FG on Fox: Who Needs a Draft?
Yesterday, Major League Baseball officially declared Yoan Moncada — perhaps the most coveted player to defect from Cuba in the last few years — free to sign with any Major League club. The bidding is expected to be intense, with the Yankees, Red Sox, and Dodgers tabbed as the early favorites. Given the tax that will be levied on on the team that signs Moncada, the high-revenue clubs are at a significant advantage, and Moncada’s signing will likely be used as evidence of the need for an international draft.
In his conversation with Ken Rosenthal last week, Commissioner Manfred publicly supported such an idea, stating that his “long haul goal” would be “to get to an international draft.” With the big money clubs blowing up the league’s system for signing young international free agents, an overhaul of the process is inevitable. But while the draft has become the de facto method for sports leagues to distribute incoming young talent — under the guise of competitive balance, but with the primary goal of holding down acquisition costs — I’d like to suggest that Major League Baseball go the other direction instead.
The logistics of incorporating international players into a draft are problematic, which is why baseball settled on its current recommended bonus system instead. And there is merit to the structure that the league created; if you have various spending allocations in place, you don’t actually need to go through the process of draft positions. The best players want the most money, so by simply creating a system where some teams have more money to spend than others, you can funnel incoming talent to certain types of teams even without handing out specific draft positions.
The problem lies in the execution of MLB’s international system, as the bonus pools are akin to speed limits instead of actual barriers. Because teams have calculated that Moncada’s talent is worthy of paying the penalties associated with blowing their budgets out of the water, the limits are functionally useless. But if the limits were firm caps, and teams were unable to exceed their pool allocations, then we wouldn’t be facing a situation where the richest teams in baseball were flexing their financial muscles to add an elite talent while the have-nots sit on the sidelines wishing for a more level playing field.
So what if there was no draft? Instead, what if we just lumped all new players — foreign or domestic — into a single acquisition system where each player was free to sigh with the team of their choice, only with firm spending caps in place to ensure that young talent flows more freely to clubs who can’t compete on Major League payroll alone? In other words, a team’s talent acquisition budget would be inversely tied to their Major League payroll; the more you spend on big leaguers, the less you get to spend on prospects, and vice versa.
Read the rest on Just a Bit Outside.
Dave is the Managing Editor of FanGraphs.
While this idea would benefit US players who would normally be drafted, and would benefit the teams that can’t afford guys like Moncada, there is no way that we would ever approve this. Our union is not going to give teams incentive to spend less on members in order to save for amateurs.
Spending on amateurs (or foreign professionals) would actually go down. As noted, MLB gave teams pool allocations of $285 million last year, but of course a bunch of them are blowing those allocations out of the water, so actual spending is going to be well over $300 million. Under this proposal, there’s essentially a firm $300 million limit for new player acquisition, with no allowance for teams to exceed their pool amount.
Switching from a soft-cap recommendation to a firm cap would actually make this a positive for the MLBPA, who could continue to sell out non-members in order to maximize negotiating power to get what they want.
you mentioned an inverse relationship between MLB payroll and cap space. Why not have the amateur cap space take a few years to react. So if an MLB team wants to deliberately lower its MLB salary to increase its amateur cap, it won’t actually receive the higher cap for 3-4 years. This prevents teams from tanking their payroll, but will reward those teams that legitimately can’t raise payroll to certain levels.
Why shouldn’t an MLB team be able to deliberately – or strategically – lower its MLB salary to increase its amateur cap? If you’re a team like Houston, they had a legitimate rebuilding effort and they decreased payroll for a few years as part of the process. I don’t think they should have to wait 3-4 years before getting the additional draft funds.
Forget “if you’re a team like Houston”. How about you’re ANY team that decides the amateur talent in a given year is better than the available crop of free agents?
…and this, of course, is what would give the MLBPA heartburn. The notion that C+ veterans get good money when they’re the best of bad lot is bread and butter for the union.
Maybe I’m missing something here, but your answer doesn’t really get to the root of the issue. In a perfect world for the Union, everybody would be spending like the Dodgers because that means more money in the pocket of union members. You proposal is essentially penalizing teams for carrying a massive payroll. while rewarding the teams that can’t/won’t spend. I don’t see how switching from a soft cap to hard one on amateur spending offsets that loss to the Union. MLB is going to have to make other serious concessions (like say reducing service time to five years for free agency) to get this through because this will undoubtedly create an artificial spending cap for big league payrolls as the original poster eluded to.
