The 2012 Rule 4 Draft has barely finished and I already know that I’m not a fan of the new slot bonus rules from the collective bargaining agreement. Scott Boras, Mark Appel’s advisor, has stated that the new rules have “created a mockery” of the draft and it’s hard to disagree with that viewpoint.
The new collective bargaining agreement has brought changes that I did not want to see in the draft – the only change that I would have liked was regarding draft pick compensation (and that includes allowing teams to trade draft picks). The draft allowed small market teams to compete, with teams like the Pirates and the Tampa Bay Rays repeatedly outspending their big market rivals. The harsh penalties act as a budget cap for each team, yet there are no similar penalties for major league payroll. When small market teams are able to find success they are then hindered in the draft – meaning that long term success will become unsustainable as they will soon have a weakened farm system because they are unable to draft top talent. The new rules also increased the likelihood that many high school prospects would opt to head to college instead of signing with teams, some would head onto other sports, however this effect will not be known until after the July 13th signing deadline – tough this was theorised prior to the draft.
Day two of the draft saw a huge amount of college seniors drafted earlier than expected, showing the first loophole found by teams in the rules set by the new collective bargaining agreement. As the draft budget of a team is reduced if they fail to sign a player, teams elected to select players that will be easy and cheap to sign, some for as little as $5k in the opinion of Kevin Goldstein. The Pirates took three college seniors – catcher Jacob Stallings in the seventh, shortstop DJ Crumlich in the ninth and right-handed pitcher Pat Ludwig in the tenth – with a combined slot value of $402,100. The money saved could then be spent on first rounder Mark Appel or high upside picks taken after the 10th (where there are no penalties for failing to sign a draft pick). The Pirates were not the only team to spot this loophole and other teams took it to a further extreme – the Yankees (five), Rangers (five), Red Sox (five), and Blue Jays (seven) topped the list of teams taking college seniors in the opening ten rounds of the draft. The Jays have since signed their fourth round selection, Tucker Donahue, to a four figure signing bonus.
The problem I have with this is that the best players are obviously not going first, which was one of the intentions of the new rules. Clubs cannot be blamed for taking this approach. It was obvious that signability would become a big concern as the draft progressed, however clubs then took this a step further, realising that saving money on easy to sign players they could free up budget space for high upside players later in the draft. Teams cannot be blamed for taking this approach, in my opinion they were almost forced to in order to free up budget space for potential tough to sign players and there was little point in taking a risk if it meant sacrificing a portion of their draft budget. As long as these draft rules continue, the meaning of a possible sixth to tenth round draftee will take on a very different meaning, as this will now mean easy to sign college seniors – and some of these players may be released from that organisation within a year of signing.
A further problem with the draft is now developing. As it seems like the Houston Astros are poised to sign the first overall pick Carlos Correa for a below slow bonus of $5MM, which could only be topped by two other teams without going over slot recommendation. As Kevin Goldstein tweeted, every team has pre-draft discussions about what it would take to sign so it’s likely that the Astros had conversations regarding the bonus with their top pick (and probably other options) prior to the draft. At $5MM, it means that their potential savings from that pick alone ($2.2MM) is greater than the recommendation from pick 16 onwards and is also higher than the entire draft bonus pools of the Los Angeles Angels and Detroit Tigers. Furthermore, the Pirates drafted a player who was the best available at that time in the first round, but due to the slot bonus pools they may have to be creative to sign the player. The $2.9MM recommendation for the eighth overall pick comes to 40% of the $7.2MM suggested for the first overall pick, which is also $1MM more than the second pick. The overall effect is that the extra money saved from the top end of the draft allows the Astros to draft based on talent rather than signability, giving them an unfair advantage over other teams.
With essentially capped budgets, Scott Boras was always going to dislike the new rules. As stated, I did not want to see any big changes made to the draft, but then further changes will also have to be made for next year. The difference between bonus pools will have to be reviewed, as some teams do have an unfair advantage as they have far more flexibility with their draft budgets than others, so I hope that the recommended slot bonuses are reassessed for next year to create a greater level of parity between the teams. The bonus pool rules and harsh penalties will remain for the duration of the CBA (though I hope that it will be removed from the next CBA), so plenty of college seniors with no leverage will be taken early in the draft when they shouldn’t really be taken for the next few years at least. The full extent of the effects of the new draft rules will be seen once the signing period concluded, however I highly doubt that I will change my view that the draft rules should not have been altered.
