Feb
22

2012 Draft: Working with the draft pool

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The new Collective Bargaining Agreement has changed pretty much everything about the draft. The signing deadline moved up a month (which is a good thing), draftees can now only sign minor league contracts, and teams will be give a soft spending limit, a.k.a. the draft pool. As we found out on Monday, the Yankees will have $4,192,200 to spend on the first ten rounds of this year’s draft, which includes eleven total selections because of the compensation pick for failing to sign second rounder Sam Stafford last summer.

Aprroximately $4.2M for the first eleven players in the draft really isn’t all that much; the Yankees spent just over $5.03M on their top eleven selections last season without signing Stafford or tenth rounder Jonathan Gray. Like everyone else, they’re going to have to get a little bit firmer during negotiations to avoid the harsh penalties associated with exceeding the draft pool. That said, there are some creative ways to not necessarily circumvent the cap, but to maximize spending ability.

“Buying” More Cap Space

The draft pool is a soft cap; teams are allowed to spend more than allotted as long as they face the consequences…

  • Exceed by 0-5% — 75% tax on overage
  • Exceed by 5-10% — 75% tax on overage and forfeit next year’s first round pick
  • Exceed by 10-15% — 100% tax on overage and forfeit next year’s first and second round picks
  • Exceed by 15% or more — 100% tax on overage and forfeit first round pick in next two drafts
  • Any tax money paid or draft picks surrendered is redistributed to clubs that did not go over their tax pool.

Based on the penalties, teams can essentially “buy” an extra 5% of draft pool money as long as they’re willing to pay the 75% tax. For the Yankees, this would mean increasing their draft pool from $4,192,200 to $4,401,810. That doesn’t sound like much, but an extra $209,610 can go a long way in the draft. The cost of “buying” that extra $209,610 would be $157,207.50 in tax. That’s $157,207.50 of real money, money the Yankees wouldn’t be able to use elsewhere. So while it’s easy to say they should “buy” the extra draft pool money, it’s not necessarily that cut and dry.

Embracing Seniors

I don’t think any team would ever actually “punt” a high draft pick — meaning select a player with no intention of signing them — but the new Collective Bargaining Agreement protects against it anyway. If a team fails to sign a player taken in the top ten rounds, they lose the draft pool money associated with that pick and can not reallocate it elsewhere. You can’t just not sign a guy and give the money to other players. You can draft college seniors and given them small bonuses though, and use the savings elsewhere.

Seniors are usually afterthoughts on draft day. Sure, every once in a while there’s a college senior who is a legitimate prospect (Matt LaPorta and Adam Warren come to mind), but most of them are fringy prospects or organizational players. If they weren’t, they would have been drafted as a junior and offered a sizable bonus. Seniors are usually drafted late and given small signing bonuses, typically a few grand. The Yankees have drafted and signed seniors like Zach Arneson, Pat Venditte, and Matt Tracy for under $20k each in recent years.

Rather than wait until later in the draft to grab some seniors to fill out minor league rosters, a team could take one or two of them in the ninth or tenth round to save draft pool space. Signing them quickly for $25k or so puts more money in the player’s pocket than he would have gotten otherwise and frees up quite a bit of draft pool money to use on players drafted earlier. Slot money after the fifth round used to be a max of $150k, so signing two seniors in the ninth and tenth round for $25k each gives the club another $250k to use elsewhere, assuming that $150k remains in place. At some point this spring I’ll look at some college seniors that could be potentially useful both as prospects and draft pool pawns.

* * *

The new spending limitations are going to change the draft pretty drastically. Players will be drafted based on pure talent more than anything else, which wasn’t always the case in the past. The best players will come off the board first, and that hurts a team that drafts late every year like the Yankees. If you’re a contending team, you’re punished instead of rewarded. Go figure.

Categories : Draft

41 Comments»

  1. Hate the new draft. I don’t see how two-way players or high schoolers drafted in later rounds could be made to sign. This is going to hurt the level of play in MLB within the next couple years.

