International Draft Is About Money, Not Balance Or Transparency
An international draft is primarily about money. Major League Baseball wants a draft because it will give owners a systematic way to control their labor costs, meaning less money for players and more money for owners. In turn, that’s why the international amateur players do not want a draft.
To most people, all of that is probably obvious. MLB is a business. The business owners want to limit the bonuses they pay to players in the draft and players in the international market. They want to limit the salaries of minor league players, many of whom who make less than $10,000 in annual salary. They want to limit salaries for MLB players, and while it’s a harder fight for cost control there, because the players’ association looks out for the interests of those players, devices like attaching draft-pick compensation to free agents are one tool owners have used to suppress player salaries.
None of that should be surprising. However, speaking on Wednesday at the general managers meetings, MLB commissioner Rob Manfred attempted to frame an international draft in a different light.
“From my perspective there’s two things about the international draft that are overriding in terms of their importance,” said Manfred, according to Baseball America’s Kyle Glaser. “No. 1, I believe in today’s climate in baseball, entry-level talent is crucial and that an effective draft system is a really important way to preserve competitive balance. It’s not about money. It’s not about paying people less. It’s about access to talent and giving out that access in a way that is pro-competitive balance.
“(Secondly), one of the things in this process is transparency is a great thing. It solves a whole lot of problems that are difficult to handle otherwise. A draft is a very transparent system, and I think the industry (and) the amateur players outside the United States, Canada and Puerto Rico would benefit greatly from a system that is more transparent.”
Follow The Money
The motivation for MLB owners to implement an international draft is cost containment. Until the current CBA changed the rules beginning in 2012, there were no restrictions on what teams could spend on international amateur players. With bonuses rising, MLB implemented bonus pools as a cost-control mechanism, both in the draft and in the international system.
In the draft, teams that exceed their bonus pools by more than five percent lose their first-round pick, while going more than 15 percent over would cost a team two first-rounders and a 100 percent overage tax. It’s an effective restraint that has deterred any teams from reaching into the penalty range.
For the international market, MLB set up what on paper looks like a system of parallel penalties. Go over your international bonus pool by more than 15 percent and you can’t sign anyone for more than $300,000 for two years. However, MLB didn’t grasp the realities of the international market. Teams soon realized that if they were willing to exceed their international pools, they could snap up multiple years’ worth of top-end talent. While the penalty has a real impact, some of the best international prospects in baseball signed for $300,000 or less, so even under the penalty there is still a ton of quality talent for teams to find in Latin America. That’s why 18 teams—from all different market sizes—have blasted through their bonus pools.
While the international bonus pools do curtail spending to a certain degree, an international draft would allow owners a much stronger system of cost containment. Under the current system, a player has the ability to negotiate with 30 teams. In a draft, a player once he’s picked can only negotiate with one team. That significantly restricts the player’s leverage, especially when combined with draft bonus pools designed to keep spending in check.
Lucius Fox is a great example. Fox went to high school in Florida but moved to the Bahamas, allowing him to become an international free agent in 2015. Had Fox stayed in Florida, it’s questionable whether he would have even been a first-round pick. Instead, he signed with the Giants for $6 million. By being able to negotiate with multiple teams to drive up his price, Fox received a bigger bonus than anyone in the 2015 draft other than the No. 1 overall pick, Dansby Swanson ($6.5 million).
An international draft would instead allow owners to limit what they pay players. Latin American players in particular are at a severe disadvantage in leverage with a draft. In the U.S., a high school senior at least has the ability to tell a team he will go to college instead of signing. A college junior has the option of returning for his senior season. That’s a move that worked for Mark Appel when he passed on signing with the Pirates as the No. 8 overall pick in 2012, returned to Stanford for his senior year and went No. 1 overall to the Astros in 2013.
What is a kid from the Dominican Republic or Venezuela supposed to use as leverage? He doesn’t have the same option to tell a team he’s going to Stanford or Vanderbilt instead. Junior college isn’t a realistic option. Many of these kids are coming from poor families with extremely limited resources. If a team drafts a kid from San Cristobal and gives him a lowball offer, he’s probably going to take it instead of going back home and waiting another year. MLB could implement hard slots or tell teams they are required to offer at least 90 percent of the slot value for an assigned pick to give the player’s some protection, but ultimately a draft is a leverage killer designed to systematically limit what owners pay players.
It’s Not About Competitive Balance
When MLB officials talk about competitive balance, it’s often a code for cost control. Neither the current system nor an international draft is a true competitive balance measure.
The current system assigns international bonus pools to each team, with the size of each team’s pool based on major league winning percentage the previous season. The team with the worst record gets the biggest bonus pool, while the team with the best record gets the smallest pool. So this year the Phillies, who play in one of MLB’s biggest markets, had a pool of $5.6 million, while the Royals, Cubs, Pirates and Cardinals each got around $2 million.
