(The following is being syndicated fromThe Captain’s Blog).
In a year that has seen the NFL and NBA deal with acrimonious labor negotiations, MLB is on the verge of ratifying a new collective bargaining agreement without the slightest bit of rancor. However, there has been one point of contention: the escalating bonuses being paid to those selected in the Rule IV amateur draft.
Thanks to unprecedented labor peace, baseball fans are unlikely to face a work stoppage next season.
Back in March, I identified mandatory slotting as one of the main topics to be addressed by the new CBA, so it’s not much of a surprise that the issue has momentarily held up the deal.According to Buster Olney, although some points still need to be ironed out, progress is being made on a compromise. In Olney’s report, he identifies the following elements:
- Slots will be recommended, not mandatory. However, if teams go over their cumulative slot recommendation for signings made during the first 10 rounds, a tax will be applied.
- If teams exceed their slot recommendation for a second time, they will also lose a high draft pick.
- In exchange for this concession, draft compensation will no longer be tied to free agent classifications.
Although I strongly oppose mandatory slotting, the solution outlined above seems like a reasonable compromise. My initial concerns regarding a slotting system centered around the inherent unfairness heaped onto the shoulders of amateur players who already lack negotiating leverage because of the six-year reserve. Although the recommendation system being proposed could have the effect of dampening amateur demands, it doesn’t constitute a hard cap. As a result, individual draftees can still make the case that they merit a team either paying a tax or losing a draft pick.
Ultimately, the amount of the slotting recommendations will determine just how fair this compromise turns out to be, but in the abstract, it really is no different from that which tenured players in the MLBPA currently face, namely the competitive balance tax and free agent-based draft compensation. Granted, the latter would be omitted under the compromise proposal, but at least the current players aren’t asking their soon-to-be brethren to play under rules vastly different from their own.
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The questions before MLBPA executive director Michael Weiner have been far less complicated than those faced by his NFL and NBA counterparts.
So, what does this mean for the Yankees? The conventional wisdom has suggested that slotting of any kind will prevent large market teams from scooping up overpriced talent in later rounds, but the opposite seems just as likely. Once again, just consider the competitive balance tax. The only teams who have regularly exceeded the applicable threshold are the Red Sox and Yankees. Why? Because they can afford to do it. There’s no reason to think the same won’t also be true regarding the slotting tax, which means big market teams could wind up with an even greater advantage when it comes to spending in the draft.
One could argue that the Yankees already overspend in the draft, so any form of limitation would be welcomed. However, that assessment ignores the net effect. If other teams are discouraged from spending over slot more often than the Yankees, the gap between the two sides could actually grow. Similarly, if big market teams are able to use the slotting system to suppress bonuses paid to non-elite selections, they could wind up with more money to spend throughout the draft, a luxury that smaller market teams are unlikely to share (assuming their total budgets are not on par with a team like the Yankees).
Finally, the loss of a high round draft pick would be a prohibitive measure, but again, it seems to disproportionately impact teams who must build future success through the draft. For example, the Rays are much more likely to be discouraged by the loss of a first round selection than the Yankees because they are not as financially capable of building their roster via free agency. However, big market teams will be freer to decide that an amateur selection like Gerrit Cole warrants going over slot because, even if a future pick is lost, a high-priced free agent could be signed to serve as a stop-gap measure.
A prodigy like Bryce Harper should still get paid under a recommended slotting system.
If the compromise outlined by Olney really is on the fast track, does that mean Bud Selig and the small market owners are oblivious to the implications I’ve suggested? Of course not. In addition to providing cost certainty in the draft, small market teams will actually benefit by removing the link between free agents and draft compensation. Once again, the devil will be in the details, but if automatic supplemental round picks are awarded to teams losing free agents, it would remove the need to offer arbitration, which for some players, can be a very risky proposition. On many occasions, teams have declined to offer arbitration to ranked free agents out of fear they would accept it, so now, they wont have to make that difficult, and potentially costly, decision. Furthermore, small market teams have often been torn between either trading players in their walk year or holding onto them for free agent compensation. With more certainty regarding the actual pick they would receive, teams should be able to better assess their deadline options.
As an advocate of the free market, especially when it comes to sports labor negotiations, I’d like to see the draft abolished completely. So, it’s kind of hard to endorse a measure that would add further restrictions to the system, particularly when they fall upon the weakest in the food chain. All things considered, however, the recommended slotting system outlined above seems to benefit all parties. The big market owners are not prevented from flexing their financial muscle in the draft, nor will they face the prospect of losing a first round draft pick when signing a type-A free agent. Meanwhile, the small market owners gain cost certainty, while lessening arbitration exposure and achieving greater transparency when evaluating potential deadline deals. Finally, current players no longer have to contend with teams shying away from their services because of the draft pick compensation tied to their contracts.
Under any slotting system, amateurs are the ones who get the short end, but at least the rumored compromise does not completely strip them of their rights. Besides, if these players fulfill the promise that underlies their bonus demands, they will soon reap the benefits of the most favorable player-owner relationships in all of sports. If it means maintaining the labor peace that promises to make everyone rich, recommended slots are probably a small price to pay.
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Like to make a couple points
1. Love that there will continue to be no restrictions on IFA market as that would be nearly impossible to regulate.
2. The slot recommendation is an interesting idea and the tax is one thing, but losing a high draft pick seems to hurt poorer teams that want to take advantage of the draft system.
