As the Major League Baseball playoffs heat up on the field, there is increased attention being paid to a darker side of the sport. In its latest issue, Sports Illustrated published an explosive account of a Department of Justice investigation into the shady deals that allow clubs to recruit and sign international players, particularly from Cuba. According to the article, MLB teams have cooperated with foreign smugglers, who traffic Cuban nationals to the United States in exchange for a financial stake in the players’ careers. The probe focuses primarily on the Foreign Corrupt Practices Act, and could have wide-reaching impacts on the sport.

For years, MLB has faced criticism for its complicated international free agent system, especially as it relates to Cuban players. Under the current framework, there are essentially two ways a player can sign with a club. First, a player who has established residency in the United States is eligible to participate in the First Year Player Draft, held every June. Though the draft presents incredible opportunities to some, it leaves players with relatively little bargaining power, as they can only negotiate with the team that drafted them. It is thus often more lucrative for talented foreign players to be declared international free agents. Once a player enters the market, he is permitted to sign with whichever club offers the most money. For the top players, this can mean bonuses that dwarf those awarded to even the best draft prospects.

Because of the current embargo, Cuban nationals are ineligible for both the draft and international free agency. As a result, these players have been forced to flee their home country in search for a shot at the big leagues. If a player comes directly to the United States, he is only able to sign with an MLB club via the draft. To take advantage of the more fruitful international free agent system, Cuban players instead defect to other Latin American countries, such as Haiti and Mexico. Once a player has established residency outside of Cuba, he is able to sign. But this trip is not easy, and incredibly dangerous. As a result, there is a lucrative human trafficking regime, that smuggles top players out of Cuba and in fact directly communicates with team officials.

Perhaps the most famous case of this shameful practice is Dodgers star outfielder Yasiel Puig. Puig’s 2012 defection from Cuba was bankrolled by Miami-based Raul Pacheco, who paid smugglers $250,000 to bring Puig to Mexico. In exchange, Puig agreed to pay Pacheco twenty percent of his future big league earnings (which today total nearly $42 million). Puig and others spent weeks as defacto prisoners in a Mexican hotel as his handlers negotiated his contract.

Puig’s team, the Los Angeles Dodgers, is apparently at the center of the FBI probe. Leaked emails show that many club officials were intimately aware of the corrupt practices that brought talented Cubans to the team, and several were even referred to as “criminals” in internal documents.

While the DOJ probe is apparently focusing on FCPA violations, some commentators have suggested that league and club executives may also face prosecution under the federal anti-racketeering statute, RICO. If this is the case, top officials like Dodgers President Andrew Friedman and current Phillies manager Gabe Kapler could face significant jail time for their alleged involvement. Though the fate of these executives and others is yet unknown, it is clear that a shake-up of the international free agency system is long overdue.

 

Josh Manning

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