Competitive Balance Lottery: Just Smoke and Mirrors

And SHAZAM! Now’s there’s parity in the MLB!

The MLB is a funny organization. One would think that in a sport producing most of the world’s largest guaranteed contracts, the production being paid for on the free agent market would guarantee on-field success. But that is not the case. Large payrolls have been large busts, such is life.

We know that a larger payroll leads to more wins, if not necessarily a playoff appearance, but also that teams need a strong input from their farm system, too. Teams have to strike a balance with these two inputs. For some teams — like the Tampa Bay Rays and Oakland Athletics — the vast majority of their talent input must come from the draft. They can afford only the January Free Agents — the unwanted scraps of the big market teams. Because of a matter of geography and history, newer teams in smaller markets like the Diamondbacks, Marlins and Rays will probably never again draw the kind of income the Mets and Yankees do.

So, an outsider might look at Wednesday’s Competitive Balance Lottery (CBL) and say, “Hey, well it’s good the MLB is trying to even things out a little bit, help out the little man.” But in truth, the CBL is a weak offering to a ever-crippled lower class. And if the MLB wants to keep small-market teams like the Rays capable of winning, they must undo their recent changes.

This is the gist of the lottery: The 10 smallest-market and 10 lowest-payroll teams will be eligible to receive additional draft picks in the 2013 Rule 4 Draft (or Amateur Draft). Teams with good records get penalized; teams with bad records get better odds.

Here are the results from Wednesday’s lottery:

Round A (after Round 1)
1. Royals
2. Pirates
3. Diamondbacks
4. Orioles
5. Reds
6. Marlins

Round B (after Round 2)
1. Padres
2. Indians
3. Rockies
4. Athletics
5. Brewers
6. Tigers

In November, SB Nation writer Grant Brisbee called the CBL a “fix to a problem that no one was complaining about.” While Brisbee’s take on the matter cuts into the sillyness of the draft, the actual situation is more complex than that. If anything, the CBL is a fix to a problem that didn’t used to exit. That is, until the new CBA.

Looking at the changes in the newest Collective Bargaining Agreement (CBA), it becomes obvious quickly that the biggest changes occur at the amateur levels, including these three major changes:

1) The new CBA makes it more difficult to receive compensation for departing free agents (such as players have to be on teams for a full season in order to be eligible).

2) The Rule 4 Draft has new, hefty penalties for going over slot on players, and no Rule 4 selections can sign major-league contracts.

3) International signings now came from a budgeted pool of funds as well, with equally heavy penalties for spending too much on free agents.

So, if we go back to our original issue — which is: There are poor teams that simply will never make the same kind of income as other teams — these new limitations on spending (changes No. 2 and 3 above) must seem like another, great win for the little guy, right? This just reduces the arenas in which they can be outspent, right?

Actually, no. The small market teams are funding their wins with cost-controlled rookies and arbitration contracts, so curtailing their ability to lure or sign amateurs only further limits their talent inputs. The organizations that had historically been paying buckets of cash for amateurs were, yes, teams like the the Rays and Pirates and Royals. The money they funneled into amateur talent may have outstripped the big markets, but it was still vastly smaller than what big market teams were paying for MLB-level free agents.

The changes to the Rule 4 draft are a massive concession to the big market teams — they no longer have to pay the undesirable premiums for unproven talent that had crowded them out of the amateur market, while they can still comfortably crowd out the small market teams in the pro market for proven talent.

I am guilty of following the Rays (and the Cubs) with vested interest, and frankly, if I’m in the Rays front office, I would take these rule changes as a personal affront. Not only do they hurt the Rays, the changes appear oddly reactionary to their recent strategies.

Consider change No. 1 — the Rays famously gamed the (admittedly broken) Type A / Type B compensation system in 2010, getting draft picks for players like Brad Hawpe and Chad Qualls, guys who played about as much as I did for Tampa Bay that year. The Rays parlayed these odd acquisitions and slew of departing relievers into a crazy 12 picks in the first 2 rounds of the draft.

Sewing up the old compensation loophole was necessary, though. If nothing else, the Rays did the league a service for showing how ridiculous the Elias Rankings were, getting undue compensation for spent or marginal players.

And with changes No. 2 and 3, the Rays were again a major player in going over slot in the Rule 4 Draft, as well as acquiring international talent — these, we could say, have been important tools in their creating consistently strong farm systems. They have tested the waters for talent in east Asia and Latin America, as well as places such as Europe (see Stepan Havlicek) and Brazil, but the recent rule changes suddenly and drastically limit the gains from such endeavors.

So it is with no little irony that the Rays are not included in those above-listed CBL results. Not only has the new CBA eaten away at the Rays’ structure for success, the new CBA’s conciliatory concession, it’s lazy apology, the CBL, has ignored them too.

If the MLB wants to create a competitive balance, if it wants to truly make it inconsequential the fact that the Yankees are spending 3.6 Oakland Athletics rosters this season (the Rays are spending 1.2 Athletics this season — they’re pot-committed), then the MLB needs to stop and go the other way.

Rob Neyer says it is nice that the MLB has added the CBL, but that it is only a start — which means the CBL has worked perfectly. It has drawn attention away from the crippling changes to the Rule 4 Draft while giving extra draft picks to the Tigers (2.4 Athletics) and Brewers (1.8 Athletics) and the hope of a draft pick to the Cardinals (2.0 Athletics) — playoff-capable teams, with or without financial help. So fans look at the CBL and how it wants to give draft picks to defending world champs and say, “Well, just goes to show the MLB does not need parity.”

But it does. And the Competitive Balance Lottery is just the smoke and mirrors to make it seem the opposite.