Five-Round MLB Draft a Shortsighted, Pound-Foolish Move
While many have moved on to a potential renegotiated deal between the players and owners to get the season underway, MLB’s decision to stage a five-round amateur draft shouldn’t get lost in the shuffle. On Friday, Jeff Passan and Kiley McDaniel broke the news that this year’s June draft will last just five rounds. The news wasn’t a total surprise given that when the players and owners negotiated back in March, the sides agreed that the draft would be at least five rounds, but would be considerably shortened. However, given the relatively low present and future cost of having even five more rounds, it’s something of a surprise that the owners refused to put down the half a million dollars per team in 2020, with a quarter million dollars more in bonuses payable in 2021 and 2022.
The agreement in March specified that the draft would stick to 2019 slot amounts, saving owners a little over $8 million from what was in the CBA. In addition, teams would have to pay just $100,000 of player’s bonuses now, with the rest of the payments split between 2021 and 2022. In 2020, that means owners will spend around $15 million in signing bonuses, a $300 million reduction from a year ago. Coupled with the delayed international signing date, the owners are seeing $400 million in 2020 savings, with roughly $80 million of those savings permanent. Last year, teams spent $50 million more than their allotted amount on bonuses for players after the 10th round, which won’t happen this year. There’s also $30 million allotted for rounds six through 10, which also won’t happen this year. According to Passan, that decision didn’t sit well with front offices:
There remains a significant divide within the team side on the draft. A majority of front offices were pushing for a longer draft, recognizing the value reaped even in later rounds can be immense. Pushback to keep the draft as short as possible from some owners was strong.
— Jeff Passan (@JeffPassan) May 8, 2020
Given the $100,000 limit on bonuses to be paid this year, owners opted not to spend half a million per team right now and $1 million spread over the next three years to prevent 150 talented amateurs from turning pro. Teams can sign players after the draft, but undrafted free agents are limited to $20,000 bonuses. The types of players drafted before the 10th round are not the types who agree to $20,000 bonuses unless teams are shifting around money to give other players larger bonuses. The players who would have received decent bonuses in these rounds are now going to stay in school for another year or in the case of high school players, go to college or junior college in the hopes of being drafted in future years. There’s an argument to be made that all of these players will eventually get drafted, so it doesn’t make much of a difference for teams. That argument is not strong.
First, let’s look at the general value lost from foregoing just the sixth through 10th rounds. Last year, I estimated the present-day value of draft picks by looking at those players’ likely future production. While the most value in the draft is in the top rounds, on average, picks in the sixth and seventh rounds were worth about $2.5 million each, with picks in the eighth through 10th rounds worth about $1.5 million each. In total, that’s about $285 million in value and an average of close to $2 million per pick. The value teams get from these picks is close to 10-times the cost. On average, teams typically end up with a roughly average player every single year from those picks.
Teams might believe that they can simply get the players they missed in future years, but that isn’t the case because the number of picks any one team has is always going to be limited. While the talent is better in rounds eight through 10 than it is in say 11-15, the difference isn’t significant enough that getting a bunch of eight to 10-round talents in rounds 11-15 the following year can possibly make up the difference of forgoing rounds six through 10 this year. To put it another way, drafting 10 slightly better players in 2021 in rounds six to 15 next year can’t come close to the value of drafting five players in rounds six to 10 this year and then drafting another 10 roughly similar players next year. Because these prospects are outside the top 150 picks to begin with, they are already not sure prospects destined to make an impact. Quantity is more important than quality at this stage, so teams can have more opportunities to try to turn low-level prospects into major league contributors.
To cherry-pick with one illustration, in 2010, the Mets drafted Greg Peavey in the sixth round, Jeff Walters in the seventh round, and Kenny McDowall in the eighth round. None of these players made the majors. Tenth round pick Akeel Morris made the big leagues, but has been below replacement level. In the ninth round, the Mets picked Jacob deGrom.
The next year, the only decent contributor the Mets drafted in the first 20 rounds after first-round picks Brandon Nimmo and Michael Fulmer was Robert Gsellman in the 13th round. They also drafted John Gant in the 21st round; the big value pick in that draft was Seth Lugo in the 34th round.
The 2011 draft wasn’t a great one for the Mets after the first round. It happens. That’s why it is better for a team to have as many picks as possible, to increase the chances of developing a good player. It might be unfair to cite the Met’s 2010 draft because deGrom is an unquestionably great success and not generally representative of the kind of players teams take in rounds six to 10. He’s also a player who might not even be in the big leagues if there weren’t at least 10 rounds in the 2010 draft.
