Draft pick compensation for FA's is gone now.

[JDOldSchool]

I've posted this already on my blog, but I'll repost here instead of retyping everything.

Baseball's new CBA: A deathblow to small-market teams


Lost in the excitement over the new collective bargaining agreement between Major League Baseball and the Major League Baseball Players Assiciation are two small, but extremely significant and completely damaging changes that will hurt every team that struggles to pay for players who will win a championship. Gone are the days of draft pick compensation for lost free agents and here are the days of slotted bonuses for draft picks a la the NBA.

Make no mistake, these two moves could not be any worse for the bottom-third revenue teams in the league. It is no secret that plenty of teams, specifically the Oakland A's, have maintained the ability to compete through the draft. Many of the players on their 40-man roster are only there because guys like Jason Giambi, Miguel Tejada, Johnny Damon and others left for greener (as in the color of money, certainly not uniform color) pastures. Without such shrewed drafting and making the most of the lost superstars, Billy Beane's A's wouldn't be much better than the Royals or Pirates. Now, the A's will need to make the most of that one first-round draft pick each year. With the low success rate of baseball's top picks, Beane and the other small-market general managers will have a much more difficult job of building a farm system with domestic players.

Perhaps even more damaging, though certainly designed to benefit the small markets, is the new slotted bonus plan. While specifics aren't yet known, if the formula is anything like the NBA's this is going to be bad, bad news for teams with less revenue. On the surface it seems great: No longer will Small Market Team A have to pass on Super Prospect B because Scott Boras demands a bajillion dollars. Nope. Now that team will get that prospect and Boras won't have any say in the matter. Great, right? No more "settling" for Joe Mauer when Mark Prior is there for the taking!

But in all seriousness, this is horrible for those teams. In the past, the small markets could pass on the super-expensive prospects and settle for quality, but less pricey commodities. By doing this, a team could then have some money to spend on a free agent, or more importantly, to retain their own players. With the new landscape of the business of baseball, a player like Barry Zito will almost certainly be traded at the deadline of their contract year regardless of their team's standing. If a general manager isn't absolutely convinced his team is a contender for the World Series, he's a seller. After all, teams simply can't risk losing their All-Stars without getting a single thing in return. