When Major League Baseball and the MLB Players Association announced a new five-year Collective Bargaining Agreement today, including several changes to the draft, reaction from club executives and player agents was as swift as a Justin Verlander fastball. Most contacted by Baseball America or quoted elsewhere believed new penalties for exceeding bonus recommendations were so harsh that they would drastically alter the landscape of the draft.
That may not be the case. Until we learn exactly what those recommendations are, it's impossible to make an accurate judgment.
Under the new CBA, teams that exceed the "aggregate signing bonus pool" assigned to them for the first 10 rounds of the draft are subject to a tax on the overage and a loss of draft picks. A 0-5 percent overage would result in a 75 percent tax; a 5-10 percent overage would result in a 75 percent tax and the loss of a first-round pick; a 10-15 percent overage would result in a 100 percent tax and the loss of first- and second-rounders; and a 15 percent or higher overage would result in a 100 percent tax and the loss of two first-rounders.
That's a dramatic difference from the informal slotting system MLB had employed since 2000. The commissioner's office recommended specific bonuses for every pick in the first five rounds and a maximum for all subsequent choices, but couldn't really punish teams that decided to ignore those guidelines. In 2011, clubs spent a record $228 million on draft bonuses, and 20 of them exceeded their aggregate slot totals for the first 10 rounds by at least 15 percent.
However, the initial assumption that the new penalties would be based on something near the old slots doesn't appear to be correct. Last year, MLB valued the total worth of the 331 picks in the first 10 rounds at $133 million. Those slot numbers were less that MLB's guidelines from five years earlier, however, and were 44 percent lower than the $192 million teams paid to sign 303 of those players.
MLB won't get to unilaterally decide the worth of draft picks going forward, though. It negotiated the values with the union, and they reportedly (and not surprisingly) will be much higher. Sports Illustrated's Jon Heyman and CBS Sports' Danny Knobler tweeted that the aggregate pools would range from $4.5 million to $11.5 million, depending on how many picks a team had and where they fell. Yahoo's Jeff Passan tweeted that the total pool for all 30 teams would be around $200 million.
If you use MLB's 2011 slot recommendations, 20 of the 30 teams would have paid a 100 percent tax on their overage and forfeited two first-round picks. If the total for the first 10 rounds rises from last year's $133 million to the reported $200 million, that's a 50 percent increase. Extrapolating the 2011 numbers, just six clubs would have received the maximum penalty.
The limits on draft spending will restrict teams such as the Pirates (who spent a draft-record $17 million on bonuses in 2011) and Royals ($14 million), who are aggressive in the draft but can't go toe to toe with baseball's big spenders for major league free agents. But if the reports from Heyman, Knobler and Passan are correct, the draft cap isn't as devastating a blow as initially feared.
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