Much A-Do About Moncada

[minnehan]

Now that Yoan Moncada is cleared to sign, any guesses as to where he might sign? With 100% tax attached to him, it's hard to imagine him landing outside the big three (Yankees, Red Soxs, Dodgers). Where do you see him to be the best fit?

[mgwiz22]

The best fit is as a yankee.

If he is a second basemen it seems that only the Yankees would have a need at the position. The Dodgers might have a need next season at 2nd or 3rd but they do have Guerrero. The Red Sox don't don't seem to have a need for him anywhere as they have Pedroia and Betts plus a recently signed third baseman and more outfielders than they know what to do with.

[chancellor]

Hmph...there's a dozen teams - or even more that could play. The Phillies could sign him as part of their rebuilding plan, the White Sox could if they see Bonifacio just as a stopgap, and don't see Micah Johnson as the future at 2B, the Mets could, Arizona could, and the Orioles could. None of those teams are cash-poor.

[mgwiz22]

Hmph...there's a dozen teams - or even more that could play. The Phillies could sign him as part of their rebuilding plan, the White Sox could if they see Bonifacio just as a stopgap, and don't see Micah Johnson as the future at 2B, the Mets could, Arizona could, and the Orioles could. None of those teams are cash-poor.

I certainly agree with that but going by the premise that was stated, that he will almost certainly land with Boston, NYY or the LAD, of the three the Yankees seem by far the team most in need of a second baseman.

[minnehan]

Hmph...there's a dozen teams - or even more that could play. The Phillies could sign him as part of their rebuilding plan, the White Sox could if they see Bonifacio just as a stopgap, and don't see Micah Johnson as the future at 2B, the Mets could, Arizona could, and the Orioles could. None of those teams are cash-poor.

Yeah, but realistically, do you see the Phillies or White Sox or any team outside the big 3 I mentioned spending 65-80 million on him? I'd love to see Moncada play for the Cubs or the Mets, but money-wise, I just don't see it happening.

[joncarlos]

The Mets are cash poor or at least they act like it. It's pretty comical that they gave up their 1st round pick to sign Cuddyer and then didn't sign another QO player.

I think it's between the Yankees and Dodgers, probably goes over 40mil and depends on whether either team thinks he can stick at SS. Right now most scouts don't... but then again how many scouts said that about Jeter? If there's any team in baseball that has the money to burn and needs a potential franchise shortstop more than anything in the world, it's the Yankees. And even if it doesn't work out, it's not like they have a quality long-term plan at 2B either.

[Hornsby]

I think that there might be a surprise team like Arizona or Florida sliding in there...the Tax issue is a big one for the California and NY teams. If I was the agent, I'd certainly emphasize those aspects, not to mention a little less pressure right off the bat.

[Kevin Seitzer]

I think that there might be a surprise team like Arizona or Florida sliding in there...the Tax issue is a big one for the California and NY teams. If I was the agent, I'd certainly emphasize those aspects, not to mention a little less pressure right off the bat.

While taxes are a consideration, they are generally a lesser consideration. In most cases, you're talking about less than $1M difference on the kind of contract he is likely to receive.

[Papa Deuce]

Yeah, but realistically, do you see the Phillies or White Sox or any team outside the big 3 I mentioned spending 65-80 million on him? I'd love to see Moncada play for the Cubs or the Mets, but money-wise, I just don't see it happening.

Absolutely, I do, if they could, if they don't want another 25% drop in attendance. You have to start rebuilding somewhere, so why not with a potential stud?

[chancellor]

Yeah, but realistically, do you see the Phillies or White Sox or any team outside the big 3 I mentioned spending 65-80 million on him? I'd love to see Moncada play for the Cubs or the Mets, but money-wise, I just don't see it happening.

I wouldn't be surprised at all, other than the Mets per JCs point. They have the money, but act like the As with half the brainpower. The White Sox are spending a lot right now, one never knows what the Os or Phillies will do. No one expected the As to sign Cespedes - everyone was sure he'd go to a big market team too. The money is higher this time around, but not so high any of the teams in the top third of income could go get him. Heck, even the Brewers kicked the tires on him.

[Hornsby]

While taxes are a consideration, they are generally a lesser consideration. In most cases, you're talking about less than $1M difference on the kind of contract he is likely to receive.

Really? I've heard that the tax rates for states like NY and California would take something like 15% or more off the top, while Texas and Florida can offer the same money and essentially be offering quite a bit more. Am I missing something in the equation? On a 50 million dollar contract, would that be something closer to 7 million or so? If my (very rough) figures are anywhere close?