The players major league teams are passing on this year might not make it back to them in future years. The October after deGrom was drafted, he had Tommy John surgery. If there had been just five rounds the year he was actually drafted, deGrom very likely goes back to school for his senior year. There’s a decent chance he would have still needed Tommy John surgery at some point and it quite likely would have been before the draft. If deGrom was coming off an injury-riddled senior season, or hadn’t pitched at all due to a surgery that would have kept him out a full year after the draft, he might well have gone undrafted and potentially pursued a career outside of baseball with his college degree. The winner of the last two NL Cy Young awards might not even be playing baseball with a five-round draft in 2010.
The sport isn’t necessarily going to lose the next Jacob deGrom with a shortened draft this season, but it certainly seems a silly risk to take for $30 million spread out over the next three years, especially considering that even if there isn’t a deGrom-level player, teams will lose out on bringing more talented players into the professional ranks. Over the last decade, we’ve seen increased success from younger players, and part of the effect of that increase has been lower salaries for veterans as they hit free agency. That doesn’t happen in a vacuum, and the phenomenon is hardly guaranteed to continue. The league is purposefully reducing the number of talented young players in this country. Advances in international scouting and team facilities have exploded of late, but there’s no guarantee that they will continue at such a high level or increase in productivity at the same rate, particularly as expansion could increase the number of players on major league rosters by a healthy amount. Even if teams feel the need to be concerned about the size of their payrolls, reducing the number of good, young players in the sport invariably makes those older, veteran players better relative to their peers, and the veterans are a lot more expensive.
Lowering the potential talent level in baseball lowers the quality of play for fans and potentially decreases interest in the sport over the long-term, though that deficit is perhaps more intangible and theoretical. Passing up on young, cost-controlled talent only to have to pay for more expensive later on is just bad business. It’s shortsighted and its justifications are flimsy. In a time of uncertainty, MLB should be trying to bring as many talented young players as possible into the professional ranks. Failing to do so for what amounts to one minimum-salaried player this year plus half that amount the next two years prioritizes the 2020 bottom line over the sport’s future.
Craig Edwards can be found on twitter @craigjedwards.
Have the owners suddenly become vulture capitalists?
As a monopsony on talent the quality of said talent doesn’t really matter. No one else is buying baseball talent.
Another data point in support of starting a rival league.
Agreed.
There seems to be a viable market for a third major league at this point.
Could they use college stadiums initially? Or could they co-locate teams on a single campus with several small ballparks? If they can’t have fans (or can’t bring in large, densely packed crowds), maybe a third major league could thrive on a single campus with several fields, and broadcast revenue only?
Uh explain how there is a viable market for a ‘third’ major league. (And explain what the existing second major league is.)
it’s a big country. Starting a regional league with aggressive cost controls and a national tv deal that avoids markets with teams already (which are not optimized for market size as it is) might, MIGHT work. I’d say the odds are against you. But you put 10 teams in California, maybe you hold on long enough to be a competitor.
MLB is made up of two major leagues, the National and American leagues. Adding an additional pro (non-minor) league would be the third major league.
As to the viability, that’s a separate question I don’t have an answer for.
Um, there are 2 currently existing major leagues: National and American.
We do not need to agree about whether there is a market for a third league.
All attempts to create a competing league in major sports have failed in the last 50 years or so. Just look at the ABA in basketball or xfl in football.
Don’t forget there are already indy leagues and they all struggle financially.
If you wanted to do it it would need to be a super rich media company like Disney investing billions to make it work and even then it is a long shot. And what interest do they have to do that?
In the end in those constructs long term only one of the leagues will survive
I don’t think you can equate the ABA to the XFL. The ABA partially merged into the NBA and the non-merger teams ended up with one of the sweetest never-ending revenue deals possible. Each family that owned a folded team is still paid to this day a portion of national broadcast rights. It was so innovative teams were added to the NBA, rules were changed (3 point shot) and stars joined the league.
Not quite correct on broadcast rights. There were two ABA teams that were not part of the ABA/NBA merger. Kentucky took a one time payout. St Louis took a percentage of media monies in perpetuity. That decision probably took many years to pay for itself but now is a goose laying golden eggs.
I’m all for it. Maybe if Trump doesn’t get reelected you can convince him ala USFL.
I don’t know. People want to see *their* players. KBO isn’t the same to most fans. And a lot of them want the feeling of seeing the best.
sure but no one has “their” players before they’re major leaguers (some exceptions for college baseball teams with rabid fans)
Control of a lower level of talent doesn’t matter if the fans don’t want to watch said talent
That’s right. And that’s one reason baseball team value increases by 10s to 100s of MILLIONS per year. They are not capitalists, they are monopolists. Next time one asks for a free stadium remember ask yourself the last time a MLB actually went belly up (not sold and relocated)
The near-zero interest rate policy of the last 12 years and the growing advertising for live TV content has increased team (and all asset) values more than “monopolist” conditions, which have been present in all sports leagues for at least 50+ years.
