Not Feeling a Draft

Today isn’t the same as yesterday. The reasons that the draft was a good idea in the 1960s no longer exist (some variations exist — people believing other teams to be farm systems of the Yankees — but the situations are so drastically different that it’s not worth mentioning, really – better scouting, scouting more players, institution of free-agency, Latin America). In fact, it might actually make quite a bit of sense to go back to a time without a draft. When one looks at politics, for example, one often sees a pendulum of sorts — after a period of Democrat rule, Republicans take over — because one side usually goes a bit too far, and a natural correction, of sorts, takes place. It’s a necessary maneuver to reduce abuses of power and maintain some focus on public interest. It’s never a complete swing back (today’s liberals are tomorrow’s conservatives) as adjustments have been made to learn from mistakes. After a period of time where the draft has been implemented, used, and manipulated, it might be time to get rid of it with the addition of a few tweaks. If that doesn’t blow your mind, then this might — after a few decades, we might have to go back to a draft, and it won’t mean abolishing the draft was a mistake.

Anyway, does a draft-less MLB work? What are the perceptions and questions? What are the problems with the draft-less proposal that need some tinkering?

Won’t the Yankees just buy everyone?

I’ll make some Yankees fans happy, for once. No, they won’t buy everyone. Look at the international market now. Aroldis Chapman, Michael Ynoa, Edward Salcedo, Elvis Andrus, etc. were not signed by the Yankees, Red Sox, Mets, or Angels. What people tend to forget is that prospecting carries a lot of risk, even enough to make big-market teams wince. The large-market teams will scout players and decide whether they believe the player is worth the risk. And as much money as the Yankees have, they’re still playing with opportunity risks. If they spend an abundance of money on amateur free-agents, they will eventually have to spend less on their major-league roster. With the payroll they have, it might actually make more sense to spend money on established free-agents than prospects (they have enough money that spending more for established production outweighs spending money for upside in risky prospects). Let’s use Strasburg as an example. Some believed that he would have made $50 million if he had been on the free-agent market. While $1-2 million won’t make much of a difference to the Yankees, $50 million would have quite an impact, even on them. And then, the Yankees have to consider the risk of signing him. We have high expectations for him, but a blown elbow could be around the corner. Additionally, they then have to weigh signing Strasburg and not signing other players ($50 million could buy a lot of prospects). The Yankees seem to have an unlimited payroll, but they don’t. And the big-market teams’ money already helps them accrue better talent when a team in the front of the draft sticks to slot and avoids a big talent, who then falls to the big-market team later, so sticking with what we have isn’t solving that problem.

But who else can afford the Strasburgs and Harpers?

The Reds did just shell out $30 million for Aroldis Chapman. It’s possible, even if smaller-market teams have to be more creative.

But don’t they still have more money to spend than anyone else?

Yes, but it’s not so simple. If the Yankees simply set aside $20 million for amateur free-agents, they could go after the top prospects only and end up with Dustin Ackely, Tyler Matzek, and Shelby Miller instead of worrying about 11th and 12th round picks. Again, there’s a lot of risk there (a lot of money tied into fewer prospects), but they might do that for the potential upside. I have a few ideas on what to do, but I’m not sure if any of them are any good. One, place a ceiling on how much a team can spend depending on where they finish (bad teams get to spend more than winning teams), but that might prevent the Yankees (or someone else; I’m not trying to pick on the Yankees) from making a crippling mistake. Two, place a limit on the number of prospects they can sign, but if you do that, they’ll just go hog-wild on the top guys. Three, create a points system based on talent level of the prospect and place a cap on how many “points” a team can sign, but there are so many logistical issues with that that it’s almost not worth mentioning. Yes, the Yankees can spend more money, but they would also be taking on a disproportionate amount of risk while also dipping into the major-league budget.

Is it really all about the money, stupid?

This will really get you going. It’s not, though money obviously has a significant effect. But let’s take a look at the decision-making process. An amateur has two missions — to make a mountain of money and to make it to the major leagues. Money only solves one of those desires. The road to the majors also has an effect. If I really want to make the team, would I choose a big-market team that constantly overlooks its prospects, often trading them, for established major-league players? And what happens if the Yankees do actually initially load up on prospects? Do you really want to fight through all of those other highly-touted prospects when you could get through another system much faster? I realize that there are such things as “wanting to play for your childhood team”, but self-promotion is often a powerful force. I’d rather be a major-league star for the Giants than a 26-year old AAA guy for the Red Sox. It even might make financial sense (give up money now for the chance at more later when you reach free-agency quicker). And sometimes the “childhood team” is the Orioles.

But won’t signing bonuses for prospects skyrocket, thus limiting small-market teams’ budgets?

