MLB Attempts Aren't Slowing Draft Spending
CHICAGO—Commissioner Bud Selig and his cohorts at Major League Baseball don't understand the fundamental principles of the draft. Lucky for them I'm here to help.
There are just two things they need to know:
1. The draft is the most cost-efficient way to acquire talent.
2. Teams will spend whatever it takes to sign drafted players.
Recognize those truths, and Selig and Co. won't have to waste their time figuring out why bonuses continue to escalate and what might be done to stop them.
This year, MLB worked as hard as ever to keep bonuses down. As it has every year since 2000, the commissioner's office gave teams guidelines for every bonus in the first five rounds and a maximum bonus for all subsequent picks. Those recommendations haven't changed since 2009 and are lower than they were in 2006, yet MLB cajoled teams into not making above-slot offers until just before the Aug. 15 deadline.
So what happened? Clubs spent $132 million on bonuses (and $7 million more on guarantees) on the final day alone, much of it in deals not announced or finalized until the final hour before midnight. All told, teams paid $228 million in bonuses and $236 million in guarantees, destroying the records of $196 million and $202 million established the year before.
Changes Of Heart
MLB never saw this coming. When bonus spending reached $156 million in 2006, owners sought and received adjustments to the draft in a new collective bargaining agreement. The two biggest changes were the establishment of a signing deadline and drastically improved compensation for unsigned picks in the top three rounds.
MLB officials publicly said the new rules would allow teams to focus on ability more than signability, and privately crowed that they'd give clubs extra leverage. However, the latter belief ignored the basic truths mentioned above. Teams aren't going to walk away from talent, especially when players are a relative bargain because they can negotiate with only one club.
In the first year of the current CBA, draft bonuses decreased slightly to $152 million as most clubs toed MLB's line. But there was dissatisfaction that a handful of teams, most notably the Tigers and Yankees, aggressively grabbed a disproportionate share of top prospects. Bonus spending jumped to $188 million in 2008 and has risen every year since.
The Pirates have been the biggest culprit of all. In the last four years, Pittsburgh has spent $47.6 million on draft bonuses, far and away the most in baseball. This year, the Pirates paid their top two picks, Gerrit Cole and Josh Bell, a total of $13 million—more than any team ever had spent on an entire draft. Pittsburgh's final tab came to $17 million, breaking the old record by more than $5 million.
In an irony that hasn't been lost on scouting directors, the Pirates' largesse followed the hiring of Frank Coonelly as club president. Coonelly's previous job was as senior vice president at MLB—where his duties included policing the informal slotting system.
Coonelly isn't the only former MLB official whose perspective has changed. Sandy Alderson helped devise the slotting system as MLB's executive vice president of baseball operations from 1998-2005. Last October, the Mets hired him as general manager.
New York ranked 26th in bonus spending from 2007-10 despite having the advantages of a new stadium and television network in baseball's largest market. This year the Mets ponied up a club-record $6.8 million.
If the men who implemented and enforced the slotting system don't think it makes sense to adhere to it, why should anyone else?
Hard Slotting Isn't Coming
Selig repeatedly has stated his desire for mandated draft bonuses in the next CBA once the current deal expires in December. But it's not going to happen.
Sources on both sides of the CBA talks concede that the chances for hard slotting in the next deal are the same as Selig allowing Scott Boras to determine the slot values. The MLB Players Association resisted the idea in the last negotiations and will balk at any kind of cap on any kind of earnings.
In that way, the union is saving MLB from itself. The union wouldn't give the owners mandated slotting without getting something equally valuable in return. Baseball wouldn't save much money overall while curtailing a way for small-revenue clubs to compete, and hurting the quality of talent available (because many more high school players would opt for college with reduced bonuses).
More likely draft changes include moving the signing deadline four to six weeks earlier. Free-agent compensation may be tweaked to reduce the number of supplemental first-round picks, and perhaps the trading of draft choices will be permitted. None of those modifications should affect bonuses, however.
The more the commissioner's office tries to clamp down on draft spending, the more unintended consequences it creates. I'll offer one more free piece of advice: Get the July signing deadline so players can get on pro diamonds earlier, and then leave the teams alone.
Most clubs are going to spend what they want anyway, and this way there will be a lot less heartburn in the MLB offices.