I am sure the various independent leagues that already exist wouldn’t mind a national TV deal.
Some of them have been for quite some time – the Ricketts, Jim Crane, good ol’ Jeffrey Loria. If you pull up the list of owners on Wiki, there are a lot of white men in their 70s who made their money in banking, real estate, wealth management, private equity, ski resort ownership, selling things to Warren Buffett, etc.
Way to inject race into the converation.
re: “way to inject race into the conversation”, re: older white MLB owners – the power and wealth gap in America persists *because* we sterilize racial disparity from every conversation
“Black people account for about 12% of the U.S. population, but occupy only 3.2% of the senior leadership roles at large companies in the U.S. and just 0.8% of all Fortune 500 CEO positions, according to the analysis by the Center for Talent Innovation, a workplace think tank in New York City.”
Nothing sudden about it. Most of them already were that, which is how they got the money to buy a team in the first place. The days of a local businessman owning the local team and caring about it as a civic asset/point of pride first and an investment second are long gone, with a couple of exceptions that probably won’t last another decade.
Yeah, but they seem a lot more committed to destroying the league since Manfred arrived.
it’s more complicated than that. No one’s private banker is advising them to lever up and buy a team. These are, generally, not very smart people in the third or fourth generation of wealth, who want a toy and also to make some money on the side. The pig headed management style of so many owner suggest that they also want to run something THEIR way, which is really hard to do with their day job (running a multi billion dollar firm or whatever).
You don’t become a billionaire in this country without being at least vulture-capitalist-adjacent.
people without money need to borrow money to do things.
America, unlike most other wealthy democracies, has decided on a policy response to this need that maximizes profit and minimizes risk for the already-wealthy person while minimizing profit and maximizing risk for the people without it. The inevitable and intended result is low social mobility and high levels of inequality.
I’m not sure what the point of your comment is. you want to run a business of a certain size, you need external funding. Which means either asking for it from someone with it, or having it already (not really external funding). The people who provide that money are frequently not very nice. It’s just efficient. It’s the way things are. Any other system is basically nonsense.
Are there things that can be done to improve social mobility? Yeah. Disallow inheritances. Society doesn’t experience any utility from them.
But I’m not sure what that’s got to do with anything.
My point is that we have chosen to regulate the process of seeking financing for your business in such a way as to minimize risk for the people with the money. That’s not how it has to be done, as seen by the fact that it’s not done that way elsewhere. There’s a lot less vulture capitalism happening in other wealthy democracies like Germany or South Korea, because they regulate their financial markets more strictly.
South Korea’s firms are essentially state run enterprises that quash all potential competition through overt price wars and product dumping. Not necessarily a great way to foster competition or innovation. Until very recently, they were a dictatorship. I don’t think that’s a particularly good example.
Germany doesn’t regulate anything all that well, particularly financial services, and the DB fiasco runs the risk of bringing the whole country down as a result. They’re staring at a bailout no one wants to or should perform on a company that was essentially a criminal enterprise.
However, it’s very socially mobile and largely egalitarian…. because they can exploit the massive economic inequality and development in the eurozone to maintain it.
By bringing these two countries up, are you arguing that the United States government should be in the business of picking which firms win and lose? Because that’s largely what happens here, and I don’t think, given how elections go, that’s what anyone wants.
I largely think that we could have a much more egalitarian society and effective aggressive regulatory state, but jacobin talking points aren’t going to cut it.
You claim to support a more egalitarian regulatory state, while also arguing that there can be no possible changes to the current regulatory regime and attacking anyone who suggests that there can be. So I’m not sure how you expect anyone to take you seriously as anything other than a defender of the status quo.
I don’t argue that there are no changes to make (wealth tax, effective enforcement of pre existing regulations, actually arresting people for committing financial crimes would be a start).
I’m saying that two examples of pretty corrupt quasi state run economies where firms basically lean on the government to suppress competition and differentially enforce regulation are not great examples of places that have “figured it out.” Basically the opposite. You just don’t have any idea what you’re talking about, is all.
Yes, there’s certainly no examples here in the US of firms leaning on the government to suppress competition and differently enforce regulation. You certainly aren’t making the claim that the US is less-corrupt and more equally regulated than other wealthy democracies, in the comments section of a blog dedicated to an industry that has received its own individual exemption to US anti-trust laws. You are very smart and know everything!
regulatory capture is bad. But we, as Americans, don’t have explicit national champion firms like Germany and SK do (who rely on a broken American financial regulatory system, btw, to keep litigation out of european courts). You just picked bad examples.
That smarmy tone really helps make your argument, good work.
