The Poor Man’s Analyst

Fixing the Draft

with 2 comments

What follows is a somewhat recent magazine article I wrote for my sports management club.

When prima donna amateur athletes demand multi-million dollar signing bonuses before they play a single game, something must be wrong. When the teams with the best records still have the opportunity to draft the top talent, the draft needs to be fixed. I’m talking, of course, about the little-publicized, and rarely talked about, Major League Baseball amateur draft. The last two seasons ESPN has televised the draft, and as a result it has been receiving increasing attention from fans and the media. With more people paying attention, one would think that MLB would take better care of its supply line for talent.

But that doesn’t seem to be the case, as the system is essentially a simple idea with a series of patches to appease the owners, agents, and players union. Take the idea of compensation picks. For the uninitiated, the way compensation works is as follows. Each off-season every player is ranked, by position, in order of ability and then categorized into either Type A or Type B status (or if they’re really bad, they don’t make either of these groups). If there are 100 middle infielders, the 20 best are considered type A, the next 20 are considered type B, and everyone else is not considered when draft pick compensation comes into play.

So what does this have to do with the draft? Let’s say, for example, the Dodgers want to sign Phillies outfielder Pat Burrell this off-season. Because the Dodgers signed Burrell, a Type A player, away from the Phillies, the Phillies receive L.A.’s first round draft pick as compensation, and are also entitled to an additional pick between the first and second rounds (this all assumes that Burrell is offered arbitration). That seems fair enough. But what if the Phillies go ahead and sign Manny Ramirez away from the Dodgers? Then the Phillies receive the same compensation the Dodgers did–a first round pick and the additional pick. Burrell and Ramirez are similarly valued players, so both the Dodgers and Phillies are keeping the same production on the field while receiving an extra draft pick for signing another team’s player instead of their own–they each give up nothing in value yet receive first round picks anyway.

For the 2007 draft, a high school pitcher named Rick Porcello was considered by most to be the second best pitcher available. With the Pirates picking at 4th overall and lacking pitching depth, it was expected that they would draft Porcello. But Porcello wasn’t picked by the Pirates, who drafted a worse player who would sign for less money. In fact, Porcello wasn’t picked until the Detroit Tigers drafted him with the 27th pick. Why did he fall so far? Signing bonus demands. Porcello wanted a lot of money to sign, or he would go to college instead. Only rich teams with money to burn could afford to take a risk on him. This happens all the time: top talent is drafted and signed by the good and rich teams instead of the bad and poor teams because the top players cost too much to sign.

How do we fix this broken system? Scrap the draft entirely.  All amateur players are considered free agents. To prevent teams like the Yankees and Red Sox from having a financial advantage, there would be an amount of money, say $15 million, that is allotted to each team every year. Teams are allowed to spend this budget however they want: on American players, Latin American players, or all of it on a guy like Rick Porcello if they feel that is the best option. To account for free agents lost, the team acquiring a free agent loses an amount of “amateur money” proportional to the contract their new free agent just signed. That amount of money would be credited to the team losing the player. This system would ensure that every team starts out on an even playing field, from a player development standpoint. Issues like market size and revenue sharing are less important than the overall framework of the system. As much as Hank Steinbrenner might object, this would be a realistic way to keep his growing wallet in check, and the proponents of competitive balance happy.

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Written by dcn29

November 29, 2008 at 6:49 AM

Posted in general baseball

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2 Responses

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  1. Isn’t an easier solution just to follow the NBA’s lead and have set contracts for each draft position. Teams will have no reason not to pick the best talent available. With revenue sharing even the lowest earning teams have no excuse not to pay a contract worth say $8M to the overall no 1 pick.

    Brian M

    December 6, 2008 at 11:22 AM

  2. Brian,

    Thanks for the comment. I actually do agree with you that the NBA has a very good system in place, and would be a good one to copy. There are two problems with it–one small and one big. The small one is that we wouldn’t know exactly how much to value each draft position. Right now, the slotting system attempts to do that, but many people think that the numbers aren’t high enough in the early rounds (and then some people think they’re too low).
    Second, the Players Association would never go for it. The reason MLB sets only slot “suggestions” is because they couldn’t negotiate what you’re advocating into the CBA. While this scenario may be even less realistic, it hasn’t been shot down yet by the union or by MLB.

    -Dan

    dcn29

    December 6, 2008 at 2:55 PM


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