Probably not. It’s supply and demand. The really good prospects (like the top 15) will probably see a jump in what they can demand from teams because a lot of teams will want them and their talent separates them into the truly elite, cant-miss guys. The next 50 players or so become more interchangeable, and while they are talented and desired by many teams, they won’t separate themselves as much from each other. They’ll likely end up garnering as much as they get now and maybe a little more. As for the rest, they might actually see their bonuses tank or, more probably, stay the same. If most of the top 100 can’t separate themselves, then once you get past them, there’s really little separation in talent. If you have a lot of similar quality guys, players lose leverage. They’ll take less just to make a team. As for the small-market teams, they probably won’t have to pay much more than they do now.

But what about the difference between Americans and non-Americans?

This is where something really needs to be done. Right now, it’s nowhere near fair that a Latin American can choose where to go and for how much money when an American has no such luck. This isn’t a xenophobic remark of “Those foreigners shouldn’t be treated better than good ole’ American boys.” It’s that each player should be treated the same. There should be equality. No player should receive advantages over other players simply based on their country of origin. Does the amateur free-agency solve this? Almost but not completely. The ability to choose has been granted. We still have, however, the issue of age (foreigners can sign at 16, but Americans have to be out of high school, usually at 18) and college (Division I players have to wait three years out of high school to re-enter the draft whereas it doesn’t matter for foreigners). How do we change this? One, eliminate the college rule. If they want to be one-and-done, let it happen (If you say something about killing the college game, I’ll slap you and refer to the fact that the only college games on TV involve the CWS and no one really watches those anyway; plus, metal bats are stupid at that age). Unfortunately, the age issue is a bit testier, but I think it’s easier than one might imagine. I would either make a universal age-16 or age-18 rule. The Age-16 Rule (making everyone eligible at 16 no matter their country of origin) will anger those in favor of education. However, if a player can get serious money at age 16 to go play baseball, they can come back to get their GED, but I can see a worse stigma than someone now has with going back to college. I would, therefore, advocate the Age-18 Rule (the same as Age-16 but now at age 18). It nullifies the advantage of foreigners who can get into the systems two years earlier (a major advantage and reason that the Caribbean is scoured so heavily), but again, we’re going for some semblance of fairness. Maybe the MLB can create some leagues in foreign countries that promote better competition for 16-18 year olds. Or maybe we can compromise. Players can sign as early as 16, but they can’t officially enter the farm system (rookie leagues or above) until 18. For the age 16-18 seasons, the MLB can create developmental leagues for the summer (much like AAU). I’m open to suggestions, but they have to make it fair for Americans and non-Americans.

But won’t their be abuses here as well?

Sure. There usually are. This is why we need tweaks to the original system, or we need to understand how the other changes in the game since the draft was instituted will eliminate the original abuses of a draft-less MLB. But remember, if there are problems, you can make tweaks after a few years. Just do it for a good reason. It’s hard to predict the effects of a social theory. Soft slotting may have seemed like a good idea in theory, but we’ve seen how that worked.

Not having a draft isn’t as ridiculous as some believe. We don’t need a draft to aid competitive balance, even though it helped 45 years ago. Times have changed, and the draft actually creates problems now (not being able to trade draft picks, free-agent compensation, soft slotting system, difference between Americans and non-Americans). Free-agency for amateurs will open things up. If teams want to pour money into prospects, they can buy as many as they want. If prospects don’t make as much sense for a team, then it doesn’t have to waste its time. Signing prospects doesn’t make the same sense to everyone. There might be an initial bout with fairness (maybe a rush to be with the Yankees or Red Sox), but it will undergo a self-correction (there are only so many spots on a 25-man roster – 25, in fact). Then, we’ll let it go for another 30-40 years, and after technology and scouting change yet again, we might have to go back to a draft. Sometimes creating stability means creating flexibility, and it means realizing that going back to a previous arrangement doesn’t mean that the current one was a mistake originally. Let’s not be too hard-headed and cling to what we know just because we know it.

6 thoughts on “Not Feeling a Draft

  1. Stephen

    Nice post. I'm definitely in favor of a free-market system here, as it will likely even things out (as you suggested, scouting isn't perfect, and the hit rate even for 1st round draft picks isn't that high — any team that signs an amateur for a lot of money will be potentially saddled with a bad contract).

     

    One thing I'd like to point out as you figure things out – an age 18 rule is potentially problematic for people given ages graduating high school. I was 17 when I started college (like many before me). By a hard and fast 18 rule, it would have forced someone like me (if I had baseball talent) to go to college rather than sign out of high school. I definitely think the modified 16 rule (with the caveat that you can join the minor leagues if you GRADUATE from high school, not get a GED) is the best option.

  2. Excellent point on the Age-18 Rule. I hadn't considered that. Hard and fast rules rarely work. I wonder about your caveat, though. How do we apply this to foreign countries where the educational systems are different or where it's not as culturally important?