I think this discussion is missing something important. In Baseball, for a player to make it to the major leagues, he has to overcome a barrel… a dozen barrels… of objections, disadvantages, stereotypes, doubts, obstacles, etc. The number of people you have to convince to have faith in you is endless, the number of times you have to rebound is also endless. And therefore, in order to push through all of that against such huge odds, you have to have an abnormal dedication to your dream. I read your discussion about how unfair real life is on a Baseball-focused website, and wonder how you’re missing the connection that real life is also loaded with objections, obstacles, people doubting you etc. Policy responses? Financial regulation? Egalitarian regulatory state? If you want to believe the deck is stacked against you, that’s cool. But you are in America, i suppose. Here, the ‘impossible’ maybe exists all around us, but only until somebody believes they can make it possible.
Disallowing inheritance is just as likely to inhibit social mobility. One of the main motivators for people to be productive is to pass on wealth and opportunities to their kids.
Now, if you wanna say “cap” instead of “disallow” that’s a little better. But you’re still creating a whole host of perverse incentives to do things people otherwise wouldn’t. (e.g. buy a shitload of “gifts” for you kid before you die, so the government won’t take them.)
There are (well, “were”) a fairly effective combination of estate taxes and maximum gift allowances that could work to limit the deleterious effects of inherited dynasties. A small handful of ultra wealthy families, led by the Mars and Koch fortunes, have managed to destroy this in the space of thirty years. The GOP owns most of the “credit,” but the Democratic Party is far from blameless on this. (We’ve gone from $1 million exemption with 55% tax beyond that amount up to $11 million ($22 per couple), with 40% tax. The loopholes beyond those totals are clever and annoyingly effective, involving charitable gifts, trusts, and magic accounting beans.)
Never support an owner as a rule. With few exceptions they are horrible greedy, needy, insecure jerks. Capitalists? BS. They are exploiters. They get politicians to give them taxpayer dollars either through tax breaks or by using eminent domain to steal land. But they are also short sided and stupid when acting as a group.
“suddenly” ? Have you not paid attention to the economics of the sport the last several years?
Edited. Seems like later round picks exceed the 20k ev.
With a robust udfa market and higher payments cutting rounds makes sense. With 20k payments, cutting to 5 rounds is a terrible idea.
Interesting analysis. The longer term implications of this season are going to mean enormous amounts of monetary savings for the owners. Fewer signings, lower bonuses, less service time, hard-to-calculate arbitration awards where traditional stats won’t have the same visual weight, and probably lower platform years, older players eventually making free agency, diminishing their value, etc. But Craig’s point about the draft is a really good one. MLB is probably thinking they will get a lot of players on the cheap, and cull from those. They will, but they are also going to miss talent.
The undrafted talent can choose $20k and slave wages in the minors, or they can do something else. I’m know I’m belaboring the point, but that’s another impetus for a rival league.
I’ve said for many years now that I’m surprised private equity hasn’t tried to put a new league in place. You either win in which place you displace MLB with Blackstone baseball or the MLB buys you off to leave or a merger. There’s a chance you fold and lose all your money but that only happens if you go in under-capitalized.
You could do a lot of innovating to make the game more interesting to attract more fans. There is a voracious appetite for live sports on TV as well. Imagine a new streaming service like Disney being a significant owner of the new league.
A new league could drain all the minor league talent over night as they are getting slave wages today.
Private equity makes a lot more money, with a lot less risk, by buying up struggling companies, stripping them of their assets, and leaving behind debt-ridden shells. Starting a new sports league–creating new assets, building up their value, recruiting highly skilled employees with competitive salaries and benefits–is not what private equity does, and they would have no idea how to do it.
There is certainly some truth to that but they are investors in all kinds of startups as well. What they are really good at is taking an asset that is valued at X and making its value X * 20 or more. Baseball has enormous valuations – not hard to see how you could take 100 million investment and make it $1 billion quickly. Especially if you lock in a recurring revenue stream like a long term TV contract.
Also, given the desire of local cities to fund stadiums, you could exploit this in the medium term as well.
one reason private equity stays out of sports is EVEN WITH THE BEST INTENTIONS it’s frequently a huge fucking money pit. Elliot Management will probably end up writing a book about the Italy fiasco. You have a better shot making money buying Argentinean bonds.
It’s not just the risk involved in pro sports–it’s that private equity has lots of other investments that are essentially risk-free for them.
do they though?
Yes. They can buy up distressed assets for cheap, using someone else’s money, and then transfer the debt they incurred to make those purchases back onto the companies they purchased, meaning that if/when the company goes under, they don’t lose their investment. See, for instance, what happened to Toys R Us.
or they buy up the companies and turn them around, generating multiples of the leverage they apply in cashflow., like Dominoes for Bain capital. You seriously don’t know what you’re talking about.
