FG on Fox: The Value of the Top Pick

by
June 5, 2014

When the Marlins traded the 39th overall pick in Thursday’s amateur draft to the Pittsburgh Pirates for reliever Bryan Morris, the most common reaction was not that the cheapest organization in baseball was pinching pennies again; it was “wait, MLB teams can trade draft picks?” Unlike in the other major professional sports, MLB has historically not allowed teams to swap draft selections, and only a special subset of draft choices — the ones MLB gives out as Competitive Balance selections, between the first and second rounds — are able to be included in deals now. When the draft begins on Thursday, there will be no drama as to which team will be making the first overall pick, as the Astros are required to keep that selection for themselves.

However, because of the way that MLB’s suggested signing bonus system works, there actually is a way for teams at the top of the draft to “trade down.” Here’s how it works.

Each team is assigned a total bonus allocation based on where their selections in the first 10 rounds are placed — teams with higher picks get more money to sign those theoretically better talents — and the total signing bonuses for selections in those first 10 rounds have to be within five percent of that pool allocation if a team wants to avoid some pretty stiff penalties. However, teams are allowed to distribute their pool allocation however they would like, and they can vary a great deal from the recommended bonus for each particular player.

If a team is able to sign a player for significantly less than their slot bonus with a high draft choice, they can then use the money they saved on that pick to take a player who wouldn’t sign for the bonus recommended with a later choice. A team that saves money on its top pick can be aggressive in selecting a player who fell through the cracks in the first round, and potentially land a second or even third top talent with their following picks.

Two years ago, the Astros did exactly that, selecting high school shortstop Carlos Correa with the No. 1 overall pick partly due to the fact that he agreed to sign for $4.8 million; $2.4 million shy of the $7.2 million slot recommendation for that pick.

The Astros then turned around and gave an extra $1.25 million to the 41st overall pick — right-handed pitcher Lance McCullers — and an extra $1.5 million to the player they took with the 129th overall pick, infielder Rio Ruiz. Correa was certainly a quality prospect, but in effect, the Astros traded the No. 1 overall pick for the No. 3 or No. 4 overall pick, with the value of upgrading their second- and fourth-round picks into late first-round talents as the reward.

Is this a good strategy, though? Should a team with the best chance to land a superstar really take a lesser talent in order to bolster their secondary selections?

Read the rest on FoxSports.com





 

Dave is the Managing Editor of FanGraphs.

11 Comments
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Jamie
9 years ago

Somewhat fascinating, in that if you were absolutely guaranteed to get a guy who has Bronson Arroyo’s career that he should go first every time. I doubt many teams would do that though, as they would probably believe that their scouting/development is better than average. But even if that were true Arroyo’s 26 WAR makes him considerably better than the average #1 pick.

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TK
9 years ago
Reply to  Jamie

I disagree, Arroyo would not and should not go #1 each time. A team full of Bronson’s does not compete for or win a championship. Yes the solid, but unspectacular have their place, but so do the high risk, high reward. The reason a team takes Josh Hamilton is because he might become JOSH HAMILTON, the reason a team takes Delmon Young is because he might become an all-star. A team of all solid but unspectacular is no better than a team of boom or busts is. In fact we are essentially comparing the Diamondbacks to the Dodgers here.

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Jamie
9 years ago
Reply to  TK

But here is the thing about the draft, Young provided substantially more value to the team that drafted him than Arroyo or Hamilton. Young at least netted Garza and Bartlett who provide the Rays with ~20 WAR. Arroyo was lost on waivers after accumulating -2.2 WAR, and Hamilton was lost in the rule 5 draft before doing anything. And this is why a guaranteed Arroyo should go first, because he definitely gets his 26 WAR, where playing the boom and bust game you can still loose the booms. There is just far too much uncertainty to go with the upside play, most of the time, over guaranteed, sustained, average production.

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TK
9 years ago
Reply to  Jamie

You are missing my point. The reason I was saying you don’t take the guareenteed Arroyo everytime is becase of the situation surrounding the team. Yes it is not the NFL draft, but need still comes into play. Therefore if you have a team like Arizona, you would seriously consider taking a high potential player because that is what your orginaztion needs.

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