New Draft Rules Working Great for MLB

The teams have to be extremely happy with the way the new draft bonus pool rules are working out.  Aside from the obvious decline in the amount of signing bonuses, amateur players are getting signed right away, giving most of the top picks an extra half season of professional baseball.

So far, 39 of the top 60 selections have signed or agreed to terms with the teams that drafted them.  The Northwest League is the only short-season minor league to have begun play, and its season started only yesterday.  The upshot is that many top draft picks who previously would have waited to sign until the mid-August deadline are already under contract and will get couple of extra months on their professional development compared to the old system.

It’s not at all surprising the Players’ Association agreed to the new rules.  The Players’ Association only represents players with major league service time, which obviously none of the draftees have.

The union recognizes that teams will spend X-amount of dollars to build winning, or at least competitive, teams, and that to the extent the teams save a few bucks on draft picks and foreign amateur signings, the savings are more likely than not going to be spent on major league free agents and locking in young major league players to long-term contracts before they can become free agents.  As part of the new collective bargaining agreement, the union also got a nice bump in the major league minimum salary, from $414,000 in 2011 to $480,000 in 2012 (and on up to $500,000 in 2014).

For these reasons, it’s a little surprising the MLBPA didn’t agree to these rule changes sooner.

All the amateur players will, of course, get smaller bonuses than in the past.  It’s a bit hard to feel too sorry for them, given that they haven’t done anything professionally yet, and the slot amounts are still substantial.

The biggest loser so far is Stanford RHP Mark Appel (and his “advisor” Scott Boras), who everyone thought the Astros would take with the No. 1 pick.  According to mlbtraderumors.com,  Appel would not agree in advance to the $6 million bonus the Astros wanted to pay (the slot amount was $7.2 million), so the Astros instead selected 17 year old Puerto Rican shortstop Carlos Correa, who almost immediately agreed to a $4.8 million signing bonus.

Appel fell all the way down to 8th, the slot for which is only $2.9 million.  Presumably, the Pirates will try to sign their remaining picks below slot, and use any savings to sweeten their final offer to Appel.  However, it’s extremely unlikely the available pot will reach $6 million, even assuming that that the Pirates will go up to 5% over their overall draft bonus pool to sign Appel, in light of the fact that the Pirates’ total pot of the first ten rounds is only a hair over $6.5 million.

The rules are that teams spending (1) up to 5% over the total pool amount will be hit with a 75% tax on the overage; (2) between 5% and 10% over is subject to a 75% tax on the overage and loss of the 1st round pick in the next draft; (3) 10% to 15% overage is 100% tax on the overage on the overage and lost of 1st and 2nd round picks in the next draft; and (4) over 15% is 100% tax on the overage and loss of 1st round picks in next two drafts.

While the overage tax strikes me as fairly meaningless, the loss of future draft picks is not.  That being said, there is at least a possibility that the Pirates will decide that Mark Appel is worth the two first round picks they would receive next year if they do not sign Appel.

If the Pirates do not sign Appel, they will receive the 9th pick in the 2013 Draft and, based on current 2012 standings, no worse than the 17th pick also.  A team might consider that a fair price to pay for a player who almost all sources regard as at least one of the top five amateurs available in this year’s draft.

However, I personally would rather have to two top-20 picks in next year’s draft, particularly if I were running a small-market team like the Pirates, which can turn a profit as a result of revenue-sharing if it simply keeps its expenses down.

It appears that the Pirates have all the bargaining leverage, and that all Appel can do is go back to Stanford of his senior year and hope he is selected in the top five in the 2013 Draft.  Given that he’ll be a year older and a proven tough sign, that seems pretty unlikely.

Boras may well challenge the new rules in court, but he would be up against the three prior Supreme Court rulings between 1922 and 1971 upholding MLB’s anti-trust exemption.  The Supreme Court has consistently said that it’s up to Congress to take away MLB’s anti-trust exemption, and it’s something that Congress has never had the votes to do.

Advertisements
Explore posts in the same categories: Houston Astros, Pittsburg Pirates

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: