The Orioles Sold a Draft Pick Again

Since the trading of some types of draft choices was allowed in the most recent CBA, we’ve seen teams use their “competitive balance” selections as currency, often swapping them for role players in minor mid-summer trades. As noted in this MLBTradeRumors post from last year, players traded for draft picks include the likes of Bryan Morris, Bud Norris, and Gaby Sanchez, although they have also been included in deals for better players like Jon Lester as part of a larger package.

Last year, though, the Orioles and Dodgers created a new kind of trade for a competitive balance pick, taking out the desired player aspect of the deal, and turning it into a simple cash proposition. Last April, the Orioles decided they didn’t want to pay the remainder of Ryan Webb’s 2015 salary — roughly $2.8 million — and so they gave the 74th overall pick in the draft to the Dodgers in exchange for LA taking Webb’s contract. The Dodgers didn’t actually want Webb, as they showed by immediately DFA’ing him upon receipt, and the deal stood as the first time two teams had clearly decided that it would be mutually beneficial for one franchise to purchase a draft pick from the other.

A year later, the Orioles decided to do it again, so last night, they traded the 76th pick in the draft to the Braves, along with the roughly $3 million remaining on Brian Matusz’s contract, in exchange for two non-prospects. For the Orioles, the competitive balance selections might as well be renamed “$3 million rebate checks,” because that’s apparently how Dan Duquette sees these selections.

From the Braves’ perspective (and the from the Dodgers’ perspective a year ago), these deals are pretty easy to follow; by purchasing a mid-70s draft selection, the team acquires about $830,000 in bonus pool allocation. That’s money that can be used to draft and sign a third-round talent, or a team could decide to punt the pick and reallocate most of that money to sign an overslot player with another pick. Last year, the Dodgers drafted RHP Josh Sborz, then signed him for $722,000, giving them $109,000 in saved allocation money; that came in handy when they wanted to sign fifth-round pick Brendon Davis, who got $918,000 despite being picked at a slot where the allocation value was just $314,000.

Since the Braves already own the 3rd, 40th, and 44th pick in the upcoming draft, they’re in prime position to land a first-round talent who slides based on price, and picking up the $830K in this deal could give them an opportunity to select a much better talent with their second or third pick. As our prospect writer Eric Longenhagen put it on Twitter.

This is exactly how a rebuilding team should be spending its money during non-winning seasons. The Braves have taken a lot of heat for not putting a quality product on the field this year, but the organization is better off long-term if they spend $3 million to buy a better quality prospect in the upcoming draft than if they had spent $3 million to have a slightly better placeholder in their rotation this year. The return on investment is simply higher by spending on the draft, and this trade helps the Braves take some of their current payroll space and turn it into value that could produce when the team is ready to win, or at least provide some currency to acquire future pieces that could help the team down the road.

We’re used to non-contending teams signing middling free agents, keeping them until the trade deadline, and then flipping for prospects in July. This is the same concept, just without the major league player being involved. This is the no-middle-man version of prospect purchasing, and the price the Braves paid is right in line with what the Dodgers paid a year ago. As a rough guide, it appears that the market value is something like 3x the slot value; in other words, each dollar in the allocation pool is worth about $3 in present salary.

The bigger question, though, is why the Orioles remain interested in selling draft picks for present cost reduction. After all, the Orioles have the 27th, 54th and 69th selections in the upcoming draft as well, so they were also in a position to move allocation money around to grab a better prospect who falls for pricing reasons. By dumping the 76th pick, they’ve reduced their flexibility and lowered the overall talent they’ll be able to add to the franchise this summer.

But while cash savings now aren’t guaranteed to be turned into roster upgrades later, the Orioles did just buy some major league flexibility. At 26-16, they’re currently in first place in the AL East, and are likely to be buyers when the trade deadline rolls around this summer. Due to the adjustments made to the rules about when draft picks can be traded — dubbed the Trea Turner rule — any picks made this summer cannot be included in deals for players this season; those picks could help replenish the farm system if the team plans on using some of their current prospects to acquire big league additions, but those picks themselves can’t be traded until after the season, and they can no longer be included as players-to-be-named-later.

So, while it’s easy to just look at this and criticize the Orioles for selling off an asset, it seems reasonable to assume that the $3 million in cash savings realized by dumping Matusz’s money might actually be a way for the team to effectively trade a draft pick for some in-season help. By trading the pick now for the cash savings, they can then take on more money in a trade this summer, reducing the asking price in talent from the seller by providing financial relief that other teams may not be as willing to offer.

Given the state of the Orioles rotation, it seems pretty likely that the team is going to be in on a starting pitcher this summer. Perhaps the team is looking ahead to a deal for a guy like James Shields, and feels they’ll be better served by offering to take on more of his salary than by trying to compete with other buyers in just prospect offers. The Orioles don’t have a lot of prospects to trade, so by accumulating some financial flexibility, they might put themselves in a position to offer a seller something that they can’t get as easily elsewhere.

Of course, if Peter Angelos just pockets the $3 million, and the team doesn’t reallocate this money back into the franchise, then it’s perfectly reasonable for Orioles fans to be annoyed by this trend of the team selling draft picks. Making a habit out of reducing your prospect stock isn’t a great idea if you’re not using those prospects to acquire other things of value, and if shedding Matusz’s contract just allows Angelos to go buy some fancy art, well, that would suck for the franchise. But at this point, with the Orioles as likely buyers this summer and some obvious holes on the roster, I think it’s probably best to assume that this is a move made in preparation for taking on big league salary in July.

And if that’s the case, then all the Orioles are really doing is trading a prospect for some help at the big-league roster, which is exactly what we expect teams in first place to do. This is a new and somewhat more complicated way of doing it, but the end result may very well just be the same as swapping a prospect for a veteran upgrade at the deadline.





Dave is the Managing Editor of FanGraphs.

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cornflake5000
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cornflake5000

I wonder if the Cubs are considering any similar deals (with their first pick being #104).