New draft rules even worse than anticipated

Obviously, there’s no team development justification for this policy. If a team can’t get a pick signed, especially a high pick, it would only make sense for them to reallocate that budget money towards making sure to get other picks signed. At the end of the day it’s the same amount of money budgeted, and depending on how spread out the reallocation is, it probably doesn’t even make much of a difference at the margin. This is even more true if a team can’t get a top round pick signed, as they can then attempt to stockpile lower round talent at cheaper marginal prices and hope one or two of them pan out. It can’t be stated enough that good players routinely get drafted and sign well after the first few rounds of the draft, including all-time greats like Albert Pujols, who was taken in the 13th round. Anyone think the Cardinals have spent the last decade bemoaning how much money they had to spend to sign him in the draft?

But there won’t be any of that under the system Bud Selig and the new-age MLBPA devised, and that’s something that ought to raise every fan’s hackles. This isn’t a deal about helping teams acquire talented amateurs, and it’s definitely not a deal about helping small markets (indeed, since the amount of pool money each team gets for a draft will be inversely related to their record the previous season, the biggest losers in this new system are low revenue teams that find success, as they won’t be able to sustain a higher level of big league spending, and without the ability to invest more money in stockpiling amateurs will have no means for re-stocking their system quickly other than trading valuable big league players). This is solely about keeping signing bonuses artificially low, baseball costs be damned.

From the owners, I expect this. Lower bonuses means lower spending in the short-term, after all, and in the long-term owners know it will mean lower future salaries as well. They’re in this thing primarily to turn profits, and this will definitely help them do that. But the players? I’m beyond outraged that the players not only went along with this, but in many ways actively pushed for it. I’m even more disappointed that so many of them justify it by claiming that draft picks don’t “deserve” the money because they “haven’t played a single game yet.” Not that it’s not true as a factual matter, but from a business standpoint, amateur or not Gerritt Cole and Bryce Harper are much more valuable assets to Major League teams than the average big league journeyman, a fact that’s more or less self-evident to anyone who isn’t deluding themselves. Is there anyone among us who would not trade Russell Martin for Bryce Harper straight up? I asked that question last night on Twitter, and as of this writing I have yet to receive a response from anyone who claims to prefer Martin.

No, from the players’ perspective this is highway robbery, plain and simple. This is the Jamey Carrolls, Mark Ellises, and Juan Riveras of the world (who combined for 3.1 bWAR in 2011 but nonetheless have already signed deals worth a combined total of over $20 million this offseason) using the fact that they have representation in the process to attempt to take money away from more talented youngsters who are worth more money than these bit players but nevertheless aren’t represented in the process, and are thus ripe for exploitation.

Of course, no current player who received an over-slot bonus is expected to pay that money back or defer future earning accordingly. Funny, that.

Born in Southwestern Ohio and currently residing on the Chesapeake Bay, Brien is a former editor-in-chief of IIATMS who now spends most of his time sitting on his deck watching his tomatoes ripen and consuming far more MLB Network programming than is safe for one's health or sanity.

12 thoughts on “New draft rules even worse than anticipated

  1. My thoughts:

    The reason this is put in place is that it reduces the negotiating power of the amateur player. Your points regarding talent moving to other professional sports remain completely valid (even reinforced) however there's a point to the additional rules. The goal of this seems to be to remove leverage from amateur baseball players joining the majors. If teams were able to allocate all of their first ten picks money to one player, Boras would have almost as much leverage as before–his only limitation would be that he couldn't demand more than your 1-10 draft pool. Now the player can demand the maximum, and that's that.

    There's a correlary to this–teams are now very much incented to work under the table to provide…benefits…to their draftees that slip between the lines of the CBA.

    • BrienJackson

      "If teams were able to allocate all of their first ten picks money to one player, Boras would have almost as much leverage as before–his only limitation would be that he couldn't demand more than your 1-10 draft pool"

      No, that wouldn't really work. For one thing, the average first round pick is still too risky to put down that kind of zero-sum investment on them, and for another, teams need to sign multiple picks each year, both because that's how you find later round talent and because they need to fill out their minor league rosters. I suppose your Strasburg-esque prospect could potentially pull this off, but that sort of prospect can probably still demand the world from teams anyway. If you were the worst team in baseball, would you prize future unknown picks over Strasburg?

      What this does, in effect, is a) keep agents from keeping track of which 4-10th round picks choose college over the slotted amount, and subsequently demanding a cut of that money be reallocated to 1st round picks or b) prevent teams from passing on signing their late first round pick in favor of going over-slot to get more of their later round picks signed. In other words, there's no flexibility here.

      This also makes a mockery out of Commissioner Bud's declaration that draft picks will be made "in order of talent." Since the ability to creatively budget and decide what you're willing to spend has been taken from the teams in favor of hard-slotting-by-another name, the likely outcome is the later rounds being turned on their heads, as teams have to try to figure out which players will and won't sign for slot money. So if you like a high school player in the third round who simply won't sign for the slot value, the smart thing to do is to pass on that player (since you can't pay them what you actually value them for) and reach down to someone you like for a later round who's more willing to take the money.

