New Draft Rules Put Premium On Predictability
Since its inception in 1965, Major League Baseball's draft has been the perfect mechanism to introduce high school and college talent to the pros. Come draft day, scouts sit at a table and ruminate about "good faces" and 80-grade arms amid a pile of deli sandwich bags and pizza boxes in the war room. Potential draftees wait patiently for the call before hugging mom and dad in celebration of a dream attained. The process plays out in an orderly fashion, with a minimum of backroom dealing and gamesmanship and an emphasis on fairness.
Uhh . . . not exactly.
Maybe it worked that way in Rick Reichardt's heyday, but things have changed markedly over the past quarter century. The influence of agents, or "advisers" as they're called to keep the NCAA at bay, increased (with an emphasis on one particular agency in Newport Beach, Calif.). And baseball's owners started to feel as if they were held hostage by the process. They began sending stronger signals to commissioner Bud Selig that they wanted to get their hands back on the wheel, and the draft became a centerpiece of the new Collective Bargaining Agreement.
Now we're about to see the fallout. Draft spending increased from $161 million in 2006 to $236 million in 2011, and it's anticipated that clubs will spend closer to $200 million this year. Rob Manfred, MLB's executive vice president of labor relations, says it was more a case of making the draft operate as its founding fathers intended.
"What we hoped to achieve through the system was to restore the draft to its original purpose," Manfred says. "That's what the commissioner said when we got into this whole business. We see that purpose as the best players being available to the lowest-finishing clubs. We think the beauty of this system is that they're going to be available at a reasonably predictable price."
The MLB Players Association wasn't anxious for an overhaul, but relented in several areas because the commissioner's office made it such a priority. The draft's new bonus structure is part of a bigger, overarching framework that includes the international signing market, free-agent compensation changes and a bonus-pick lottery for low-revenue teams.
"These were all management proposals," union executive director Michael Weiner says. "We didn't come in looking to change the draft. It was an important area of negotiation from the clubs' perspective. They claimed it was designed to improve competitive balance. We said, 'The teams that are spending a lot of money in the draft recently are teams like Pittsburgh and Kansas City, who see it as an arena where they can really compete.' We raised questions and we made compromises. But it remains to be seen what effect this will have on competitiveness."
After years of making bonus recommendations and finding that some clubs toed the line while others fielded the obligatory admonishing phone call from Selig and then spent what they wanted, baseball has enacted a system with more teeth in it.
Teams have a predetermined amount of money available to spend each year. The Astros, who pick first this year, have an $11.2 million budget for 11 picks through the first 10 rounds. The Twins have 13 picks and a $12.4 million pool over the first 10 rounds. At the bottom end of the food chain you'll find the Angels, who can spend a mere $1.6 million on eight picks after losing their top two choices as compensation for signing free agents Albert Pujols and C.J. Wilson.
Teams incur progressively steeper penalties for overspending. Exceed your designated limit by 5 percent, and you pay a 75 percent tax on the overage. As the percentage increases, offending teams could be on the hook for a 100 percent tax payment and the loss of two future first-round picks. Those penalties might be worth considering if the prize is a Bryce Harper, Stephen Strasburg or another once-in-a-generation prospect. But the 2012 draft is one of the weakest in recent memory, so this will not be the year.
If you whiff on signing a pick, you can't use that money on other players. Last year the Blue Jays failed to sign pitcher Tyler Beede, the 21st overall pick, but spent the money budgeted for him elsewhere. If they had the same result this year, they would simply lose the allotted $1.8 million for the slot.
After the 10th round, teams can sign as many players as they want for less than $100,000, all the way through round 40 (as opposed to 50 rounds under the previous system). Anything over $100,000 for a player will count against a club's budget. An American League scouting director predicts that college juniors will be lining up for "one-size-fits-all deals" and help to fill those minor league roster spots. "We're going to need numbers," the scouting director says.
