An Emerging Market

Sometimes teenage prospects turn into Pedro Martinez, but not usually.

In October, Michael S. Schmidt of the New York Times wrote two articles about Major League Baseball’s increased efforts to regulate the signing of prospects in the Dominican Republic (here and here). He also suggested that 2010’s new regulations are why Dominican prospects are signing more slowly and for smaller bonuses than they did in 2009. Yesterday, Schmidt published a piece about one group of people that is still bullish on the Dominican prospect market: private American investors.

These investors, unaffiliated with established sports agencies or Major League teams, are working with Dominican trainers or setting up their own baseball academies in the Dominican Republic. In exchange, they get percentages of the signing bonuses of any financed players who sign with Major League teams. Schmidt’s article on this interesting phenomenon is worth checking out. Sports Illustrated also reported on one of these academies this April, and Time Magazine had a broader piece about the Dominican baseball economy this July.

There are obvious ethical questions around Major League Baseball’s relationship with the Latin American prospect market, where teenagers are trading school for steroids and a small chance at life-changing wealth. By putting more money into that marketplace, private American investors may be encouraging more kids to leave school for a dream that will never come true. You could alternatively argue that more American money means more money going to those same kids, but I wonder how much of it makes it to them.