The fact that not all private equity owned companies fail isn’t the point in your favor you think it is. The point is that Bain bore basically zero risk when they tried to turn Dominoes around–if they had failed, they would have borne no serious financial consequences for doing so, because the debt they took on to buy Dominoes was transferred off Bain’s books and onto Dominoes’ books. Why should companies take on risk, if there are investments like these that they can make that are effectively risk-free?
If my aunt had balls, she’d be my uncle, basically.
There are lots of pernicious incentives for PE firms to do what you described, but after a certain point you can’t raise money if you don’t generate multiples off of the investment. PE exists for a good reason- lots of firms are run really poorly. Certainly, the guy who ran JC Penney into the ground should never work again. Burger King shouldn’t exist. But all these firms serve an important function in a. streamlining operations of inefficient companies and b. investing in innovation that can’t get funding through the rich uncles of the world.
Private Equity firms (I liked them better when they called them leveraged buyouts, but they rode that term flaming into the ground and it can never be used again) rarely if ever invest in innovation.
Not really – PE has an increasingly hard time finding assets because there is so much competition now. They’ve taken to doing things like buying trailer parks.
Remember that existing corporates have a huge advantage buying companies For sale because they have both revenue and cost synergies whereas a PE only really has cost synergies and leverage. Any company with any real value is worth more to an existing corporate than a PE because they can integrate it. In a competition with an existing corporate PE generally loses the bidding which is why they tend to buy distressed assets. It’s a good business model but once a lot of completion comes in, it gets harder. Plus the US govt unofficially capped leverage so its hard (not impossible ) to go much above 6.5 to 7X leverage
This times a thousand. I work for a giant tech company. We sell against PE backed companies all the time. It’s an easy conversation for sales when talking to greenfield prospects or even existing customers threatening to leave. “Partner with a proven brand with billions in cash or risk your business with essentially a start up with no cash, no R&D spend, and the ‘owners’ looking to sell in 5 years”.
Then when something like COVID hits, we buy our smaller competition. If we don’t buy them, it’s because they were poorly run and go out of business.
I don’t know how other industries operate, but the idea that it makes more sense for larger firms to acquire smaller firms v a private equity investment seems logical. At least in the mid sized range of businesses.
I have seen a lot of “F___ You” term sheets in my time but Elliott is in first place.
You want a laugh, you should read up on how horribly wrong AC Milan has gone for Elliott
$20K is the max. The owners won’t bother paying that much. Some of these kids will go to college, or get another year of eligibility if they are in college, some may go to one of those academies. Wouldn’t surprise me at all if Boras sets something up–and as much as I don’t like Boras, if he does that, good on him, because the owners are taking advantage of the situation.
The “missing out on talent” is a guess. I doubt any talent gets “missed”. What it seems to do is skew the competitive balance over time. It seems like someone like Branch Rickey will do really well and that teams with lazy Scouting will fare poorly. The draft was designed to smooth out that risk.
Now, in combination with reducing/eliminating minor league teams and limiting how many teams you can have, maybe the Branch Rickey risk is smaller.
So, perhaps it leads to better independent leagues which have to pay and develop players with the MLB Only paying for those players it wants later. More like how you see the MLB use Korea and japan. This is a good answer for owners. It may have to occasionally pay a lot for an Ohtani, but you don’t pay for the 1000 guys that Ohtani has been playing with.
the median value of a player drafted in a later round never goes below 20k. So just by EV alone they’re going to miss out.
If a player goes undrafted, and then signs a major league deal (being placed immediately on the 40 man roster), wouldn’t the $20K limit be eliminated?
Or if a player signs for $20K and then signs a major league contract and gets placed on the 40 man roster, couldn’t teams easily get around the $20K limit?
CBA actually specifically prevents stuff like this for draft-eligible players.
Even if it were allowed, though, why would they even do this for those kinds of players anyway? Teams find it difficult to manage their 40-man roster in-season as it is, and it would just put unnecessary strain to add on a guy who might be years away from contributing to a team. And that’s if they make it to the majors in the first place and manage to stick relatively quickly, since going that route would also eat up option years whenever they spend at least 20 days in the minors in a season.
It’s a shame that the owners pushed so hard to save what feels like pennies compared to the future value/production they could get from their draft picks.
I wonder if the savvier teams will look to to sign undrafted/indy-ball players that train at places like Driveline, etc. as a short-term solution to shore up missing talent from this draft cycle.
I wonder if the owners will let that happen. Eliminating rounds in the draft isn’t just about saving money on player signing bonuses, it’s about having fewer players in the minor league system to justify the elimination of minor league teams, which we already know the owners want.
Additionally, a side benefit for owners is that more players will stay in school longer, which both outsources the costs of player development to educational institutions, while also reducing their leverage in contract negotiations after being drafted.