The problem with this proposal is with the international players: if they can’t get the years and millions upon millions of dollars they’re seeing and are looking for, why come at all? If al they can get is a small, cheap contract… Is it worth leaving one’s family and everything they’ve known growing up to move to America for? Plus, in some cases, the amount of danger involved wouldn’t be worth the small reward. Puig wouldn’t be in the MLB if this style of int’l FA signing was in place a few years ago: he is rumored to have spent almost as much as what would-be one year’s contract under this system just to get to America and out of Cuba. And then, for those players who think they deserve crazy money, what’s to stop them from signing a one-year deal with whichever team pays them the most (i.e. a team that needs the talent) only to become a FA the following offseason and THEN signing the big money deal they were expecting? I agree drafts aren’t the most efficient way to sign players, but putting caps on international spending would end up hurting the international players and MLB itself.
interesting proposal.
would there be anti-trust implications? (either immediate, or potential)
Aside from MLB’s historical anti-trust exemption, virtually anything can be allowed under a collective bargaining agreement. All MLB players were set to become free agents when an arbitrator ruled that the reserve clause lasted only one year; then MLB and MLPA worked out a CBA that restricted free agency. So, that’s why there are all these comments about what the player’s association will agree to.
I don’t see why you couldn’t have a waiver system for posted international players, it’d fix a lot of the logistical problems of a draft. Teams make a claim and, if they can sign the player in a fixed time, they move to the bottom of the list. If not, player continues down the list. Put some sort of qualifying offer in place, so that if a team makes a reasonable offer and the player rejects it, and no one else signs him, he’s out of MLB for a year. Otherwise, if no one claims him at all, he’s a free agent.
The giant problem here is that the qualifying offer will be absurdly low, to incentivize the player to sign for whatever the team offers him…
Yeah, that’s why the qualifying offer would have to be a fairly high bar set by MLB, not by the team. In any case you need something to give the player an incentive to sign instead of just pass through to free agency.
And maybe you move the team to the bottom of the list if they make a claim and don’t make a qualifying offer.
Wouldn’t a player keep rejecting the offers until he gets to the highest bidder? So if KC has the top pick and they want Moncado, he goes into negotiations knowing that Boston, NY, LA, etc, will pay him significantly more. He turns down KC, then every other team, until he gets to the big-budget teams that offer him a ton of cash.
We’ll just call negotiating with the guy prior to claiming him on waivers tampering 😉
Or they could just allow the draft picks to be traded…
I like this idea, but it still incentivizes team to tank, just in a different way. Teams that spend less on their MLB teams not only get more pool money for themselves, they also take money (to some extent) away from teams that are spending above league average. I don’t think we’d ever see a team of 25 players making league minimum, but holy cow that would be a huge swing in that team’s favor as far as the draft is concerned.
This method also leaves a team like the Brewers somewhat out in the cold. They’re spending close to league average in terms of payroll, in part due to a number of poor drafts which have currently left the upper levels of their farm system bereft of impact talent but that’s a whole different conversation. But they operate in baseball’s smallest market so it’s not like they’re abusing some kind of financial advantage. So in a sense, they’re being punished for trying to compete. They’re kind of the poster child for competitive balance. They’ve used the money they get from revenue sharing to compete at the major league level. They shouldn’t be punished for that any more than a team like the Cubs or Astros should be rewarded for losing at the major league level. Or in this case spending less money.
I don’t know what the answer is and I think the firm caps idea is actually much better, like WAY better, than the current systems in place. It’s just not the perfect answer. I’m not saying it has to be the perfect answer though. Maybe there isn’t one. Maybe it’s just that you institute this firm caps idea but also allot additional cap space to teams that operate in smaller markets, similar to how the Competitive Balance Lottery attempts to do that now.
Or maybe the perfect solution is to not tie the draft to major league spending at all? Every team gets exactly the same amount of money. But then that ignores competitive balance at the major league level. Again, I don’t know.
First thought in response to last point would be to tie new talent acquisition funding to market size. Problem with that, of course, is that certain teams would be perpetually at an advantage in this area; its already a little funny imo that STL (a top-15 payroll and perennial contender) gets a competitive balance pick, and things like that would only be exacerbated where such teams get per se more resources to play with w/r/t new talent acquisition. It could also bifurcate the market in an odd way, with those “big market” teams turning mainly to free agents and “small market” teams relying largely on their minor league systems. This may not be a bad thing (and perhaps not so different from the difference between NYY and TB), but it would certainly be unique.
You could, of course, have a complex equation that considers recent full- and post-season performance, recent payroll, market size, etc. to figure out ordinality, and then allocate each team a certain amount based on where they wind up.
Like you said, the Brewers are suffering from poor drafting. To make up for that they are forced to spend more on FAs than maybe they’d really like to. Even so they’re only fringe contenders at best.