Some elements of the new system are popular. Scouting directors seem to favor the prohibition on major league contracts for draft picks. Teams also like the new mid-July signing deadline (July 13 this year), a month earlier than the previous D-Day of August 15. It makes for a month less of indecision and sweating. And the quicker draft picks sign, the quicker they can go out and play.
"When we had that long waiting period until August 15, it made no sense," a National League scouting director says. "This will be huge, especially with the college guys. The point is to get them out there, get them playing and get them to the big leagues so they can help your team a little sooner. This accelerates them a hair. Instead of going to High A their first full season, they may go to Double-A. This puts them a little closer."
Some front-office people, such as Padres general manager Josh Byrnes, think Manfred and Weiner did a skillful job in establishing new parameters. San Diego has six of the first 70 picks and the third-highest bonus pool at $9.9 million, so it has a lot at stake in the 2012 draft.
"We had sort of gotten away from the draft model that if you're a player, you want to be taken as high as you can possibly be taken," Byrnes says. "I think this system reinforces that concept. You want to get drafted as high as you can get drafted, rather than deliver yourself to the team that will write the biggest check. This system really rewards good scouting as opposed to strategy."
Signability Is Paramount
Predictably, the changes prompted bellyaching in certain circles. The Pirates and Royals have, indeed, spent liberally in recent drafts. In the overall scheme of things, that $10 million-12 million annual investment is a pittance compared to what the Yankees, Red Sox, Phillies and other big shooters spend on free agents. But large draft payouts don't necessarily ensure a team will hit the jackpot. BA rated Pittsburgh's farm system as the 11th-best in baseball entering this year, and that's not going to rescue the Pirates from two decades of losing anytime soon.
"Just because you're spending a lot of money, it doesn't mean crap unless you're evaluating the right players," a NL scouting director says. "Sometimes it's eyewash. If you're throwing a lot of money at guys and evaluating it right, theoretically it should give you an advantage. But it doesn't matter if you're throwing money at the wrong guys."
Regardless of the system or the size of bonuses, the concept of "signability" always has been pivotal in the draft. Scouts can salivate over a player's wheels, arm, bat speed and intangibles. But it doesn't matter if his asking price is beyond an organization's comfort zone. Numerous scouting directors and front-office officials say MLB's new system has raised the stakes for teams. In the past, clubs had the option of ponying up an extra $500,000 if an area scout misread a draft pick's price point. No more.
"I think signability is more critical this year than in any other year I've been involved in the draft," an AL scouting director says. "It's going to require teams and people like me to do things we aren't normally accustomed to doing, and that's getting a bottom line figure by the draft. There will be deals cut because basically it's our jobs at stake now. If we don't sign an individual for the amount that we have to sign them, it could jeopardize our whole draft."
The athletes affected by the process come in all shapes, sizes and talent levels. A year ago, the Royals gave No. 5 overall choice Bubba Starling $7.5 million over three years to dissuade him from playing quarterback at Nebraska. This year Kansas City has $3.5 million available for that same No. 5 choice and a $6.1 million allotment for its first 10 picks. So it's safe to say Starling would be a Cornhusker right now if this system were in place in 2011.
Last year, high school outfielder Josh Bell made it clear he was going to Texas until the Pirates forked over a $5 million bonus. Bell hit the mother lode as the 61st pick in the draft. This year the 61st pick, which belongs to the Astros, is penciled in at $844,100. So something has to give.
"Now you would either have to select him in a spot where you can give him a lot of money, or he's going to go to college," an AL scouting director says. "There are a lot of other high school kids that we've taken in rounds two to 10 and given a lot of money to, and we're not going to be able to do that now. So you won't select them or you won't sign them, because you're going to offer a slot that's way lower than they're hoping, believing and thinking they're worth."