Correct
From the vantage point of a parent of an athlete, most minor league players would be better served in their economic life by going to college after HS. If they can’t rise to the top there, at least they have a degree to get a job. And they probably would not get out of the minors if they could not dominate the NCAA. If they do dominate, then they can still get drafted and also be better prepared after baseball in the bargain, however the attempt to make it turns out. I read some place that the vast majority of minor league players are only there as cannon fodder for the small percentage that can thrive in MLB to hone their skills on and produce a product for minor league parks. After that is over they are years behind others who already started their personal, lifetime profession. The exceptions are guys like Fernando Tatis and other blue chippers. But they won’t be impacted by this anyway.
If you’re a baseball player who is good enough to go pro, but not a blue-chip prospect, your goal should be to get as much money out of baseball as quickly as possible. If you go pro and wash out in your 20s having never made the majors, you can still go back to school and get a degree and start a non-baseball career in your 30s, which is a totally normal thing that a lot of non-athletes do for a variety of reasons. On the other hand, going to college both requires you to spend several years of your physical prime playing baseball and not getting paid for it, and reduces your leverage to get a larger signing bonus if you do get drafted, as you can’t threaten to go back to school if your demands aren’t met.
I mean, maybe? I get what you’re saying, but if I’m a fringe prospect who signs for $200,000, I’m not likely to have very much of that left after taxes followed by a few years of covering my living/training expenses while I earn minor league wages. A frugal player could save some, but an athletic scholarship might actually have more value in the long run. Of course, that math changes quickly as the signing bonus goes up.
I’m certainly not in the “kids need to get an education” camp, but it’s not at all clear-cut. There are some players for whom entering the draft out of HS is the best choice, and others will do better by going to college.
If you’re pursuing a career path that requires peak physical performance, there’s a substantial opportunity cost that comes with starting your career at the age of 22 instead of 18, not to mention the danger of a career-ending injury happening before you’ve had a chance to cash in on your skills.
Very true. But if you’re pursuing any career that requires a college degree (as a great many fringe prospects eventually will), there’s a substantial opportunity cost to waiting. Including the possibility of reaching your mid-20s and having to support a family instead of go back to school, or any of the other reasons it’s not easy to go back to school after several years. And if your post-playing career is going to be in baseball there’s an advantage to already having a degree and using your minor league time to make connections.
I’m not denying that some young players are smart to go pro early. But there are advantages to college as well. It really depends on the person.
Since this is a math oriented site I’ll risk it. The expected return from minor league baseball is lower than the expected return from taking an equally well motivated hard working guy and having him start his normal life. Unless he has some reason to believe he really is Fernando Tatis or Harper or… some other guy who obviously had it early.
Except that they’re not sitting around wasting their talents while in college; they’re still playing ball, still working out and getting coaching. This is why D1 players typically do not start in rookie ball, and tend to move through the minors faster. They’ve simply elected to get paid in the form of a college scholarship instead of taking that five- or six-figure bonus.
And of course college comes with more flexibility: you can always drop out and go pro, whereas pro teams hold your rights for years.
I think in the future less players will go to college, and more players will go overseas at some point. It simply makes more sense financially.
They don’t have to go to college. But pursuing almost any early career path in any trade will put them ahead of where they’ll be from minor league baseball. They won’t make much, most of the time. And they will just be older when they eventually start their “real” life.
Why “get as much out of baseball as possible” instead of “get as much as possible (period)?”. For most, baseball is a waste of an important part of their economic life. They are adults, so if they want to go for it – great. Especially since I like to watch it. But at some level this is better for prospective minor league players financially, not worse. It’s just different…
If my boy has a chance to play professional ball, I will support him financially as long as he needs.
If he does not make it, he can go to college in his mid-late 20s, even in his 30s.
College does not need to start at age 18.
That’s what will happen. Non top prospects of wealthy families will sign for 20k and play pro baseball as a hobby supported by their families and players from poorer backgrounds who can’t make the top 5 rounds will “get a real job”
If players choose to stay in school and go in to the draft another year, no harm no foul, if they are high schoolers who actually go to college, I prefer that. Players who choose to sign as free agents, they get to choose where they go instead of being drafted and stuck in an organization that maybe they didn’t want to be a part of. They actually get some control there. But since they are not being drafted are the rules different for their earning potential and control they have moving forward?
It depends on where they go from here to determine if it was short sighted or not. Do they expand the 2021 draft to account for a larger pool of available talent? Can they institute domestic pool, similar to the international pool, that would allow the teams to extend additional, more lucrative non drafted free agent signings for players who were draft eligible in 2020, but were not selected? At the end of the day, they didn’t have time to do their diligence. Minor league seasons may not even get going to much scale, so development time might be minimal. If they can find a way to layer in this talent over the next 12 months, once they have a chance to better scout them, that flexibility could allow talent to be just as well captured.