[Kevin Seitzer]

Really? I've heard that the tax rates for states like NY and California would take something like 15% or more off the top, while Texas and Florida can offer the same money and essentially be offering quite a bit more. Am I missing something in the equation? On a 50 million dollar contract, would that be something closer to 7 million or so? If my (very rough) figures are anywhere close?

California income rax rate is 10.3% on income over $1M. But Texas and Florida players don't pay zero income tax. They pay zero income tax to their home states, but they pay non-resident income tax when they play in states with income taxes. So depending on the schedule they play, they end up with an effective tax rate of something like 2-3%. And if a player for a California team is not a California resident, I don't think they pay California income tax when they are playing out of state.

Also, almost half of the money that a team is paying for Moncada is going to the commissioner as an overage penalty, not to Moncada.

So I guess in the extreme case, it could be $2-3M difference. But in practice it often ends up less than that. Yes, it matters, but along with a host of other things. Believe me, I come from a team that sells this benefit every chance we get. It's a nice thing to offer. It's rarely the sole difference maker.

[minnehan]

California income rax rate is 10.3% on income over $1M. But Texas and Florida players don't pay zero income tax. They pay zero income tax to their home states, but they pay non-resident income tax when they play in states with income taxes. So depending on the schedule they play, they end up with an effective tax rate of something like 2-3%. And if a player for a California team is not a California resident, I don't think they pay California income tax when they are playing out of state.

Also, almost half of the money that a team is paying for Moncada is going to the commissioner as an overage penalty, not to Moncada.

So I guess in the extreme case, it could be $2-3M difference. But in practice it often ends up less than that. Yes, it matters, but along with a host of other things. Believe me, I come from a team that sells this benefit every chance we get. It's a nice thing to offer. It's rarely the sole difference maker.

No, he issue isn't income tax, it's the penalty tax that will be a factor. If the Red Sox or the Yankees sign Moncada, they will have to shell out 100% more for him, so if they sign him for $40 mil, the penalty tax will make the cost $80 mil.
From MLB.com:

Because he is not yet 23 years old and did not play in a Cuban professional league for at least five seasons, Moncada is subject to MLB's international signing guidelines, under which each team is allotted a $700,000 base and a bonus pool based on the team's record the previous year to be used during the international signing period, which started on July 2 and ends on June 15.

Clubs are penalized if they exceed their bonus pools by certain amounts, and the Yankees, Rays, Red Sox, D-backs and Angels have all exceeded their allotted money by more than 15 percent and are in the maximum penalty range for the upcoming 2015-16 signing period. The penalty includes a 100-percent tax on their pool overages and prohibits them from signing any pool-eligible player for more than $300,000 during the next two signing periods..

The Red Sox paid 72.5 mil to Rusney Castillo, and Moncada is said to be even better, so we'll see. Moncada would be incredible if he was signed by Cincinnati, but the Reds won't spend anything, so that's out of the question. He'll be a real shot in the arm boost to whatever team lands him, probably after a year in the minors. This will be interesting to see how it plays out.

[Hornsby]

California income rax rate is 10.3% on income over $1M. But Texas and Florida players don't pay zero income tax. They pay zero income tax to their home states, but they pay non-resident income tax when they play in states with income taxes. So depending on the schedule they play, they end up with an effective tax rate of something like 2-3%. And if a player for a California team is not a California resident, I don't think they pay California income tax when they are playing out of state.

Also, almost half of the money that a team is paying for Moncada is going to the commissioner as an overage penalty, not to Moncada.

So I guess in the extreme case, it could be $2-3M difference. But in practice it often ends up less than that. Yes, it matters, but along with a host of other things. Believe me, I come from a team that sells this benefit every chance we get. It's a nice thing to offer. It's rarely the sole difference maker.

I appreciate the info Mike, thanks...

[Kevin Seitzer]

No, he issue isn't income tax, it's the penalty tax that will be a factor. If the Red Sox or the Yankees sign Moncada, they will have to shell out 100% more for him, so if they sign him for $40 mil, the penalty tax will make the cost $80 mil.

The penalty is a factor for any team. We have the biggest pool at $4.9M, so everyone else is less than that. So any amount spent over the amount of the pool is penalized with an additional tax by MLB of 100%. That doesn't particularly hit the California or NY teams any harder than anyone else.

If Moncada signs before July 2, the Cubs and Rangers are out because they are prohibited by rule from signing anyone for more than $250k because they went over their pool caps in the previous signing period. If he signs after July 2, any teams who went over their pool caps in the current signing period will be out, which appears likely to be the Yankees, Rays, Red Sox, Diamondbacks, Angels, and possibly another team or two. So unless Moncada specifically wants to sign with the Cubs or Rangers, he will likely sign with someone before July 2.