There is no such system that can save teams from front office mistakes.
Well, that’s sort of what a previous season record-based draft order does.
Vladimir Gutierrez has defected. Thoughts?
What about a much higher penalty for going over? What if the penalty was a sliding scale based on your bonus pool?
If the present system will have teams paying something like $30M plus $30M in penalty for a player like Moncada, it basically treats all teams roughly the same, since no one has a draft pool near $30M and the range is small enough for it not to make much difference where you are in the range.
Basically the same penalty for a bad team or a good team to sign him. that doesn’t seem to be the spirit of the thing.
If you got $5M and
* spend up to $5M, 0% tax
* spend up to $10M, 100% tax on that last upto $5M
* spend up to $15M, 200% tax on that last upto $5M, plus tax from above
* spend up to $20M, 300% tax on that last upto $5M, plus tax from above
…
So if Moncada is worth about $60M total and something like the above in place:
A team with a $15M pool, could offer $35M [plus $25M penalty]. A team with a $5M pool, for $60M total, would be looking at $22M [plus $38M penalty]. Unless the international player really wants to take less, the low pool teams would have to blow past the $60M valuation.
For the teams like the Yankees to really compete with teams like the Astros would be monumentally expensive. Assume they were the $5M and $15M teams respectively, if the Yankees matched the Astros $35M [pre-penalty offer] would have a $105M penalty.
Maybe a bit too extreme, the %%% can be dialed back a bit to get a nice equilibrium.
You know, a salary cap could…
(hood thrown over head)
(tossed in back of car)
(car drives off)
(never seen again)
Actually Moncada did not defect, he left with government permission and a Cuban passport and visa on a flight from Havana.
The thing that rankles me is that the overwhelming majority of the revenues that MLB clubs take in originate in the United States, and yet the American-born players are the ones who benefit the least from the current system.
The system should have everyone pass through some sort of player-entry draft (make a totally separate draft for foreign players, if you will, complete with its own bonus pool restrictions), or none of them should.
Dave,
The real problem is you’d basically kiss any japanese player goodbye and probably quite a few Cuban players who can make a very nice living in the Japanese League without having all the risks that come with defection.
The logistics of drafting for 16 year olds vs. 25 year old Japanese pros is so vastly different it would be very hard to create a solid full tilt MLB international draft. I really think not addressing the Japanese issue is key here. Cutting international spending would only mean there’s no way a guy like Yu Darvish becomes a Ranger. He’s a lock to be a Dodger, Yankee or Red Sox pitcher.
Not to mention you have the whole birth certificate issues as well. What would the answer, something like holding 8 international combines on different continents so most of this stuff can get vetted?
It would be an easier and better answer to let all amateurs be free agents. Quicker and cleaner. Especially since it was teams like the royals and blue jays spending all kinds of money on amateurs before the new rules took over.
I wonder what this would do to the minor leagues.
If Team X has a large MLB payroll, then goes all out to sign 2-3 top amateurs, and are left with literally no cap money after that, how do they fill out the affiliate teams? Surely they would think ahead far enough to prevent that actual scenario, but but as of now, late-round draftees get virtually no signing money anyway. Do these guys just get to pick from whoever offers to pay them a weekly check? Do these minor league salaries count in the cap? Would they sign for $50?
It’s not as crazy an idea as some others that have been thrown out there is all seriousness, but any shakeup to this degree will take years to completely settle out all the various gamesmanship strategies and new inefficiencies created. Seems like the top end of the market would be quite a bit simpler, but the back-end could get pretty wild.
Interesting point. If the major league team is the key determinant for funding for the acquisition pool, and my team sucks, maybe I send a bunch of expensive players to the minors to get my salary figure down. And if you forbid that, how do you account for players with big contracts who you signed a few years earlier who are working their way up the farm system, without punishing the team?
The answer to the second question is that you delay implementation and grandfather existing deals in some way such that when it’s “go” time no one is stuck with penalties based on the old system.
As to the first, the “MLB payroll” can be defined based on the 40-man roster. And to shift a high-priced vet off of that roster basically means cutting him outright. The team would now (a) still be on the hook for the salary, and (b) the player could go sign for league minimum with another club. Even if some portion of the salary is forgiven for pool calculation purposes, it’s a suboptimal result for almost any organization.
Let just make it simple, hard cap (and hard floor) for the entire organization, spend it how ever you want. Major’s minor’s whatever.
There is literally no need, baseball is the most equal sport and i’d rather see money on the player’s pocket than the owner’s
I don’t see the union going for this idea.