The elite talents—like Georgia high school outfielder Byron Buxton, Baseball America's top-rated prospect for the draft—will sign in the first round and pocket enough money to be set for life. Some other kids who simply aren't cut out for college also will take the plunge. But many decision-makers think it's inevitable that the new system will funnel a lot more prep talent to colleges and junior colleges. That's just fine with the commissioner's office, which doesn't mind the thought of colleges serving as a feeder system. Welcome to baseball's more NFL-like approach.
It remains to be seen how well-equipped college baseball programs are to handle the influx. NCAA Division I programs are currently limited to 11.7 scholarships each, and MLB and the union are working with the NCAA to contribute money to expand that allotment. Baseball also needs to find a way to better attract more African-American talent. A window of opportunity could be opening as more parents debate whether to let their kids play football in the midst of the NFL's concussion crisis.
Trust Your Area Scout
The new system places a premium on area scouts to forge relationships and do the reconnaissance to give teams a sense of security. In this respect, it marks a return to values that baseball held dear before the draft became such big business.
Eddie Bane can relate. During his time as scouting director with the Angels, Bane took some major signability hits. The list of prospects who got away includes Khiry Cooper, who passed on pro baseball to play wide receiver at Nebraska, and Pat White, who made a similar choice to play quarterback at West Virginia. But Bane also scored a monster hit in the 2009 draft when he selected New Jersey high school outfielder Mike Trout with the 25th overall pick.
Amid rumblings that Trout's price tag was increasing to as much as $3.5 million the night before the draft, Bane had confidence in his initial number because Los Angeles was convinced that Jeff and Debbie Trout would stay true to their word. Angels scout Greg Morhardt had a longstanding relationship with the family, and it paid off when Trout agreed to sign for a slot bonus of $1.215 million a week after the draft. If the new system does anything, it magnifies the importance of developing ties with players.
"Now you better spend time with that kid in August and September or go up and watch his high school team play basketball in November," says Bane, now a major league scout with the Tigers. "You take him out to dinner then instead of getting to know him in May. That's where the area scout can do some damage. I hate to see the area scout at the Area Code Games, and all he does is sit there for four days and not interact with the parents or take the kid out to dinner. That's where you make your hay."
Predraft deals are technically against baseball rules, but it's no secret that they happen every year. They'll become even more critical in 2012 as teams will have so much less wiggle room.
That dynamic only can heighten the profile and influence of baseball's relentless foot soldiers: the area guys. One AL scouting director says he expects to see more area scouts in homes this year on draft day, collecting signatures just moments after clubs have made their selections.
The old agent ploy of slow-playing negotiations for leverage is passé, because the leverage belongs to the clubs now. If an adviser isn't willing to give a concrete answer, a team will simply pass and move on to the next player. It's a risky bet for a kid and his parents to dally. Wait too long, and you might find yourself signing 10 spots later for significantly less money.
"I've told agents, 'Talk to your client, get your bottom-line number and then be by the phone," a NL general manager says. "When it's draft day, if our slot is $1 million and our pick is five minutes away and we call you and say, 'Hey, we're going to take your guy and we're going to offer him 900,000,' it's yes or no. It's not a negotiation. If you say no, you better hope he doesn't fall three more picks, because then you're swimming upstream."
Say Goodbye To The Wild West
Some wonder if agents eventually could be rendered obsolete under baseball's changing draft landscape. If a prospect is slotted in for $2 million as the 17th pick in the draft, why does he need to hand over $100,000 to an agent to facilitate his deal? His parents can simply put out an all-points-bulletin that he's amenable to signing and pocket the entire amount. Mom and dad don't have to worry about being overwhelmed by the process, because there's little negotiating involved. In some respects, it's less hassle-filled than strolling into a showroom and buying a new car.
Long before the draft takes place, families will have to sit down and determine whether the value of a college scholarship outweighs the instant reward of a signing bonus. In many cases, they'll be making the call without stars in their eyes.
"This is going to be a serious education for players and their families," an AL personnel man says. "It's been like the Wild West out there for a while. But you're not comparing apples to apples with the new system and this one. It's not even in the same orchard."
