Yankees Taking Advantage Of The New Draft System

The new CBA includes numerous new rules to restrain teams like the Yankees from finding young talent. The previous Rule 4 Draft rules, the First-Year Player Draft in June, already included a draft order that hurt winning teams. Despite the picks being ordered by reverse standings, the Yankees and other rich teams had previously offered players large signing bonuses in their later turns, thus getting talented players that cheap teams could not sign. The Yankees also took advantage of the international market, where the spending was largely unrestricted.

The rules changed tremendously in 2012. Though teams could technically offer whatever they wanted to players on both the international market and in the amateur draft, taxes and future signing restrictions now act as a big enough deterrent for teams to actually follow these guidelines. If you spend too much in the draft, depending on your overage, you can be subject to a 75-100% tax, and could lose up to two years of first round picks. Similar rules follow the international signing bonus pools, where all teams are now given a $2.9 million cap to spend in one year, and then an extra amount based on how poorly they played the previous year. If you go over this amount by a certain percentage, you’ll begin to see taxes and restrictions on spending in the next season.

For teams that win, it’s now very hard to get an edge on young talent. There’s no doubt that the goal of the new CBA, at least in the eyes of Major League Baseball, was to create a more competitive playing field that benefited the game. What we received benefited the owners. These restrictions will now limit the overall money that teams spend on young players, and bonuses will thus fall dramatically. I’m not sure you could say it’s bad for the game, but it’s hard to imagine this evens the playing field when losing teams like the Pirates still fail to sign their first round picks because of their slot limit.

Meanwhile, the Yankees seem to have figured out a way to circumvent some of the CBA’s restrictions. Now that Rafael Soriano has signed with the Nationals, and Nick Swisher has signed with the Indians, the Yankees have three first round picks in the 2013 draft. The placement will likely change a bit, but those three picks are projected to be 27th, 31st, and 32nd overall. This gives the team fairly early picks, but more importantly, it’ll allow them to spend around $5 million in bonuses, which is well over $3 million more than they were allowed in 2012. This is on par with the slot bonuses of the 4th or 5th overall picks, which puts them in great shape for the draft.

After the 2013 season, the Yankees will obviously line up for at least one first round pick in the 2014 draft, since I doubt they’ll lose this pick by signing a big free agent in their budget year. They’ll also have Curtis Granderson, Robinson Cano, Hiroki Kuroda, Phil Hughes, Andy Pettitte, Mariano Rivera, and Kevin Youkilis reaching free agency. Depending on what happens next season, these guys may be worth qualifying offers, which would net them additional draft picks for 2014.

It’s hard to believe that the Yankees may have the most first round picks in 2013, but this could be a trend. Despite the CBA trying to limit the Yankees spending limits, the team has found a way to use money to get young talent. Their ability to spend big on one-year deals could allow them to annually pick up free agents that will net them draft picks the following year. This year’s Kuroda and Youkilis signing could be the beginning of that.

Mike is the co-Editor-in-Chief of It's About The Money. Outside of blogging baseball, Mike is also a musician, a runner, and a beer lover.

8 thoughts on “Yankees Taking Advantage Of The New Draft System

  1. lol

    Very lacking in any relevent info………….boring.

  2. smurfy

    I’m intrigued a bit, Michael, thinking about the CBA, guided by mutual ownership (there are more losers) and ML(now)players’ association, with the losing clubs arguing for “competitive” advantage on top of advantage, now tightening the screws on who and how much you can spend on, especially if you have a good system and experience success, ending in a French Revolution-type socialism with the aristocracy dead, and loss of athletes to the more popular football. Chicks may dig the long ball, but they flip for quarterbacks and tight ends.

    The one year f.a. signings may auger for draft pick advantage, but rarely: maybe Youk revives to be worth a $14 mm qualifying offer. Mo, Hiro and Andy would likely retire or play in Japan. The real chance for the Yanks to rebuild (since they are admitting that F.a. dependence is unsustainable under the ML salary cap, now enforced by punitive taxes)is using the picks they get from their high-priced talent this next draft.

    Good thing about gaining the bonus-signing money: tell the two sport candidates that this is the best chance to become a happy Yankee. But the Yanks will hold Cano; and I see prudence in holding Phil, too. So next year, maybe one extra pick?

    • I could see them just getting a pick for Granderson in the end, but there’s still a good shot with Youk and Kuroda. The limited time these players have to accept the qualifying offer is a major disadvantage for them. No FA accepted their qualifying offer this season, mostly because they felt they could get the same, if not more, on the market. Kuroda was a good example of this, where he basically received the same amount of money in the end, but preferred to at least keep his options open, instead of accepting the offer immediately.

      If Youk projects to earn around $13-$14 million next year, the Yanks should go ahead and give him an offer. These players would much prefer to lose that offer and gamble for a multi-year deal. The worst that happens for them is a slightly cheaper one-year deal.

      • smurfy

        Youk is only eking out a value of $14mm if he really can play 130 games with a much improved performance. The way teams are reluctant to give up the pick and pool money, he would probably take the generous offer, and stay.

        That number is pretty high.

  3. bg90027

    I’d be surprised if they make anyone but Cano and Granderson a qualifying offer next year. I think the budget is going to be too tight to risk anyone else accepting the offer, even if it might be a small risk in the case of Hughes if he has a good but not great year.

    I also think the 1 year contracts for $10+ million are mostly a thing of the past if they are serious about getting under the $189 million payroll. I guess that we could see a few if Cano walks or if they decide that they can’t be competitive at $189 and punt on the goal for one year to give prospects another year to develop. I don’t think this is part of any long term strategy though.

    • smurfy

      as much as I wanna keep Phil for the payoff after development, I’d make the offer, if he warrants it by performance. If he’s good short of great, he could take the offer, planning on raising his value for a longer-term contract the following year.

      • bg90027

        The problem with that is the budget is going to be so tight that they can’t afford to be surprised. They would be banking on Hughes valuing a multi-year contract on the open market more than what would be an above market AAV on a one year. If he took the 1 year, he’d be overpaid which might also make it harder to trade him if it came to that in order to make the budget.

        I think the new budget realities are really going to limit the qualifying offers to the no brainers like Cano and Granderson.

  4. Scout

    Having first round draft choices only helps if you use them wisely. That means staying away from the Cito Culvers of this world. I don’t have much confidence in the Yankee draft brains when it comes to number 1 picks. So here’s hoping the organization doesn’t try to be too clever — stick with the consensus talent for those slots.

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