Let’s imagine that the current system didn’t exist, and all players were paid a market rate. Would pre-arb players earn so little? Of course not. But how much WOULD they get. It’s reasonable to say that pitchers might earn less, as they often take longer to peak. But hitters? Well Sullivan showed that they peak at a younger age than we tend to think (http://www.fangraphs.com/blogs/hitters-no-longer-peak-only-decline/). In other words, maybe a 21 year old Mike Trout gets paid more than the 26 year old Mike Trout.
Accordingly, it’s reasonable that teams might prefer to have younger players on their rosters than older ones. Now I know that this proposal doesn’t necessarily mean that the current system of three pre-arb years followed by three arbitration years (or the super two system). However, teams might prefer to own younger players to older ones in general. The result being that older players have less value.
And since unions protect their existing members above their future members, it’s pretty tough to see them accepting the risk that 35 year olds will become less valued.
Now, if you just had a straight allocation pool with a hard cap, that could work. But allowing teams to play with their money between the pro club and the acquisition pool seems like a pretty tough sell.
Are we still pretending that baseball has a competitive balance problem? Are people still wondering how the A’s, Royals, Pirates, Orioles, or Cardinals can ever hope to out compete the rich and mighty Yankees, Mets, Red Sox, Cubs, White Sox, Phillies, and Rangers?
Let the billionaires and multi-hundred-millionaires duke it out to acquire the best talent from the developing world. I’m sure they’re all self-professed capitalists. It’s enough that we funnel public funds to subsidize their already immensely profitable businesses. We really don’t need to take money from poor kids to save them some bucks, all under the 100% BS guise of improving competitive balance (as if that would be a sufficient justification anyway).
All this talk of a draft, or spending caps is disgusting.
“the player acquisition budgets could be increased or decreased based on the percentage of deviation from the league average major-league payroll”
Chances of the MLBPA going for that are zero point zero. While it kinda eases the issue of teams tanking on purpose (they won’t lose on purpose, but they will have a low payroll on purpose), it gives incentive to teams that have low payrolls. It will drive salaries down. While the MLBPA is more than happy to sacrifice future members, it is beholden to the current members who have absolutely no reason to consider this idea.
“Do we sign James Shields for $100M and forfeit our ability to sign any amateurs next year, or do we offer him $70M so that we can sign Yoan Moncada and a couple of his friends?”
What about location though?
What if a south cali guy is offered 500k$ from LAA, 550k$ from LAD, 600k$ from TOR or COL.
Is there any chance he really takes the 600k? Wouldn’t that force far teams from overpaying? Why would a pitcher take similar deals to go to COL considering what we know about Coors?
Just a thought, i’m just thinking teams far from where MLB players are typically born (south, midwest, etc) would have to overpay almost everytime.
Maybe it’s because i’m Canadian and think no one will come over!
I just think this is a good idea with one major flaw. It’s going to give teams the incentive to conduct fire sales and purge payroll. Suddenly, the Astros tank job will become the model for rebuilding. We’ve already seen Cubs and Astros, teams in huge markets easily capable of supporting a top ten payroll, intentionally constrain payroll for the purposes of tanking/rebuilding. Could you imagine if teams were provided an even larger incentive to not spend?
They way to fix the flaw is to reward the pools based on win/loss record. I get that you don’t want to reward teams for ineptitude, but it’s the only way. Dave, you said it yourself that teams are actively trying to achieve mediocrity to avoid becoming like the Astros because of the way it alienates their fan base and ravages their revenues. This idea would completely reverse that trend.
Agreed. Tie it to the W/L record and it becomes a tenable idea. Teams will tank either way, but this gives more incentive for top teams to spend. They’d have the same Amateur Allotment whether they finish first with a $100M payroll, or a $200M payroll. There are more to the dynamics of this, as the repercussions/effects can’t easily be predicted, but tying Amateur Allotment to team payroll is simply a non-starter.
Wouldn’t this effectively put a salary cap in place? No team is going to forfeit its ability to acquire talent, so you would essentially have team spending would be capped at the major league level.
It would have devastating effects on win now teams long as well.Take the Dodgers for example. They have a massive payroll, but they aren’t set up to be the Phillies because they have drafted/signed and developed talent. But under this system, teams would be crippled to win now and develop talent because their payroll is already massive well into the future.
They could phase in the penalties over a 10 year period. In year 1 high payroll teams are only docked say up to 10% of their allotment, and that could gradually increase to where the league wants it to be.