  3. Larry@IIATMS

    Mark, nice post, but I'm confused.  It looks to me like your proposal is a solution in search of a problem. 

    Yes, agreed, there's no logical rationale for having a draft that is limited to American players.  But I don't share your faith that in the absence of a draft all teams will look for creative ways to assemble the best group of young talent.  Look at revenue sharing.  A few teams use revenue sharing to improve performance on the field, but a number of teams use revenue sharing to enhance their net profist.  I fear that teams like the Florida Marlins will view your abolition of the draft as yet another opportunity to cut spending, this time on player development. 

    I might argue that the draft forces the bottom-dwellers in baseball to sign and develop top talent.  The Nationals really had no choice but to sign Stephen Strasburg.  The Nationals have to at least make a token effort to improve their ballclub, if only to preserve the argument that they're worthy of increased revenue sharing.  But without a draft, who would expect the Nationals to compete with the Yankees, Red Sox, and Mets for Mr. Strasburg?  Granted, the Nationals would have the ABILITY to do so, as you've pointed out.  They'd also have the ability to sit on the sidelines, and sign enough bargain talent to fill their development pipeline, all the while enhancing their bottom line, while they prepared arguments that they can only compete with increased revenue sharing.

    I'm going to argue here that MLB teams must be forced to compete.  I'm willing to use free market tools in this effort, but I'm not willing to accept a "free market" that allows a team to maximize net profit at the expense of on-the-field performance.  Call me a liberal if you like, but if the draft forces bad teams to develop great talent, then by all means let's hold onto the draft.

  4. It's funny because I usually don't like completely free-market ideas. Even here, I realize there must be some tinkering to prevent what you're saying.

    On Strasburg, who really expected the Reds to sign Chapman? I'm not saying the Nationals would have gone for Strasburg, but someone else might have. And even if the Yankees did sign him, the $50MM pricetag would have an effect on the Yankees. One is the opportunity cost to sign one of him versus several other high-profile prospects. Another is the potential risk he represents. If they always get the "number 1 prospect" that's going to be a lot of money down the drain.

    But the draft doesn't always force bottom-dwellers to go after or even sign their top picks. Pittsburgh went for Tony Sanchez. The Blue Jays didn't sign a top pick, and now, they'll be forced to take less-talented players for their compensation picks because a) they have so many picks that getting really good players would likely be too expensive and b) they have to ensure they get those players or risk losing the pick altogether. The Nationals had to sign a closer as the 10th pick. The draft doesn't always work. If it did, the bottom-dwellers like the Pirates would have the best farm systems while the Red Sox had the worst. Porcello's, Matzek's, Turner's fall all the time because bottom-dwellers refuse to pay the money. At least with a free-agency, the players would get to choose their teams (I really should have made this more prominent in the post) and they would get more money from those big-market teams (thus increasing the risk for those teams).

    But would the teams use this to increase their profit margin? I'm not sure, but I'm sure someone can think of some mechanism to watch over that. And it seems that the Players Union is paying attention to that now and would continue to even without a draft.

    Is my optimism misplaced? Maybe, but I'm just trying to show that's it's not such a bad idea. More pessimistic sorts can do the tinkering.

  5. Larry@IIATMS

    Mark, excellent arguments in your reply. 

    Baseball is unique in that it's so difficult to spot the "can't miss" prospect.  Strasburg is probably a unique case.  So, a draft in baseball does less to promote competitive balance than it does in (say) basketball, where the talent typically falls off dramatically after just a few draft picks. 

    One argument I decided to duck is the way the draft reduces the bargaining power of the drafted players — particulary the high-profile prospects.  It's possible that the draft depresses the value of some of these prospects, to the point that the Pirates and the Royals can afford to sign a few of them.  But your point about Tony Sanchez and the Blue Jays is a powerful argument in the other direction.  Maybe the "poor" teams would be better off focusing on talent they can more easily afford.  As you've pointed out, the drop in draft talent from the first round to the later rounds may not be all that great.  Maybe the "value" picks are in the middle rounds.

    I have the uncomfortable feeling I get when I'm being successfully persuaded. 

    I naturally worry about what some teams might do when left to their own devices.  The draft at least provides a structure where these teams are required to make choices.  Would these teams do better in a system that allowed greater room to make choices, or would they make more mistakes?  Would the abolition of the draft give the Blue Jays greater room not to sign players, or the freedom to focus their energy on affordable players?  I don't know.

    Great post, Mark.  I'll be posting here on economic issues and revenue sharing, and I hope you'll share your thoughts with me.

  6. In the end, I don't know what teams will do. That might be impossible to predict. But if they're not signing prospects and/or they're just signing middling prospects and they don't win, then people will notice. I imagine there's a bit (though not complete) more transparency there than in Wal-Mart's financials.

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