The new collective bargaining agreement has brought changes that I did not want to see in the draft – the only change that I would have liked was regarding draft pick compensation (and that includes allowing teams to trade draft picks). The draft allowed small market teams to compete, with teams like the Pirates and the Tampa Bay Rays repeatedly outspending their big market rivals. The harsh penalties act as a budget cap for each team, yet there are no similar penalties for major league payroll. When small market teams are able to find success they are then hindered in the draft – meaning that long term success will become unsustainable as they will soon have a weakened farm system because they are unable to draft top talent. The new rules also increased the likelihood that many high school prospects would opt to head to college instead of signing with teams, some would head onto other sports, however this effect will not be known until after the July 13th signing deadline – tough this was theorised prior to the draft.
Day two of the draft saw a huge amount of college seniors drafted earlier than expected, showing the first loophole found by teams in the rules set by the new collective bargaining agreement. As the draft budget of a team is reduced if they fail to sign a player, teams elected to select players that will be easy and cheap to sign, some for as little as $5k in the opinion of Kevin Goldstein. The Pirates took three college seniors – catcher Jacob Stallings in the seventh, shortstop DJ Crumlich in the ninth and right-handed pitcher Pat Ludwig in the tenth – with a combined slot value of $402,100. The money saved could then be spent on first rounder Mark Appel or high upside picks taken after the 10th (where there are no penalties for failing to sign a draft pick). The Pirates were not the only team to spot this loophole and other teams took it to a further extreme – the Yankees (five), Rangers (five), Red Sox (five), and Blue Jays (seven) topped the list of teams taking college seniors in the opening ten rounds of the draft. The Jays have since signed their fourth round selection, Tucker Donahue, to a four figure signing bonus.
The problem I have with this is that the best players are obviously not going first, which was one of the intentions of the new rules. Clubs cannot be blamed for taking this approach. It was obvious that signability would become a big concern as the draft progressed, however clubs then took this a step further, realising that saving money on easy to sign players they could free up budget space for high upside players later in the draft. Teams cannot be blamed for taking this approach, in my opinion they were almost forced to in order to free up budget space for potential tough to sign players and there was little point in taking a risk if it meant sacrificing a portion of their draft budget. As long as these draft rules continue, the meaning of a possible sixth to tenth round draftee will take on a very different meaning, as this will now mean easy to sign college seniors – and some of these players may be released from that organisation within a year of signing.
A further problem with the draft is now developing. As it seems like the Houston Astros are poised to sign the first overall pick Carlos Correa for a below slow bonus of $5MM, which could only be topped by two other teams without going over slot recommendation. As Kevin Goldstein tweeted, every team has pre-draft discussions about what it would take to sign so it’s likely that the Astros had conversations regarding the bonus with their top pick (and probably other options) prior to the draft. At $5MM, it means that their potential savings from that pick alone ($2.2MM) is greater than the recommendation from pick 16 onwards and is also higher than the entire draft bonus pools of the Los Angeles Angels and Detroit Tigers. Furthermore, the Pirates drafted a player who was the best available at that time in the first round, but due to the slot bonus pools they may have to be creative to sign the player. The $2.9MM recommendation for the eighth overall pick comes to 40% of the $7.2MM suggested for the first overall pick, which is also $1MM more than the second pick. The overall effect is that the extra money saved from the top end of the draft allows the Astros to draft based on talent rather than signability, giving them an unfair advantage over other teams.
With essentially capped budgets, Scott Boras was always going to dislike the new rules. As stated, I did not want to see any big changes made to the draft, but then further changes will also have to be made for next year. The difference between bonus pools will have to be reviewed, as some teams do have an unfair advantage as they have far more flexibility with their draft budgets than others, so I hope that the recommended slot bonuses are reassessed for next year to create a greater level of parity between the teams. The bonus pool rules and harsh penalties will remain for the duration of the CBA (though I hope that it will be removed from the next CBA), so plenty of college seniors with no leverage will be taken early in the draft when they shouldn’t really be taken for the next few years at least. The full extent of the effects of the new draft rules will be seen once the signing period concluded, however I highly doubt that I will change my view that the draft rules should not have been altered.
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