    • A.D. says:

      Only reason is the risk, case study is Mitch Mustain (who I don’t think really considered baseball out of HS) #1 QB recruit in the nation and one of the more decorated HS QBs ever, goes 9-0 as a true freshman starter at Arkansas only to basically never start again due to a series of QB shufflings, transfer, and greater competition

  2. CMP says:

    I’m shocked that big market teams like the Yankees and Red Sox allowed this to go through.

    • A.D. says:

      Not that many mega-spenders vs mid to small market teams. Plus in general most owners would support this as helps drive their costs down, and therefore presumably their profits up.

    • viridiana says:

      “If you’re a contending team, you’re punished instead of rewarded. Go figure.”

      This is the moreonic illogic of Selig, who has been obsessed with neutralizing the adv

      • viridiana says:

        …advantages of big mnarket teams (sorry -cut my earlier post off somehow). Arguably, though, these policies have actually been one of the root causes of salary escalation. How else can successful teams get top talent unless they outspend advantaged foes picking high in the draft? Amazing that nobody has called Selig on this.

  3. titit says:

    More then anything, any kid with a question mark surrounding them will probably go to college now and increase their value in two years. It will reduce talent for future MLB generation.

    MLB players who make it receive huge money, but now with smaller bonuses and no “real” money until at least the first year of arbitration, high end athletes may go towards other sports including football and basketball.

    Large bonuses were a way to attract talent, who then had to toil in the minors for a way before getting to the show. Contrast with football and basketball, where they are in the pro leagues quicker and college ball and football are huge draws, as well.

    The rationale behind this is noble, however like most regulations the actual outcome becomes problematic and over-reaches.

  4. Kevin Ocala, Fl says:

    Still can’t understand how the CBA, or any form of salary-cap in sports isn’t a form of collusion….what a bunch of rascally wabbits….

    • Robinson Tilapia says:

      It is. It’s just one that’s allowed. None of this claims to function as a “true” free market.

      • A.D. says:

        Agreed, the interesting point is that the players association is essentially negotiating for amateurs even though they do not actually represent amateurs or have their best interest in mind.

      • Kevin Ocala, Fl says:

        Absolutely it is. I’ve dealt with the “collusion” thing in business before. The amazing thing about pro team sports is the way that “collusion” has been marketed under the banner of “competitive balance” over the last 25 years, and nobody barks. That baseball who’s “Somehow” been allowed to run their empires with an anti-trust exemption, wants even more, amazing! Take the worst of capitalism and add add two parts socialism, voila! Amazing profits! I guess it gets under my skin, that I can’t get the chance to be a legal parasite on the fat masses. All these boys really studied and distilled the Goebbels/Hitler ideas of getting an agenda pushed down peoples throats.

  5. Brandon W says:

    they lose the draft pool money associated with that pick

    Is that based on slot for that pick?

  6. RkyMtnYank says:

    “The new spending limitations are going to change the draft pretty drastically. Players will be drafted based on pure talent more than anything else, which wasn’t always the case in the past. The best players will come off the board first, and that hurts a team that drafts late every year like the Yankees. If you’re a contending team, you’re punished instead of rewarded. Go figure.”

    I guess I don’t understand this whole statement. Regardless of the way it used to be, isn’t this exactly the way it is supposed to be? It’s the whole purpose of the draft, if you’re a good contending team then you get a higher draft pick that is supposed to be less talented than higher draft picks that go to worse teams. This is how you try to restore the competitive balance versus teams like the Yankees. We may not like it but why is it wrong?

  7. Rich in NJ says:

    Will the CBA really put more money into the pockets of current MLB players over time? If not, it’s almost as if Michael Weiner is working for the owners.

    • A.D. says:

      Well it increased the min MLB salary which will have ARB knock on effects so it should increase players in MLB at the bottom of the spectrum, along with lower threshold for super-two status.

