Draft Reform Heading in the Wrong Direction

Buster Olney posted on his blog about some of the ideas baseball is throwing around for reforming the amateur (Rule 4) draft.  All of these ideas are centered around attempting to lower salaries for draftees and stop putting small-market teams at a disadvantage:

The premise that guided the talks is that the draft is the best and easiest manner in which baseball can address the widening financial disparity between The Haves and The Have Nots. And the focus is on some kind of a slotting system, which would enable the worst teams to have access to the best players.

Olney mentions how Rick Porcello fell in the draft a few years ago due to signability concerns, but that singular example doesn’t really prove anything.  The draft, as it currently works, does the exact opposite of what these proposed rule changes suggest.  Sure, small and mid market teams passed on Porcello – but they shouldn’t have.  The draft is one area where small market teams can find value and Porcello for $3.5 million is pretty much a steal when you consider you get his first 3 years of performance in the majors for practically nothing and then have him under control for the following 3 years as well.  Sure, there is plenty of risk when signing young talent, but those risks still apply to proven free agents (ahem, Carl Pavano) and the draft requires a much smaller financial investment.

The perfect example of this is the Tampa Bay Rays, who routinely spend as much in the draft as the big market teams, and can consequently compete thanks to all of the young talent the have developed (and ironically, Olney discusses the Rays’ young talent in today’s blog entry).  Look at it this way: if a team were to invest $10 million a year on the draft, they would be spending the most out of any team and could easily sign multiple elite talents each year (of course this assumes good scouting, but obviously you have to be able to evaluate talent to succeed).  Sure, $10 million is a ton of money, but for what it currently costs to have Adam Dunn on your team, you could create a pipeline of elite, young talent.  That’s a much better way for a team on a limited budget to invest its resources.

Even this offseason, the Cincinnati Reds and Kansas City Royals made the two biggest amateur moves, and neither of those teams are large market powerhouses.  So it’s not just Tampa Bay who is investing in youth.  Clearly, the big market teams do not have a monopoly on this market.

Can a team with more resources more easily invest in the draft?  Well, of course.  For a small market team it takes persistence and patience, but my point is that, at least right now, it is a cheaper way for them to invest in talent.  Young players command less money and are under team control through their prime years (yes, great players can maintain their prime from ages 28-32, but most players peak around 25 or 26).

So a slotting system is not really going to solve anything from a competition standpoint (and to be honest, exactly what they’re trying to “solve” to begin with is debatable).

What’s more troubling, however, is what a slotting system like what Olney’s article suggests, would do to the players themselves.  Why should amateurs not be allowed to sell their abilities on the open market?  For some reason, we tend to think of players “earning” contracts with past performance, and obviously there is some truth to that.  But really, contracts pay players for what they will do.  Why should players out of high school or college not be able to capitalize on their potential?

Remember, for most drafted players, their signing bonus will be the only significant money they earn.  Should MLB really limit that bonus so that experienced players can earn a few extra million?

If baseball is really worried about “Haves” and “Have-nots,” then they should evaluate players the same way.  Let’s say that Prospect X could have signed in a free market for a $1 million bonus, but instead got “slotted” into a bonus of $100k.  Sure, still nice money for a young kid, but if that same prospect blows out his arm a couple years later, that bonus isn’t enough to necessarily secure him a college education.  Meanwhile, thanks to slotting, teams will invariably have more money to spend on free agents, so maybe Free Agent X signs a $90 million contract instead of an $85 million contract.  Either way, that player is set for life.  Obviously, I’m making up those numbers, but my primary point is I don’t understand the fascination with keeping money away from young and talented high school and college players who have devoted a large portion of their life, and consequently their future, to playing baseball.

Also adding to the problem here is that foreign players are not subject to the draft and consequently can sign for whatever they like.  So, in fact, baseball is penalizing young players simply for being American.

Bottom line is that liberal spending in the amateur draft currently stands to help both teams and players and MLB would be better off allowing amateur players to sign with whomever they like than instituting a slotting system.

I know that since I’m a Yankee fan, this seems like a biased opinion, and look – I understand that the Yankees have an advantage anywhere that money is concerned.  Personally, I think the Yankees should invest even more in the draft, but they prefer to spend more money to sign more reliable free agents and that’s their choice.  Competing primarily through young talent is more difficult because those players are still so far away from who they will be as baseball players at the time you sign them.  But evaluating those prospects correctly can give a small market team an edge.

Most importantly though, MLB should not penalize young players.  How much outrage would there be if normal MLB free agents were subject to a slotting system?  What if every free agent was ranked (much like the Type A and B system does now) and given a contract accordingly?  What would most people say to that?  Probably that it’s not fair.

And that’s exactly my point.

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