How The Cubs Lost Their Top 2017 International Prospect

Shortly after the 2017-18 international signing period opened on July 2, the Cubs signed righthander Florencio Serrano for $1.2 million.

Serrano, 17 at the time, ranked as Baseball America’s No. 29 international prospect in 2017, the No. 4 pitching prospect in the class and the top 2017 player in Mexico.

Now, Serrano is not with the Cubs. MLB did not approve his contract and ended up suspending the entire signing system for Mexican League players, with major changes likely coming there.

So, what happened?

Nearly every player in Mexico who joins an MLB club is already with a Mexican League team, which then transfers those rights to an MLB team. Serrano was with the Tijuana Toros of the Mexican League. By MLB rules, for players signed from Mexican League clubs, only the amount that goes to the player counts toward a team’s bonus pool.

Typically, Mexican League clubs keep 75 percent of the money, with the other 25 percent going to the player. In that case, an MLB team paying $1 million for a Mexican League prospect would only have $250,000 count against its bonus pool.

However, that’s not true in every case. Some players with more leverage have been able to negotiate with a Mexican League club to keep a higher percentage of the transfer fee. If the player were to receive 50 percent of his $1 million transfer fee, then $500,000 would count toward the MLB club’s international bonus pool.

In 2017, when the Cubs signed Serrano, the Cubs were in their second year of being unable to sign international players for more than $300,000, a penalty from having exceeded their international bonus pool in 2015-16. However, for Mexican League signings, only the amount that goes to the player counts toward that $300,000 maximum. So for Mexican League players who keep 25 percent of their transfer amounts, a club under the $300,000 penalty limit can sign them for up to $1.2 million.

That $1.2 million is how much the Cubs paid Tijuana to sign Serrano. It is a bizarre rule, but it applies to all 30 clubs, and other teams in the penalty have signed Mexican League players for more than $300,000, so everything seemed fine at the time.

Within the past year, MLB received word that certain Mexican League clubs were not reporting accurate information on the amount of money that was going to players from their signings. While the Cubs believed that Serrano was going to receive the usual 25 percent, MLB discovered that Tijuana was really going to give him 50 percent.

That difference matters to MLB because it affects the bonus pool calculations. Specific to the Cubs, since the amount going to Serrano was really supposed to be $600,000 instead of $300,000, the Cubs should not have been allowed to sign him in the first place since it would be above their $300,000 maximum bonus.

As a result, MLB did not approve Serrano’s contract. During the investigation process into Serrano and other Mexican League deals, MLB had put a temporary hold on approving Mexican League deals, and since Serrano’s contract ultimately was never approved, the Cubs never paid Tijuana. The Cubs didn’t receive any disciplinary measures, as the league didn’t find any evidence that the club knew the true percentage that was going to Serrano. Since the Cubs were not at fault, MLB increased the Cubs’ current 2018-19 bonus pool by $300,000, the amount they had allocated to Serrano’s signing in the now closed 2017-18 period.

The Cubs could still potentially sign Serrano again. Serrano has yet to join another MLB club because neither he nor any other player affiliated with a Mexican League club is allowed to right now. Since June, MLB has banned teams from signing Mexican League players, as Jeff Passan of Yahoo Sports reported at the time, with Serrano’s high-profile case a turning point for the decision. MLB is working to reach a new protocol agreement with the Mexican League similar to what it has in place with Nippon Professional Baseball in Japan and the Korea Baseball Organization.

While MLB and the players often find themselves at odds, in this situation, MLB and Mexican players would be largely united, albeit for different motivations. MLB wants to protect the integrity of its bonus pools, and by having a larger percentage of Mexican League signing money counting against its international pools, that’s less money overall that owners would be spending. Many players from Mexico are unhappy with a Mexican League system they feel is unfair, allowing the Mexican League club to pocket the majority of their signing amounts. For players, a system where they might receive 75 percent of their signing amount instead of 25 percent would be a significant upgrade and more consistent with what their counterparts from the Dominican Republic and Venezuela keep from their bonuses.

So far, no new protocol agreement is in place. That means Fernando Villalobos, a 16-year-old lefthanded-hitting catcher with Mexico City who is Baseball America’s No. 34 international prospect in the 2018 class and was expected to sign with the Brewers, is among the Mexican players stuck in limbo.

So is Serrano, who was an unusual international prospect already, as he was born in Corpus Christi, Texas and pitched for Robstown (Tex.) High as a freshman in 2016. After his freshman season, Serrano moved to Mexico—where his parents were born—and joined the Tijuana Toros. He was old enough to have signed in 2016, but because he wasn’t registered to sign with MLB as an international player, he had to wait until the 2017-18 signing period to sign.

With strong legs on a 6-feet, 175-pound build, Serrano, now 18, has quick arm speed and a fastball that parks in the low-90s, reaching 95 mph with a chance to increase. His best secondary pitch is a slider, a potential plus offering that he can use to miss bats, and he has shown feel for a changeup. Serrano has the pitch to project as a starter, though some scouts saw reliever risk due to the effort in his delivery.