3. I would be interested in how baseball would look if they abolished the draft and just had free agency when you got your HS degree/GED. You would think with the free market that prices might escalate, but theoretically they will only be paid as highly as teams value them.
Do you have any thoughts on how the FA system of getting amateur players would like and how that would affect the minor league system.
I agree 100% with all of your points. If there was no draft, I think smaller teams might actually benefit because they could allocate more of their resources in that arena, whereas the big market teams would still be beholden to free agency. Also, it would encourage and reward beating the bushes. The more prospects you find, the more you can sign. Who knows…some teams might actually invest money in academies in the U.S., which would only improve baseball’s popularity in this county. That’s just a simple summary, but I think abolishing the Rule IV is something that should be considered.
Here’s something I wrote about the topic a few months back: http://captains-blog.net/2010/04/16/baseball-needs-to-abolish-the-draft-for-jackies-sake/
That was a nice article and I agree. The less money there is in baseball due to constraints on the market will limit the demand and lower the supply while lowering costs. While it may lower costs may be nice for baseball it is probably still beneficial for teams to have open reign as the six years of control make up all those costs you would sign for bonus babies.
We know what baseball would look like if you had a completely free market. The draft was instituted in the mid 1960s, before then the Yanks had their pick of whoever they were willing to spend money on, and of course the Yankees had a dynasty that ran from the 1920′s through the 1960s with few interruptions.
That’s always the kneejerk response, but before the 1960s, there was the reserve clause, which made players indentured servants. Also, there were only 16 teams, and only about 10 of them were economically viable. Besides, it really isn’t true to say the Yankees signed everybody, just like that isn’t the case in the international free agent market. How the Yankees really used their financial muscle back then was by “buying” players from other teams (ones they had signed as amateur free agents or purchased from minor league teams, as was often done back then).
This isn’t the 1920s-1960s, so future decisions should not be made based on expectations involving past realities.
The Yanks acquire most of their top MILB through IFA, so even if there was a hard cap it wouldn’t tie their hands too much. My main opposition to a hard cap is the young players get screwed. For many of them that will be their one big opportunity to cash in on their athletic ability, since the vast majority get weeded out in the farm system or first few seasons in MLB. If I was a talented young player I wouldn’t want restrictions placed on what I can/can’t earn.
The baseball draft isn’t as linear as Football or Basketball, so the Yanks will still have plenty of chances to find talent down in the draft. D-Rob was a 17th rounder. Pettitte was 22nd round pick and Posada 24th round. They’ll still be able to find players.
The Yanks waste a certain amount of their budget advantage by routinely overpaying. I don’t blame them for what they’re giving Teix or CC. They paid what they hads to to sign them. OTOH Jeter, ARod, Mo, and Soriano, didn’t need to get all that money. By now, good players expect the Yanks to overpay. If the Yanks didn’t overpay them, they’d be insulted.
My first reaction is wouldn’t a tax hurt the worst teams picking early? Example being look at Washington, when they took Strasburg and Harper first overall. Clearly those two are going to command a huge price, and it beehoves Washington to do whatever it takes to get them signed. But they are going to eat up a huge majority of your alloted amount, thus limited what they can do later in the draft. That just makes it easier for teams like the Yankees, who may not even have a first round pick, to gooble up all the singability cases since they will have little competition for them.
Am I missing something on this?
The slots recommendations would be higher for earlier picks, but it’s likely that the Harpers and Strasburgs would command well in excess. Under this proposal, the Nats would have had to decide between skimping on the rest of their draft in 2009 and 2010, or taking a tax hit and possibly losing a first rounder in 2011. So, to answer your question, yes, it could hurt the smaller market teams, especially those picking early in the draft. Quite frankly, I don’t they care. I have a feeling those teams prefer the cost certainty to the chance to get better.
“Quite frankly, I don’t [think] they care. I have a feeling those teams prefer the cost certainty to the chance to get better.”
I agree that they probably don’t care. But isn’t that a flaw in Selig’s proposal then? Imposing penalties in order to prevent the “haves” from gaming the system — penalties which you correctly point out as likely to have a negligible impact on how the “haves” conduct their business — but ending up hurting the “have nots” doesn’t seem like a very bright idea.
Personally, I say eliminate slotting altogether but shorten the draft to 20 or 25 rounds. Shorter drafts would mean a more judicious selection process and a greater pool of undrafted free agent signings. Undrafted players wouldn’t command bonuses (otherwise they would’ve been drafted) so we tighten up the pool of drafted players and permit teams to spend as they see fit.
It’s not a flaw because I think that’s Selig’s aim. Regardless of the sport, whenever owners talk about competitive balance, what they really mean is cost certainty. That’s true in the NFL, NHL, NBA and MLB. Some sports are just better at pretending.
Oh, I agree completely that this is Selig’s aim. I’m simply calling it a flawed plan from an objective point of view. It defeats the true purpose of helping the “have nots” because it creates an incentive for them to avoid drafting the best overall player, lest they be penalized for paying market value. I find it absurd.
Generally speaking, I cringe at “cost certainty” programs in all professional sports. Too often it’s a poorly-disguised attempt by ownership to protect against their own greed and stupidity. If an owner needs to be protected from himself it’s more a testament to poor decision-making skills and that shouldn’t be held against the players.
I am sure all the wolves agreed when they voted on having lamb for dinner. The notion that a cartel would think that the best way to protect their members from each other is by cutting employee pay is inevitable, and why we have unions in the first place. Hopefully the players union won’t sell out their future members, but it’s always easy to bargain away someone else’s money.