      But it’s not going to make more money for the guys already signing million dollar contracts/extensions.

      • Rich in NJ says:

        OK, so there are some benefits, but I’d like to see projected overall payroll growth over a five or ten year time horizon. It seems like it is draining a driver of salaries, but maybe not.

  8. Plank says:

    I believe a player can elect free agency if they are drafted and not offered a certain percentage of slot. The drafting seniors plan therefore isnt feasible. It was in response to Brandon Loux a few years ago.

  9. JoeyA says:

    Does Bud Selig and the powers that be understand that baseball is not the first option for most athletes in this country anymore…and this limitation on spending in the draft will only further that problem.

    Organizations like RBI (Reviving Baseball in Inner-cities) acknowledge this issue and do what they can to help it, but when an athlete has a choice between baseball, basketball and football, with the hurdles already inherent in becoming successful in the MLB, this will add to that challenge.

    A guy like ARod would probably be a QB instead of who he is in baseball.

    • Preston says:

      I agree with you in theory. But A-Rod went number one and got his money earlier than he could have in any other sport. Plus the potential earnings in baseball is higher than in other sports, especially football. So the A-Rods will still come. It’s the second and third round picks that have D1 scholarships that won’t be as likely to come for 150k as they would by 500k.

    • Kevin Ocala, Fl says:

      But all the other team sports have caps for years, no?

  10. CMP says:

    It sure seems like the Yankees are gonna become handcuffed in draft and in the international market with these caps, so unless they’re prepared to fall back to the pack, they’re gonna end up having to go after free agents even more aggressively.

    • D-Lite says:

      True, it limits the spending over slot benefit, but theYanks have been good finding value in the draft. Bichette, Gardner, warren, Phelps, etc weren’t big ticket guys and are or likely to be at least productive MLBers. If anything this just makes Damon O. that much more vital to the org.

    • Plank says:

      You just summed up why the MLBPA agreed to these new rules.

  11. JonS says:

    “The best players will come off the board first, and that hurts a team that drafts late every year like the Yankees. If you’re a contending team, you’re punished instead of rewarded. Go figure.”

    How is that any different from other sports like football and basketball?

  12. dean says:

    Still can’t believe the players agreed to this……

    • Havok9120 says:

      Okay….what the heck?

      Another MLB deal. Sigh. So thats 3 guys on the 25-man who will spend half or more of the season on the 60-day DL.

      • DM says:

        At least you’re consistent. Most everyone else hasn’t questioned the “major league” contract status that was instantly attacked with Chavez and Ibanez. They know he can’t pitch until mid-year at the earliest but still guaranteed money.

  13. Januz says:

    In my humble opinion, the Yankees will be fine, In fact, they were setting the stage for their future draft model in 2010 & 2011. What they did were getting guys that were considered “Unsignable” under contract at prices far below what was expected (Dan Camarena comes to mind), and not signing guys that were risky (Like Sam Stafford), or really only would have signed with an astronomical contract. In addition while the rounds were cut to 30, they will be it is not a big distraction, because they only signed one guy (Joey Maher) later than the 30th Round. I feel confident about what they are doing.

  14. Mike R. says:

    I don’t see the problem in draft picks being based on pure talent. That’s how it works in every other sport and I’m perfectly fine with that.

  15. I am not the droids you're looking for... says:

    I wonder which team will be first to suck up the huge penalty (in picks) of going waaaaaaaay over the limit to sign someone.

  16. Preston says:

    I don’t think the new draft rules will affect us that much. Every team will be restricted in the same way. Teams drafting higher will get the better players which for the most part has always been true. The only difference will be that more athletes will choose to go college in which case we’ll get compensatory picks the following year. The key will still be who scouts the best and who develops the best. The thing that will really hurt us is the International cap. Not that we won’t still be able to find nice players (Nova, Aceves, Nunez etc.) but it’ll be harder to get elite players like Montero and Sanchez.

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