How To Fix Baseball’s Draft

There has been a lot of talk recently of the General Managers and commissioner Selig getting together on ways to fix Major League Baseball’s amateur draft (Buster Olney has an excellent article about the issue at ESPN, subscription required). The crux of the problem is that there is a major disparity between teams that spend money on big signing bonuses and those who don’t. As a result some of the best young talents slide 5, 10, even 20 spots in the first round. On top of that teams will handout signing bonuses of 1st or 2nd round money to players all throughout their draft class.

Right now there is a ‘slotting’ system in place, where each draft position has a ‘recommended’ bonus. Unfortunately, there is no real tangible penalty the league can enforce for going over slot. And the only teams the league can put pressure on are the small market teams (aka the ones who can least afford to go cheap in the draft) by withholding money or events. Now there are a number of ways the league could look to improve/fix the draft, but I think the area they should focus on; are the trading of draft picks and players rights.

Before I get into my proposal, I wanted to highlight the option that seemingly is the one most bandied about, hard slotting. Hard slotting is essentially assigning a bonus amount for each draft slot and if the player signs thats what they get. Now that is glossing over it a bit, but it would make the MLB Draft similar to the NBA draft. The problem with that is there are few similarities between the MLB and NBA in player development. In the NBA, players are ready to enter the league and for the most part begin their career from day one. In Baseball even the elite prospects need a year or more of minor league development time. There is a greater uncertainty of MLB prospects even making it to the big leagues, much less having successful careers. That is why the draft is 50 rounds (though teams sign traditionally between 25-35 players, sometimes more) compared to 2 rounds for the NBA.

In other leagues, the draft is usually predicated on team needs, baseball is the exception to that rule, since they can’t predict the impact of a particular player. Another issue for baseball teams is that their prospects have considerable more leverage than other sports. In NFL or NBA if you are drafted, you sign or hold out. In baseball if you are drafted not only can you sign or hold out, but players can decide to go to/back to college, or even play in independent ball for a season. With this extra leverage teams have to pay a higher price for talent. If there was a hard slotting system, plenty of mid-round players who sign for first round money would simply just go to school instead of now signing for 4th or 5th round money. Hard slotting would limit the talent pool each season, and make it harder to rebuild through the draft (though I’m sure colleges would be happy). For these reasons baseball teams need more flexibility in building their roster, and a deeper talent pool, two things they can’t do with hard slotting in place.

What Baseball does need to do is allow the trading of draft picks or draft rights. As it stands now draft slots can’t be traded and any player who is drafted must not only sign with his drafted team, but also be with the organization for a year after signing until he can be traded. The one semi-workaround of this archaic rule is the “Player To Be Named Later” (PTBNL) rule that allows a six-month window to ‘name’ the player, so a player drafted in June could be traded the following December or January as a PTBNL. Even in that instance a player needs to sign with that original team, before he could be named as a PTBNL. This is easily the worst rule in baseball, and one that again hurts the wrong teams. The rule is in effect so small market teams won’t “sell” a player or pick to a big market team for just cash. And that I understand, draft picks shouldn’t be sold if the original team isn’t getting any ‘baseball’ value back. But is the eliminating of all trading the only way to ensure this? The league already must approve any trade of over $1 million dollars in cash changing hands…wouldn’t that bylaw stop any shady transactions? Now instead of a big market team like the Yankees or Red Sox having to trade up for a top prospect, and they stay where they are and still potentially get that player.

The best example of why this rule is out of date is this past year’s draft. The Pittsburgh Pirates and Baltimore Orioles, two rebuilding franchises, who had each spent big money on a single prospect over the past two years, selected 4th and 5th in the draft. With the top talents Strasburg and Ackley off the board, they were left looking at an industry consensus of a number of high potential pitching arms to choose from. The problem is most of those players were rumored to be asking for bonuses between $5-7 million, so instead of drafting one of those arms the decided to draft 1st round talents (though not considered top-5) who would sign for the recommended ‘slot’. While it looks as though the Pirates and Orioles took the ‘cheap way’ out, they spent the money they saved on their 1st round pick later in the draft signing a number of players for more than ‘slot’. They ended up being the 5th and 6th biggest spenders in last years draft (according to numbers compiled by Baseball America). They ended up being punished for their not wanting to break the bank on a particular player, and going with quality-quantity over one big name prospect. If they had been able to trade back they could have still gotten the player they wanted, as well as additional draft picks later to further deepen their impressive draft classes. In addition they actually “overpaid” their draft picks, since if they traded back and drafted them 5-10 spots later their ‘slot’ value would be less. The trading of picks has no downside in today’s game of baseball and will allow teams who aren’t in love with the industry consensus player, to get extra value out of their pick.