      While I'm at it, I should also add that this provision functions as proof that MLB knows these new rules will result in fewer draft picks signing with the drafting club, otherwise they wouldn't have put such a draconian rule in place.

      • Brien,

        In response to a): It does prevent agents from doing this, yes. But it also prevents agents from demanding higher sums for their clients *at the expense* of other draft picks, and (importantly) before the other picks exit from the conversation by (for example) choosing college.

        I find it easy to imagine a situation (without the siloing of draft bugets amongst picks) where the changes made would actually make it easier for Boras to hold a team hostage. If the upside of (in a perfect world) a team surrendering its entire 1-10 allocation to sign one prospect exists, incoming amateurs still have incentive to hold out. The whole point of this system seems to be to stop holdouts–here's what you're allowed to be paid, take it or leave it.

        Again, I hate the system as a whole. I just think that the most recent revelations aren't negative given the previous construct put in place.

      • Also, in response to your first point…

        Yes, teams do need to sign multiple players. Much agreed. But we have plenty of information from the free agent market that points to the irrationality of general managers from time to time. It would only be a matter of time before a team gave a Bryce Harper kind of player an overly sizeable chunk of their total top 10 pool. I mean, who would have thought Vernon Wells would have gotten the contract that he did, or that *another GM* would be willing to take on that same contract down the line. Nagle, Zito, Rowand, etc. There are lots of crazy contracts out there. All it takes is one GM doing that to raise the market for every other draft pick looking to get paid.

        The reasons you lay out that this isn't an issue are perfectly rational. Unfortunately, baseball has shown that teams don't always walk that rational line.

  2. FWIW, my comment above doesn't speak to whether or not this is a good or bad thing — taken in sum (draft slotting in general), I'd surely think it's bad. However, draft slotting where teams were incented to put all of their eggs in one basket (in fact, where they would be forced to put all of their eggs in one basket if they wanted any premium talent) would be even worse.

    • Mark

      NO. This is as fundamentally unsound of an economic argument as is possible. If teams were incented to put all of their eggs in one basket, that's because the value to do so was there. Would teams possibly "overspend" on one player if it made more sense to spread the investment out over more players? Nope. The market efficiently distributes payments until artificial limits are imposed.

      • BrienJackson

        "The market efficiently distributes payments until artificial limits are imposed. "

        I won't go quite so far as to make that forceful of a statement (I mean, I did just note how much money Carroll, Ellis, and Rivera have been paid this offseason), but I'll give it a 75% endorsement.

        On the other hand, it seems that draft bonuses have actually been one of the most efficient markets I can think of. Since the individual picks aren't necessarily well know, general managers have many fewer biases about them than they do big league players, and since they're relatively fungible in the later rounds, teams generally have the ability to determine their value and pay accordingly. If a 3rd round pick makes an unreasonable demand and chooses college, it isn't a huge deal.

      • Mark:

        1) Teams have a very difficult time valuing players in the draft. SImply put, there's not a great dataset by which to compare college players, methodologies of analysis are seriously conflicting from team to team, etc. It's hard to make the argument that teams are able to determine whether or not the "value is there".

        In terms of "fundamentally unsound economic argument as possible"…well, I don't know. Without the siloing of budgets by draft pick, the net effect of the previously put in place rules would be to concentrate risk–to get a top player you'd have to give up other top picks. While a player's dream would have been to get the whole pool for himself, we don't have to take it to that extreme for it to be bad. We've already capped the upside for the amateurs at a rather low level (which is bad). But it's even worse for the teams if you increase the cap for individual players, while forcing teams to take on less diversified portfolios of these players. Suddenly you are being forced to pay more to take on even more risk.

        • And I'm at work, so can't respond any further currently. But will take a look when I'm home if you riposte.

          • lvtuva

            My outlook is that the best way to craft a sane system is to allow the free market to work. Teams who routinely overspend on top picks will lose out to teams which do not. Either they will correct themselves or continue to lose out. Allowing this learning process works remarkably well.If in fact the top draft picks are worth what they get, i can't see why they shouldn't get paid as such. Also I don't think it matters that teams can't accurately evaluate talent. Teams simply discount the payments with a risk factor just like they would if they were a stock or bond.

          • BrienJackson

            If you let me craft the system from scratch myself, I'd scrap the draft altogether and make everyone a free agent.

  3. john

    trying to put a positive spin on a bad situation.. Any chance a college senior plays pro-ball for two years (until he is 23 (i think that is the age of the cut off and then just becomes a free agent and cashes is. This would be hugely favorable for the yanks who can then spend anything on top young talent.

    Case in point – Starsburg isn't able to get a deal he likes in his slot (1 overall). He plays pro ball for 2 years (he's now 23) and becomes a free agent where anyone can bid on him.

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