Changing times may also accentuate the different approaches of agents. San Francisco-based agent Matt Sosnick has built a successful business by working the draft, forging ties with front offices and, in numerous cases, getting players bumped up because teams knew they were amenable to signing quickly. Last year, Sosnick represented four of the first 60 players in the draft. He thinks teams are going to be more anxious than ever to work with agents who are up front and less inclined to foster an air of mystery.
"I think teams are going to make every effort, particularly in the first couple of rounds, to try to have very finite deals in place before they make a pick," Sosnick says. "There's no safety net of another pick or the ability to spend money later in the draft. It ends up being a do-or-die with every pick you make. And I just don't foresee many teams being willing to pick a guy with no thought to what it's going to cost them."
Scott Boras, of course, takes a decidedly different approach. Given his inventiveness and lengthy track record of blazing trails in draft strategy, many front-office people wonder if Boras can find another loophole to exploit. If he has, he's keeping it a secret.
Boras says he thinks the new system places more of a premium than ever on experienced advisers who can evaluate talent and correctly assess the value of prospects, rather than be backed into a corner by external forces.
This year's draft might not prove to be a real test of potential glitches in the system, because the talent pool is relatively weak, and might breed a false sense of security among clubs. Think back to the 2005 draft that produced Justin Upton, Alex Gordon, Ryan Braun, Ryan Zimmerman, Troy Tulowitzki, Cameron Maybin, Andrew McCutchen and Jay Bruce among the top 12 picks. It might be tough finding enough money for a class like that under the new system.
"The need for experienced representation that knows the value of athletes is in the greatest demand in that type of situation," Boras says. "If a player doesn't know what his value is, he can fall prey to this need for early negotiation and not getting a number that he's truly worth. That evaluation is very difficult in the draft. It requires a great deal of experience and very knowledgeable people who've been through it many, many times."
Boras has been relatively muted in his criticism of the new draft system, but he sees areas where he says it can be improved. For starters, he would like to see teams given more spending flexibility. Not all drafts are created equal, Boras contends, so why not give teams a designated amount of cash over a five-year period, then let them make the call on how much money they should allocate each year based on the talent available?
"If you went to teams and said, 'Over a five-year period, you can spend this amount of money and spend it in whatever years you want,' that system has more of a chance of fairness," Boras says. "In drafts, the talent comes in waves. It does not come in a uniform annual basis. We want scouting to take its effect. If you give teams flexibility, your scouting system might tell you, 'This is going to be a great year.' Scouting operates the way it should. We have to accommodate for the relative lack of consistency with which entry talent is available. This system is void of that very critical consideration."
Boras also proposes rewarding successful low-revenue teams. So if the Rays pick high in the draft and finish first in the AL East, they should be allowed to retain a $10 million allotment the following year, for example, even if they're picking 28th.
"If you're a revenue-sharing club and you win a division, your draft allocation does not get limited," Boras says. "But you have to win. If you finish second, it doesn't work."
Those ideas could be grist for future discussion and revision. In the short term, baseball's 30 clubs will have to navigate on the fly. A team can try to cut corners with its first-round pick in anticipation of using the savings in subsequent rounds—with no certainty which players will be available later in the draft. It's the equivalent of trying to assemble a jigsaw puzzle with only some of the pieces in front of you.
"Before, you could do it one player at a time," says Jeff Luhnow, who owns the No. 1 overall pick in his first year as Astros GM. "Let's make a decision: Are we going to go over slot on this player or not? Of course, your overall budget was impacted. But each pick sort of stood in isolation. Now you have to be more of an orchestra conductor. There's definitely going to be more coordination of signings required."
The process of amateur talent acquisition has entered a whole new phase in its evolution, and front-office people, scouts, advisers, parents and the players themselves are about to see how the storyline unfolds. The draft is set to go. We're about to find out if baseball is ready for it.