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.