It’s a funny situation. When Major League Baseball owners and Major League Baseball players renegotiated the latest collective bargaining agreement between the two sides, they effectively put a limit (not a hard limit, but one with extraordinary penalties if passed) on the amount of money that a team can spend on signing bonuses for newly drafted players. I can’t help but shake the feeling that the MLBPA really didn’t mind making this concession, while the highest ranking executives for the owners would’ve minded quite a bit.

While drafts have come to represent something of a lottery to fans, one in which the results don’t typically become available until years down the road, it represented a place of value to Major League teams smart enough to take advantage of service time rules that permitted the acquisition of talent at a fraction of the cost present in the free agent market.

That’s simply not the case anymore.

Starting this year, each team is told of an amount of money it shall not exceed for signing bonuses given out to draft picks in the first ten rounds (after which, no player can be signed for more than $100,000, unless it comes from the remaining balance of each team’s slot allowance). This amount is based on the team’s position in the draft and the number of picks it has attained in the first ten rounds.

MLB has set a predetermined value for every pick, from $7.2 million for the number one choice to $100,000 for any pick after the 300th. These are the resulting slot allowances, also with the amounts of money that each team spent in the first ten rounds of last year’s draft, as well as the overall amount they spent:

Team Picks Bonus Pool 2011/Top 10 2011/Total
Twins 13 $12,368,200 $5,072,300 $5,902,300
Astros 11 $11,177,700 $4,705,800 $5,545,800
Padres 14 $9,903,100 $10,345,600 $11,020,600
Cardinals 14 $9,131,100 $4,055,000 $4,554,000
Blue Jays 14 $8,830,800 $8,990,000 $10,996,500
Athletics 13 $8,469,500 $2,612,300 $3,067,300
Mariners 11 $8,223,400 $9,840,000 $11,330,500
Cubs 12 $7,933,900 $6,559,950 $11,994,550
Mets 12 $7,151,400 $5,070,000 $6,782,500
Red Sox 12 $6,884,800 $10,048,700 $10,978,700
Orioles 10 $6,826,900 $7,282,400 $8,432,100
Brewers 12 $6,764,700 $6,793,300 $7,509,300
Reds 12 $6,653,800 $3,701,400 $6,378,900
Rockies 12 $6,628,300 $3,709,900 $3,967,900
Rangers 13 $6,568,200 $3,021,500 $4,193,000
Pirates 11 $6,563,500 $16,445,700 $17,005,700
Royals 10 $6,101,500 $11,405,000 $14,066,000
White Sox 11 $5,915,100 $2,126,300 $2,786,300
Dodgers 11 $5,202,800 $2,978,800 $3,509,300
Marlins 10 $4,935,100 $3,655,000 $4,135,000
Phillies 12 $4,916,900 $3,855,300 $4,689,800
Indians 10 $4,582,900 $6,362,500 $8,225,000
Nationals 10 $4,436,200 $14,551,100 $15,002,100
Yankees 11 $4,192,200 $4,202,500 $6,324,500
Giants 10 $4,076,400 $5,021,000 $6,266,000
Braves 10 $4,030,800 $2,522,200 $3,735,700
Rays 10 $3,871,000 $11,309,400 $11,482,900
Diamondbacks 10 $3,818,300 $11,161,500 $11,930,000
Tigers 9 $2,099,300 $1,815,200 $2,878,700
Angels 8 $1,645,700 $2,656,600 $3,318,100
Total 338 $189,903,500 $191,876,250 $228,009,050

Information from Baseball America.

Teams that go over slot up to 5% on the draft will face a 75% tax. Teams that go over slot by 5-10% face a 75% tax and the loss of a first rounder. Teams that go over slot by 10-15% face a 100% tax and the loss of a first and second rounder. Teams that exceed slot by 15% or more face a 100% tax and the loss of two first rounders. Teams that don’t exceed their draft spending limit will have a chance to obtain picks from teams that over-spent.

How will this limit on spending affect the draft? There are good guesses out there, but ultimately we don’t know. We’ll have to wait and see how teams react to the new rules, how they might try to acquire the most talent that they can for as cheaply as possible.

This often posted chart weighs heavily with me:

It would seem to me that a smart team would realize the likelihood of the greater majority of value coming from an earlier pick and spending likewise. In other words don’t pinch pennies to be able to afford the player you drafted in the fifth to tenth rounds when the talent is there to be bought in the first five.

However, we’ll have to wait and see how things play out and how team’s order the talent they wish to acquire over the next three days  when 1200 players will be selected by Major League teams, starting tonight at 7:00 PM ET.