How is giving one team a $5.6 million pool and another team $2 million competitive balance? Teams that put a bad major league team on the field get rewarded with a competitive advantage, but there is no balance. Teams are not competing on an even playing field. If MLB gave each team a firm bonus pool of $10 million and said spend as much or as little of it as you want, then that would be balance. Team could make decisions for themselves and scouts would compete on a balanced field. This system would also be cost containment for the owners, or at least cost certainty, and it would at least meet the definition of balance and a level playing field.
An international draft would even further promote what some in the game refer to as competitive imbalance. The worst team in baseball already gets the No. 1 pick in the draft and the biggest draft bonus pool. An international draft—assuming it’s structured similarly—would give them two No. 1 picks, the biggest draft bonus pool and the biggest international draft bonus pool.
It’s rewarding teams with a competitive advantage for making decisions that led to having a bad major league team. It creates even more incentives for tanking, promoting competitive imbalance at the major league level when there are teams spending multiple seasons without concern for the winning percentage of the varsity team with a system that offers more rewards for winning 60 games instead of 80.
If every team had the same bonus pool and the ability to negotiate with any eligible amateur player, then that would be a system with balance. An international draft restricts teams’ access to sign players and by its design prevents teams from competing for players on an even playing field. It reduces competition, and it certainly isn’t balance.
It’s Not About Transparency
Manfred is right that transparency is a great thing. Unfortunately, MLB’s history is that it is anti-transparency. As Allan Simpson detailed in the Baseball America Ultimate Draft Book, MLB used to withhold the names of the players drafted after the first round for a week, then even refused to reveal what rounds those players were picked for another four months. As Simpson wrote:
“Ostensibly, MLB’s approach was aimed at keeping information away from agents and college coaches at a time of significant bonus inflation. The clandestine efforts by the powers that be to keep the public in the dark—and often the drafted players themselves, in many cases—and forgo an obvious opportunity to market the game only spurred my resolve to expose this inequity.”
Once Simpson and BA let it be known that they were planning to track down and publish every pick in the 1998 draft, MLB finally agreed to make the full draft list available to the public.
In the modern international arena, anti-transparency is baked into the DNA at MLB. One of the most frequent complaints from international scouts is that the commissioner’s office does not listen to their input regarding how to improve the international signing system or communicate well with them regarding important international matters.
In recent years, MLB made rules banning kids from entering team academies, making it more difficult for scouts to see them. Despite Venezuela posing a safety risk for scouts and MLB moving its own Venezuelan showcase to Panama (an event that has since been cancelled), MLB rules restrict the ability of a team to pay for a Venezuelan player to travel to the Dominican Republic to conduct an evaluation in an environment that doesn’t jeopardize their safety. Cuban players who submit their paperwork to MLB to become free agents often wait around for months and get no substantive response from the commissioner’s office when they inquire with them to learn more.
Teams are pouring more than $100 million in bonus pool overage tax payments to the commissioner’s office, which according to the CBA “may use the tax proceeds to further the international development of baseball,” but where is all that money going?
The draft in the United States, meanwhile, is not transparent. The draft is full of back-room dealings, with teams and agents openly ignoring MLB rules by negotiating before the draft and steering players toward certain teams, either to cut an under-slot deal with a high pick or promising a well above-slot bonus if the player is able to slide to them with a later pick. In some cases, teams leave a player hanging out to dry after promising him money at a certain pick and not following through by drafting someone else instead.
The lack of transparency in the draft became famous in recent times when the Astros drafted but did not sign lefthander Brady Aiken with the No. 1 overall pick in 2014. Aiken and the Astros originally agreed to a $6.5 million bonus—with the club selling Aiken jerseys in its store complete with the No. 1 on the back—but the Astros were uncomfortable with Aiken’s elbow during the physical and backed out of that deal. That, in turn, prompted the Astros to also back out of their $1.5 million deal with their fifth-round pick, righthander Jacob Nix, since signing Nix while losing the full slot value from Aiken not signing would have put the Astros over their draft bonus pool and cost them a future first-round pick. Neither player signed. Nix filed a grievance against the Astros and received an undisclosed cash settlement. Transparency at its finest.
Braves Paid High Price For Little Reward In International Signing Scandal
In the end, those involved in the Braves international violations paid a very high price for very little reward.
If Manfred is serious about bringing more transparency to the international arena, that would be tremendous, but for it to be more than lip service, the commissioner’s office needs to start from within. MLB can’t claim to be in favor of transparency, then in the same breath not be transparent about its intentions for pursuing an international draft. At its core, an international draft is about money. Manfred and MLB are looking out for the owners, not the players whose bonuses they are trying to limit. Being authentic and straightforward about that would at least be a good first step toward greater transparency.