June 19, 2006

Baseball’s Amateur Draft Falls Short Of Promise

Baseball is in love with it’s rules, regulations, statistics and traditions.  Fortunately, the average fan can still enjoy the great American game without really knowing what the infield fly rule is or why a slugging percentage is important.  The recent June baseball draft is just another example of baseball staying with a system that has woefully failed to meet its goal of improving competitive balance in the sport.

A Little Background - Baseball used to simply allow teams to bid for high school and college players.  Somewhere along the line it occurred to someone that this approach might favor the wealthier teams just a tad.  Reluctantly, baseball was forced to change and instituted a draft in order to allow the weaker teams an opportunity to acquire the best talent.  There are many, many rules governing the draft, but the concept was to allow the teams with the worst records the previous season to draft amateur talent before the better teams selected their choices.  Baseball held it’s first draft in 1965 and until 1986 had January and June draft sessions.

There have been a number of permutations, but the current draft process looks likes this:

• The draft is held the first week of June and consists of 50 rounds
   
• The draft is conducted by conference call from the Commissioner’s Office and may run as long as three days
   
• Teams select in reverse order of their record
   
• Compensatory, or “sandwich” picks between the formal rounds, are allotted to teams that have lost ranked players to free agency
   
• Teams have two minutes to make their selections or pass
   
• Basically, eligible prospects include high school players, junior college players, college players after their third year, or college drop-outs and/or amateurs over the age of 21. 

Those are the basics of the system although there are many more rules and restrictions.  About a third of the prospective players taken will be high school players.  After the draft the teams face the challenge of signing their picks and that can be a problem.  To help the teams determine signing bonuses, Major League Baseball has provided “slot money” guidelines.  Slot money is the amount recommended by the Commissioner’s Office/MLB for draft picks based on when they were selected.  Clubs must offer the draftee a contract within 15 days of his selection or lose his signing rights.  There’s an exception, of course - after all it’s baseball.  If the drafted player declines the offer and attends a junior college the team can “draft and follow” him and again try to sign him as late a week before the next year’s draft.  If the team fails to sign him he goes back into the upcoming draft.  Sounds simple doesn’t it?

Reaching The Goal - With all the rules and regulations, you might think that the system does a good job in reaching it’s goal of promoting parity in the leagues.  You’d be wrong.  The reality is that the baseball draft has had little, if any, impact on team competitiveness.  Paul Standohar, in his paper The Evolution of Baseball’s Amateur Draft studied the problem and concluded that “As far as competitive balance, it had little effect if any.  Some researchers say it had none. It’s hard to put these things in a test tube.  Intuitively, I would say not much.”  Certainly, it would be hard to argue the case for parity if you are a fan in Colorado, Pittsburgh, Milwaukee, Tampa Bay, Kansas City and a few other destinations where hope no longer springs eternal.

Fatally Flawed System - There are numerous reasons why baseball’s draft is not working to meet it’s goals.  Clearly, in an era of free agency and free spending by some clubs, the idea parity will remain elusive.  The rich seem to get richer and the poor seem to lose 100 games.  Some of the more obvious flaws include:

Kasey Kiker, the Texas Rangers first round pick signs autographs while being introduced to fans in Arlington.  Rangers hope the high school pitcher will be a star but only time will tell.

Player Selection - The draft is a crap shoot at best and there is a long history of puzzling choices made by teams.  You could easily fill a book with stories of Hall Of Fame players who were passed over repeatedly in favor of prospects that never got near the “show.” Mike Piazza, a star by any measure, wasn’t taken until the 62nd round of the draft (this was prior to the draft being limited to 50 rounds). It has been suggested that as many as 70% of baseball’s first round picks never play major league ball, or make only a brief appearance.  In other sports, a first rounder is almost always a lock to make the team - not so in baseball.  Baseball-Almanac.com did an assessment of the 1997 first round selections in baseball.  1997 is a good target year as drafted prospects would be in their eighth professional season.  Assuming three years in the minors they should be established major league players in 2006.  BA found that of the 31 first round picks, 10 did not make the majors at all and another third of the prospects never became regular players.  Super agent Scott Boras observed that “When you look at the draft on the whole, you’re talking about a risk venture.  Yes, not all the first rounders will make the majors and only a few of them will turn into stars.” 

Signability - Another serious flaw in the system is that is simply does not bind the best prospects to the worst teams.  Weaker MLB teams are typically those with fewer financial resources, or the will to spend the money on players.  Prospects can make pre-draft demands that deter teams from selecting them with their prized early picks.  Agents, such as Boris, will set the signing price well about the slot and threaten to have the prospect refuse to sign with the team.  Weaker teams pass on the top players, not wanting to end up with nothing and knowing they cannot meet the price of the player.  This allows top talent to drop in the draft until a one of the more wealthier teams makes the choice.  Take the case of Jared Weaver, the top pitching prospect in the 2004 draft and a Boras client.  Issues of signability dropped him to 12th where he was taken by the LAA Angels.  Boras had Weaver refuse to accept the Angels offer and he sat out a year before the team finally relented and paid a $4 million bonus - the highest received by any player of the 2004 draft.  As for Weaver, he has already pitched in the majors and looks to be a top talent for the future.  The best pitcher ends up with one of the top teams of the last five years.  His story is not unique.  Another tactic is for the prospect to declare that he doesn’t want to play for certain teams and will refuse to sign.  Minnesota Twins GM Terry Ryan commented, “You’re not going to take a player who doesn’t want to be with you.”  Players have a lot of options - weak clubs don’t.

Solutions - Free agency and team finances may overwhelm any attempts at competitive balance in the long run.  Still, some changes in the draft system might contribute to more parity.

Slot Money and Signing Options - Currently, the MLB only suggests a recommended signing bonus for draftees.  Agents can advise their clients to refuse, even waiting until the next draft.  Two changes would greatly limit the draftees options.  First, make the slot money a fixed amount and not subject to negotiation.  Second, bind the draftee to the club for two years.  At first blush, these changes might almost seem un-American; however, they are justified when you consider the following:

• Draftees are already restricted to some extent - when you have a draft it’s not a free market situation
   
• The “hit and miss” nature of player development should provide the drafting team with greater leverage.  Many first rounders cash healthy checks and never contribute to the major league club.

·   Agents and prospects are manipulating the draft.

• Fairness - if the player is truly talented there’s a big payday waiting down the road.  Under the current system, the club assumes all the risk

Allow Teams To Trade Draft Picks - A different approach would be to allow the teams to trade their draft picks for established players and/or other draft picks.  Currently, MLB strictly forbids trading the picks prior to the draft and, indeed, for a full year after the prospect has signed with the club.  Other major sports, such as football, have embraced the practice of trading draft picks.  If a team knew they could not sign one of the top prospects in the draft they could entertain offers from other teams for the pick.  Clearly, this would give the weaker teams increased advantages in building a talent base.  If the team accepted players under contract the question of signability would be moot.  A similar variation would be to allow the team to draft the prospect and then immediately trade him rather than wait the year.  Scott Boras supports that concept, recently saying, “If they truly wanted the draft to have the best player go to the worst team, they would invoke that rule.”  An added benefit might be to create a good deal more interest in baseball’s draft, just as there is with the NFL draft.

Unfortunately, baseball has always been slow to make changes.  The draft will almost certainly continue in its current configuration even though a lot of the best talent is finding a way to end up with the better teams.  Fans in small markets should be concerned as they continue to hears threats of consolidation, or abandonment to larger and more lucrative markets.  Wouldn’t it make more sense to address the problems with more reasonable solutions?  Don’t hold your breath.

Blair Lybbert

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