And The Rest

In case you missed it, Johan Santana threw the first no-hitter in the history of the New York Mets franchise on Friday night. [Getting Blanked]

Perhaps it’s no coincidence that Santana’s no-hitter happened to follow comedian Bill Maher’s purchase of a limited partnership with the club. Someone has come a long way since Ratboy. [CBS Sports]

It was a sad weekend in Toronto, that went far beyond the Blue Jays merely losing two of three against the Boston Red Sox. Third baseman Brett Lawrie was present at a shooting in the city’s largest downtown shopping centre. He informed many of the ultimately fatal incident through his Twitter account. [Getting Blanked]

Edwin Encarnacion is surprisingly alright. [DJF]

What baseball can learn from hockey’s video review war room. [Baseball Nation]

Major League Baseball has officially declared 20 year old Cuban outfielder Jorge Soler a free agent. The last expected big signing before new rules on international free agent signings is implemented in July, Soler must complete a little bit more paper work before he can be signed by a Major League Baseball team. [Baseball America]

There’s a lot of uncertainty for the Boston Red Sox with all of the rumours putting Kevin Youkilis on the trading block. [MLB Trade Rumors]

Bryce Harper’s toughest at bats. [Baseball Prospectus]

New York Mets starter Jon Niese left last night’s game early due to a rapid heart beat, but tests have since indicated that all is well with the pitcher. [New York Times]

The latest from the Rogers Clemens perjury trial. Yawn. [Washington Post]

Comments (16)

  1. Man that draft picture always cracks me, it looks like a scene frm BASEketball.

  2. This is really the end of the high school draft pick, outside of the 1st round of course.

    Most kids arent going to not go to college for a much smaller pay cheque.

    • Definitely not the pick, and maybe not the high school signing either. Basically, high school kids turning down contracts this year, might be less likely to sign a big deal two years later, given a) the slot assignments; and b) the willingness of teams to use the majority of that assignment on high school talent.

    • It looks to me like the draft cap essentially holds teams to spending an overall amount similar to last years total, therefore there is still plenty of money to be spent by teams on the draft and high school picks will still get offers similar to last year (not less).

      My guess it that more teams may choose to pass on signing some of their picks if they run into potential cap issues, and they will still find money for players they really like, regardless of where they were taken and if they are coming out of college or high school.

  3. Just to clarify, teams only get penalized if the spend over their allotted budget for the total draft, not for going over on an individual slot. Right?

    Also, a couple of questions:
    1. How does signing a draft pick to a multi-year deal affect what is allotted towards the bonus? Is it just the first year dollar amount, the total amount of the contract, or just the amount given as a bonus? i.e. If a team signs their first round pick to a $1 bonus and a five year $30 million contract that pays $1 million in the first year, what amount would go towards the draft bonus pool allotment?
    2. Is there a list somewhere of the predetermined value for each pick?

    • Yep. And that’s only for the first ten rounds.

      1. No Major League deals are allowed.
      2. Click that Baseball America link under the chart. There’s a ton of coverage there.

      • 1. That doesn’t really answer my question, or did you mean to say major league deals aren’t allowed? If not, what amount would go towards the draft cap in my given scenario?
        - $ 1 signing bonus
        - $ 30 million five year contract
        - $ 1 million for the first year of that contract

        • Forget my comment, for some reason I read your response as:

          No, major league deal are allowed.

          • The impact of the new CBA vis-a-vis the Rule IV draft will not be known for a couple or more years.

            Looks like MLB has created a new job description for front office personnel. Capologists will become the new norm for most teams.

          • Works on commission? No, money down!

            Whoops, that Bar Association logo shouldn’t be there…

  4. I’m worried about baseball losing out to other sports when it comes to signing talented, multisport athletes.

  5. I’m guessing that a lot of baseball execs are going into this one with a fairly conservative mindset. They’ve got their targets and some pre-negotiated guys and i’ll bet with the amount of uncertainty about how things are going to progress, not too many of them will call an audible if someone unexpected drops.

    For one, I’ve seen some talk about underslot signings, but since a team loses their allocation (in the first 8 rounds or whatever it is) if they don’t sign that player, without a complete agreement between the player and team prior to picking, there’s very little leverage for the team and the player for underslotting, since they can’t turn around and spend that money elswhere.

    There’s a snippet in this piece that I don’t understand. How do, “teams that don’t exceed their draft spending limit… have a chance to obtain picks from teams that over-spent?” Can you now trade unsigned draft picks? Does their bonus allocation go with them? Can they be traded for each other? That would make for an incredibly volatile marketplace, where the player drafted high up willing to sign for cheap becomes immensely valuable in trade (especially with the benefit of advanced planning), but is also fraught with serious pitfalls.

    • “Teams that don’t exceed their draft spending limit will have a chance to obtain picks from teams that over-spent.”

      I was going to ask the same question Jay asks.

      I don’t think this is something the Jays would try to profit from – I’d guess they’d be more likely to try to maximize the match between the money and the talent (rather than draft lesser talent to save cap space to sign other teams’ latter round players?) – but, is that how a team would take advantage? And is there an angle the Jays would/could exploit?

      Sorry for being too lazy to think it through myself, but I’m finding these new rules mind-boggling.

Leave a Reply

Your email address will not be published. Required fields are marked *