I’ve got no problem with cutting the draft down long term. Honestly, the draft is terrible, and a terrible idea. Why should the Marlins get anything for the rent seeking they’re pulling off? But they should let teams sign people however they want, for whatever they want.
Passing up on young, cost-controlled talent only to have to pay for more expensive later on is just bad business. It’s shortsighted and its justifications are flimsy. In a time of uncertainty, MLB should be trying to bring as many talented young players as possible into the professional ranks.
Beyond the current cash flow savings, this is about realigning the number of minor leaguers in each team’s system concurrent with goals to contract the number of affiliates. There are seven “rungs” on the on-shore minor league ladder and MLB owners are being told to plan for the effective elimination of at least one of those rungs. I’m not expressing an opinion on the draft itself, or the contraction process, other than to say that from a cost and labor standpoint, these two items clearly appear to be related.
This will have a much larger impact on A-ball and below than it will on AA and AAA.But in any event, when contraction happens, teams will employ fewer minor leaguers going forward. It’s not a stretch to say that affiliated baseball could contract by 15% or more, meaning that less players are needed to compose minor league rosters. Owners are therefore planning for the most “efficient” way to construct rosters in the future, with less players in each system.
Reducing the draft allows each team some independence in reviewing their overall farm system and deciding whether to jettison existing talent (and sign more draft-eligible FA’s) or whether to rely on and develop existing talent (and abstain from signing more draft-eligible FA’s). It would be a bad (worse) look for baseball to have a 10-round (or longer) draft only for a handful of owners to fail to sign later-round draftees because they prefer their existing minor league talent to round out a smaller number of affiliates. Economically, if you want a 6th round draftee at a time when overall labor count is decreasing, you have to like him enough to pay him a signing bonus compared to the next cut on your existing roster – and that cut may be a player to whom you’ve already paid a signing bonus, and have some body of professional work to evaluate performance and progress. (We could have a debate about the psychology of “sunk cost” decisions, but I believe they are real, and not all humans are rational amidst such decision sets.)
So to make it simpler – five more rounds of draft is five more guys a team may have to cut from elsewhere at a time where the labor pool will be shrunk. Shortening the draft gives each team more flexibility in that process.
Then there is a scarcity question. If more players go to independent leagues and those leagues are capable of showcasing development, an owner can make a decision to place a small amount of $100 bets rather than a large number of $20 bets. Independent leagues allow a greater normalization of competition than the draft process, to the extent that you see entirely professional-calibre players rather than high school and college performance where you have a much wider range of skill in competition.
(Fully aware this will get thumbsed-down because many or most don’t like the content, even though I’m not expressing an opinion, and only drawing attention to the facts as I see them.)
Kyler Murray got a lot of press with his decision, but there are impacts on future talent when owners make the path to pro baseball so onerous, risky, and difficult. Without pointing to Young Player X specifically, decisions like this on the whole are going to reduce the level of talent that enters professional baseball.
Another way to look at this is that we are five rounds away from the ultimate goal of complete free agency, right? Isn’t that a good thing.
without a restriction on signing bonuses for undrafted free agents, sure.
Are there rules about the individual contracts minor leaguers have? The Jays unilaterally paid their minor leaguers more money. Can I sign an undrafted FA and pay him 100K/year in A-ball? Even if i pay my other A-ball players less? Put another way, is there a cap on MiLB salaries? I think every now and then MiLB FAs sign multi year deals. Are undrafted players the same as MiLB FAs? A team could sign a decent college player to 4 year, 70K/year deal (or whatever) with the 20K signing bonus.
I’m sure the commissioner’s office would hate it and object but is there anything in the rules stopping this kind of thing? It’s likely self defeating in the long term. The yankees and dodgers would just raise their MiLB salaries and then the Rays and Pirates would cry poor and claim they can’t spend money. Wait?! is the baseball industry based around screwing over an overwhelming majority of the players with only a few getting paid commensurate to their time, effort, skill and the profits they create? Wait?! Is american capitalism….never mind. Just the questions about MiLB salaries after the signing bonus.
This is a great idea, but I think there are already front offices thinking about how to make end runs around this rule. Why should you play the same game as the Marlins?
I’ve been on this bandwagon for a while. If you’re willing to take enormous penalty bonuses to acquire talent (which teams were) then why wouldn’t you be willing to pay larger minor league salaries? Either collectively or individually.
What is the point of collusion and a monopoly if you’re going to allow competing on pay?
So, no one knows (thus far) of any on-the-books rules preventing this or demanding that all players at a certain level be paid the same amount?
I don’t know what the rules on it are but we haven’t seen a lot of motivation on the ownership side to do this. With the length of the draft there isn’t a lot of undrafted talent to pay for. The slotting rules give teams all the power as it is.
