Is Rusney Castillo the next international free-agent gem?

Unless you’re a dedicated baseball fan or follow Ken Rosenthal on Twitter, you may not know the name Rusney Castillo. That is probably going to change soon, as he is expected to sign a free-agent contract in the not-too-distant future, becoming the latest international import to incite a bidding war among MLB teams. If rumors are to be believed, his contract might even end up north of $50 million. And recent history suggests that even that might be a bargain.

The sport seems to be pretty far removed from the days of Hideki Irabu and Kei Igawa. Certainly, there was a time when major-league teams — okay, most often the Yankees — threw significant money to bring over international players who turned out to be duds. But lately, there have been few better ways to spend money than on the international free agent market. Especially if you’ve been buying a hitter from Cuba. 

Since the start of the 2010 season, seven hitters have defected from Cuba, signed major-league contracts worth at least $10 million in guaranteed money and played in the majors this season. Here are those seven players:

International WAR

Name Team WAR
Yasiel Puig Dodgers 4.4
Jose Abreu White Sox 4.0
Yoenis Cespedes A’s/Red Sox 2.4
Leonys Martin Rangers 1.7
Adeiny Hechavarria Marlins 0.2
Erisbel Arruebarrena Dodgers 0.2
Alex Guerrero Dodgers  —

Three of the seven players have contributed little or no value in the big leagues this season, but Puig, Abreu, Cespedes and Martin have all been at least solid contributors, with Puig and Abreu clearly far better than just that. These seven players have combined to produce 12.9 WAR this season, and giving them credit for the final month or so of the season, we should expect the group to end up with around 15 WAR for the year.  

There are different ways of estimating the value of a win, but most of the economic studies based on free-agent signings suggest that teams pay between $6 to $7 million to buy a win in free agency. In other words, the combined free-agent value of these seven Cuban hitters, based on their 2014 performance, is going to be in the range of $90 to $105 million. How much are they actually making?

You don’t want to just look at their 2014 salary since all of these guys signed multiyear contracts, and these deals are often backloaded. So, instead, we’ll use the annual average value of the contracts they signed as their per-year price. Here’s how those AAVs break down.

Abreu: $11 million

Cespedes: $9 million

Guerrero: $7 million

Puig: $6 million

Arruebarrena: $5 million

Martin: $3 million

Hechaverria: $3 million

Combined, that’s $44 million per year for these seven players. That’s certainly a lot of money, but remember they’€™re going to put up something close to 15 WAR by the end of the year. So that averages out to a little under $3 million per win. That’s about half of the lowest estimates of the cost of a win in the 2014 market, though to be fair, these deals weren’t all signed this winter and the price of a win has been going up significantly of late. Still, Cespedes and Martin rate as significant bargains even relative to the going rates at the time they signed, and while Hechaverria hasn’t been particularly good yet, he’s also making about the same amount as Willie Bloomquist.  

And that’s been the key to the success of these kinds of deals; even when they haven’t worked, the costs have been so low as to not really matter. And the potential of landing an Abreu, Puig or Cespedes makes taking those risks an easy call. Like with draft picks, you may go in knowing that the expectation for most prospects is failure, but the value gained when one pans out is so large as to make up for the cost of the ones who didn’t pan out, and then some.

Of course, you shouldn’t jump to any conclusions based on a sample of seven players. However, the story isn’t all that different on the pitching side of things. The big investments in arms over the last few years? Masahiro Tanaka, Yu Darvish, Hyun-Jin Ryu, Hiroki Kuroda and Aroldis Chapman have all performed better than expected, and even with Tanaka and Darvish currently on the DL, the group has stayed mostly healthy. Sure, there’s a Daisuke Matsuzaka here and a Kenshin Kawakami there, but the overall rate of return on international free-agent pitchers has been much better than the return on domestic free agents.  

Part of this is just natural risk aversion. Especially with Cuban players, the data is spotty and the process of escaping the island means that these players often haven’t played competitive baseball in a year or more. Teams have been reluctant to invest tens of millions of dollars based on physical skills and a few rounds of batting practice, as the stigma of having an overpaid albatross on the books is something that every team wants to avoid.  

But in today’s baseball economy, risk aversion to this degree is likely inefficient. There is so much money in the game that even broken-down former closers are commanding $10 million per year in free agency. Any team attempting to acquire talent just has to accept that it is going to end up paying real money to players who turn out to be lemons. The key is to make sure you also get enough bargains that you come out ahead in the aggregate.  

I don’t know enough about Rusney Castillo to say whether he’s more Cespedes than Arruebarrena, but I do know that the return on investment on players like Rusney Castillo has been quite high as of late.  While signing him comes with a significant chance that he’ll turn out to be a waste of money, the reward appears to be high enough to justify a significant contract. If you have to sign a few light-hitting backups for the right to find one Jose Abreu or Yasiel Puig, so be it; you still come out way ahead in the long run.