If this approach was taken, MLB free agency salaries would tank. The cost of dealing away prospects for vets would be the prospects in the trade PLUS the opportunity cost of acquiring future prospect talent because the vets will add to the team’s payroll (reducing the talent acquisition budget). As such, teams will simply invest in signing talent/prospects and utilize them for 6 years until free agency. Why sign a FA knowing it will cost you disproportionately more in the way of your ability to sign prospects that are more cost controlled (pre-arb and arb years) in the first place? Moreover, although the system in place desires parity, there should also be a benefit for (1) being in a large market (other than forcing ownership to take large profits because they cannot re-invest due to the caps), and (2) performing poorly and thus having talent directed to you. This is why there is a trifurcated system with a domestic draft based on records (and market), a FA market with a luxury tax, and international markets with soft caps/penalties. The system can surely be refined, but I would caution against major changes that may dramatically change the landscape or have unintended consequences. Remember that signing Moncada carries with it a penalty of both a tax and not being able to sign certain international players for the following 2 years. So the same team can only sign top international talent every 3 years, giving other teams a fair bite at the market. More subtle changes could also be made to either pull down the bonuses being given or direct where the talent goes without either instituting a draft or such firm spending caps as described.
One glaring and major issue with this is imagining the foreign players’ side: why should I move my entire life, everything I’ve known, just to come play for a few million that I could make here? There would be much less incentive for players to come to America to play, especially those who have to risk their life. There’s a high cost to leaving one country to move into another for baseball, and a few million dollars isn’t worth it for those foreign players who know they’re worth more. Another issue is that this wouldn’t benefit the poorer teams at all. Why would a player who is worth many millions settle for a small, cheap contract? They’d either refuse to come play (as I mentioned already) or they’d sign as short of a contract as possible, to get to the free agent market sooner and make the money they should have been making in the first place. The poorer teams would only get a year’s worth of play from these players before the rich teams swooped them away on the market. This would also result in improper incentives: what would stop a rich team from making a deal with a poor team, who has more money available, to sign that player and then deal him away for a price (cash and prospect(s))? Then the rich team signs him to an extension worth the money he should have had all along. I agree, drafts aren’t perfect, but this idea is worse.
While the draft obviously has historical precedence, I am throwing my hat into the free agent-style ring. I recently had an idea on the draft that I would like to propose. Under my system, teams would have a cap of $25M/yr for signing domestic and international draftees (the cap could be adjusted upwards to account for inflation). Teams would have absolute flexibility to sign the free agents. Some teams could drop tens of millions on one or two players, while others could spread out the money across the board. MLB could even have teams announce their signings, similar to draft day.
My solution to spending over the cap is to place a 100% tax on any money spent above the threshold. The tax revenue would be divided equally among divisional opponents and added to their budget for the next year’s draft. If a team like the Yankees wants to spend well over the cap, they would be strengthening their rivals ability to sign draftees. In addition, any money not spent would be rolled over for the next year’s draft. My system would not be tied to wins or total payroll.
What would be so wrong with instituting a hard cap for spending on int’l FA’s inversely proportional to each teams W-L record?
It’s obvious the taxes don’t do shit. Hard caps mean the teams in most need of amateur talent have the greatest ability to acquire it, and there wouldn’t be any direct relationship to major league payrolls.
Taxes can work. What is clear that the associated penalty is not severe enough. You just need to play around with the various levers to find the sweet spot.
Umm, the Mets
Personally, I think most posters here are placing far too much value on amateur talent. The predominant assumption that teams will either tank their W/L record or shed a bunch of payroll (which will in essence tank their W/L record) is pretty poor. Most teams are striving to compete in the current year at the major league level. They will place a higher value over a known quantity than take a high priced flyer on unknown talent. How do we know this? Look at what happened before international spending limits were implemented. It was basically a FA market with no cap. Yet, teams did not go crazy with huge signing bonuses. Nor did they reallocate a large chunk of their ML budget for these international FA’s.
Will some teams adjust their mix of payroll and place a great emphasis on amateur talent? Sure. But I can’t see teams like the Yankees and Dodgers stepping out of the FA game and focus exclusively on signing 16 YO’s from Venezuela. ML players will still be heavily sought after and paid well.
I don’t see any major hurdles in Dave’s plan.
The only thing worse than a draft is a salary cap. Trading one monster for another, this one taking money out of all the players’ pockets rather than just amateurs, does the players no good.
That said, I do not mind a cap on amateur spending so long as they are reasonably high. Oh, and let minor leaguers unionize.
To clarify – get rid of the draft and let all amateurs sign to the highest bidder under an amateur spending cap. Something like the current IFA system with a much larger cap number (tie it to inflation for the lawlz). Teams can still trade for space.
It should have nothing to do with ML payroll. F that noise. Pro prospect and anti-player is still just anti-player in the end.