I am speculating as to owners’ position. If all teams are equally missing out on talent, then all teams are equally injured. There is no competitive disadvantage to missing out on talent. Second, owners don’t see missing out on one draft class as a big deal as those players (a) will continue to play elsewhere and be available at a future date and (b) even if some disappear, then others will come along. Baseball will not be ruined by missing out on a star. It’s not a sport tragedy. It’s an individual tragedy for those players who have dreamed of playing in the majors and lose the chance .
I do wonder how many teams truly care about WINNING versus how they truly care about PROFIT.
I think 5 rounds is too little but the vast majority of value comes from the top of the draft anyway plus many college players will sign for 20k because where else can they go?
Also eventually those kids will need to sign and while draft picks are limited teams are already drafting scout sons and likewise in the final rounds to fill it out so they have enough slots to draft the real talents next year. No real prospect will be lost to baseball because there is no real alternative to mlb if you want to be a pro player (sure Japan but players usually want to play mlb and not npb).
Sure I know there are lots of examples of later round picks but generally most value is at the top of the draft and this is even more extreme if you look at players who make significant contributions.
Imo long term a draft of about 15 rounds would be ideal, especially with the minors contracting. Just doesn’t make sense to draft dozens of players who only have a 5% chance to make the majors.
Scouting and player dev got better and I think in a couple years we will be down to 3 teams per franchise (90 milb teams) and a 10-15 rounds draft with hs and international players being developed for the first year at the complex with lots of training, live at bats (driveline style) and instrasquad games.
From a business standpoint, as long as no team is getting an advantage, why should MLB as a whole even CARE about missing out on a particular talent? They’re not competing with anyone for players, only for fans – and as long as there’s no rival league that might pick up that talent, they haven’t lost anything (or so little that it doesn’t matter).
On the other hand, there’s the fact that there’s so little money involved compared to the league as a whole that paying it out doesn’t matter either – but that’s not really much of an argument for making the draft longer.
Any chance NPB/KBO get more aggressive with American amateur talent because of this?
What for? Both of these leagues have foreign player limits, and they’re not going to waste that slot on a player after the 6th round.
both of those leagues have an attached minors league, too. I doubt minors count against the major-league foreign player limit (especially in Japan, where Carter Stewart was supposed to pitch for the farm team last year).
Carter Stewart was projected as a top-10 pick.
Well, most teams only hit the limit on their active roster. They could keep a guy in their own minor league for a couple years and see if he develops. They do it with Dominicans (Alfonso Soriano being the most famous)
In reality, I think most American 18 year olds wouldn’t be prepared for the culture shock, and those leagues wouldn’t see the value in doing this with non-elite talent.
One thing that I hope someone will address is with a 5-round draft and capped bonuses is how much more talent is going to be going into the college ranks. So I just scrolled down and there are about 30 FV35+’s below 150 in Eric’s board. And that’s before we get to the total volume of players likely drafted in the late rounds.
I am not much persuaded by the argument here.
But then again, I was expecting to be unpersuaded, since ya’ll have lost all credibility in my eyes on these kinds of subjects. You’re so reflexively inclined to oppose whatever the owners support, that I simply don’t think you’re doing analysis, you’re just advancing an agenda.
Granted, this is the norm in media nowadays, and it seems to make money, so I can’t blame you. I guess maybe that’s ironic.
If the owners ever do something non-predatory, come back here and see if you have a point. You might need to be patient and live a really long time.
If you won’t break down WHY you think the analysis is bad, you’re just advancing an agenda.
“The next year, the only decent contributor the Mets drafted in the first 20 rounds after first-round picks Brandon Nimmo and Michael Fulmer was Robert Gsellman in the 13th round. They also drafted John Gant in the 21st round; the big value pick in that draft was Seth Lugo in the 34th round.”
Shit, that’s a really good draft. An extra first helps, but still good even if you take either player away.
If I were drafting, I would push all high school players Way up my board, and I think I’d be hard pressed to take a college player in anything besides the first round.
For the most part, senior signs aren’t getting that much money beyond the first several rounds anyway. Whereas maybe you’d take your favorite senior sign in the 4th or 5th or something, with SO many undrafted players, is he really different enough for you from someone generic to fill out a SS roster? How many HS kids are going to forego college for $20k? These might be your only five shots at signing high school players in this particular draft. Can you offer tuition (if/when career ends, or during offseasons) with the $20k, or is it strictly the bonus? That would go a long way towards a more normal draft environment, wouldn’t it?
Also, we don’t know what HS sports are going to look like, or when they are going to happen, and we already lost a whole spring. I want to take the most advanced of the last pool of HS players we can confidently say there will be.
Just aim high on upside. Mass disruptions can change variables that we’re used to assuming are more or less consistent. Get the talent in the system now and adapt to whatever changes are going to be a part of the 2021 environment as you go, because that’s what everyone will be doing.