supra note 55 at 17-18.80 Id. at 19.81 Id.82 Jonathan Watts, Cuban baseball players have ceilings on their salaries lifted and can play abroad, The Guardian (December 18, 2013), available at: http://www.theguardian.com/world/2013/dec/18/cuba-baseball-players-pay-rise. Note that the articlelists a salary of 300L per month (300 British pounds). I converted to $495 under anexchange rate of 1:1.65.83 Id; Randal C. Archibold, Cuba to Let Its Athletes Play Abroad, NY Times (September27, 2013).84 Watts, supra note 85 Id. Cuban third baseman, Yulieski Gourriel is considered by many to be the best Cuban ballplayer. Although recent contracts entered into by lesser regarded Cuban nationals indicate he could probably land a $100 million contract, he refuses to defect.86 Opening Day: Over 28 Percent of MLB Players Are Foreign-Born, Fox News Latino (April 3, 2013), available at: http://latino.foxnews.com/latino/sports/2013/04/03/over-28-percent-players-were-foreign-born-in-mlb-opening-day/87 Jeff Wilson, MLB insider: many glad to see plans for international draft put on shelf, Star Telegram (June 8, 2013), available at: http://www.star-telegram.com/2013/06/08/4921973/mlb-insider-many-glad-to-see-plans.html?storylink=digger-topic88 Id.89 Id.90 Id.91 Id.