July 2nd Primer: The Basics

Kiley kicks off a week of international content with a primer on what the July 2nd market is and what to look for from this year's class and MLB's new rules.


The July 2nd market can be confusing to a newcomer, so let me explain some of the basics. While Canadian, Puerto Rican and American players can be drafted at age 17 or 18, once they graduate high school, players from other countries can be signed once they turn 16. Some countries like Japan and Mexico have professional systems nearly every player goes through but most countries want their players to sign MLB contracts as soon as possible.

July 2nd is the day you can start signing the 16-year-old players and anyone that turns 16 until August 31st is eligible in that class. Any player that was previously eligible in a past July 2nd period is a free agent, so players aged 17 to 22 frequently sign throughout the year, particularly from Latin countries. International players that are released are also immediately free agents and frequently will re-sign with other teams.

The Dominican Republic and Venezuela are the two most prolific countries for the July 2 market, with the Dominican producing over three times as many signees as Venezuela in recent years due to the saturation of baseball into the Dominican culture. Given the distance to travel and some safety and political issues, the Dominican has become the center of Latin amateur baseball rather than Venezuela. It's common now for players from many other Latin countries to move to the Dominican to train with agents and buscones to be seen more frequently by more teams.

All 30 MLB teams have academies in the Dominican, whether they own them or rent them, and the academies house anywhere from 30 to 100 players along with staff. The players are trained here most of the year and play in the Dominican Summer League (DSL) for their MLB club to gauge their readiness to come to America to play in the more advanced minor leagues. Many organizations have two DSL teams and some clubs will sign upwards of 30 players a year from Latin countries, with an average bonus budget in recent years around $1.5 million to $2.0 million dollars per team with 12-15 signees per year most common.

Bonuses range from as low as $1,000 for older players signed just to fill holes on DSL clubs to the all-time bonus record coming in 2011 when the Texas Rangers gave Dominican OF Nomar Mazara $4.95 million. There are typically 10-15 million dollar bonuses per year with a top bonus around $3 million most years. This could change some now as last year MLB instituted bonus spending limits for each team for the first time and this year each team gets a different bonus limit based on their 2012 MLB record.

This market began to exist in the late 1980's and early 1990's and some All-Stars have signed over the years first at ages as late as 20 for bonuses as low as $10,000. As the market has gotten more advanced and every team has gotten involved, the efficiency has greatly stepped up and now the best MLB players typically sign for at least mid six figure bonuses.

Essentially every Latin baseball player you've heard of has gone through this process and it's in the DNA of the Dominican Republic. At a recent event put on by MLB in San Cristobal, Joe Torre came as an ambassador and was joined by Pedro Martinez and San Cristobal mayor/former 1994 NL Rookie Of The Year Raul Mondesi. A few days later, I was at a mall named after Sammy Sosa.

Jorge Arangure and I detail this process in greater detail on this week's Marginal Prospects podcast, going up later in the week

This Season

I went to the Dominican back in January to see the big multi-day showcase MLB organized for the top July 2nd prospects. This made it very easy for American-based scouts to come down during a slow part of the scouting schedule to crosscheck most of the top players. There were also a number of private workouts held by agents and clubs with all the scouting heat in town and the two main prospect leagues (Dominican and International—DPL & IPL) also held multi-day events.

I got second and third looks at some of those players this week when the DPL toured through Florida spring training sites and this week I'll be rolling out reports and a podcast focusing on Latin baseball and July 2nd. For now, I'll run down some thoughts, buzz and rumors from the market.

- In January, nearly all the scouts I talked to said the top of the market was down from recent years and also a little muddled. Usually he first question I get asked is if there's a Miguel Sano, Gary Sanchez, Felix Hernandez or other super elite prospect and there isn't one this year.

- Scouts do seem optimistic about next year and I did see a handful of promising 2014 prospects but it's still incredibly early. I talked to one scout about a 2014 that stood out at the DPL showcase and he then noted the player that stood out in the same event last year isn't a high profile guy now. At the ages of 14 to 16 years old, so much physical development can happen that reports change on a weekly basis, very different even than American high school prospects at 17 and 18 years old.

- Scouts didn't want to tip their hands completely and tell me their whole pref list, but the consensus was that of the nearly all of the known top players were at these events. That isn't saying much for me seeing all the players that will get top bonuses on July 2nd given the age, uncertainty and despite recent strides by MLB, disorganization and decentralization of the talent. There will be popup guys and I've heard about at least one notable Central American talent that will be a big dollar guy but the vast majority of the top talents tend to come from the Dominican and Venezuela, which are scouted most heavily and accounted for almost every July 2nd player I've seen.

- This is the second year of MLB imposing spending limits internationally. Last year, every team was limited to a uniform $2.9 million and this year the amounts are staggered by the 2012 MLB standings. Like the draft slot values, the whole list won't be public until very close to the signing date, but the top few teams are up around $4 million and the bottom teams are in the $1.5 million to $2.0 million range. Teams can trade for up to 50% of their assigned cap spending figure from other clubs and, as you might expect, the clubs with the highest pools (same as top picks in the draft, so Houston, the Cubs, Colorado, Minnesota, Cleveland, etc.) stand to gain the most.

- To that end, Houston currently has the hammer in terms of bonus pool money and their max possible pool money could get over $7 million. Rumors are flying about Houston given this advantage, since they can essentially pick whomever they want to sign and every scout knows this. The Astros could choose a more restrained approach as they did in their first draft with a big pool of money and sign a number of mid-range players, but the situation is different. The difference is in the 2012 draft, the Astros had over $11.1 million but over 65% of that money ($7.2 million) was allocated to the first overall pick. To have any flexibility to spend the $11.1 million, the Astros had to go well under slot at #1. They already have the freedom to spend as they please with whatever amount of money they end up with as their bonus pool this season, so anything is possible.

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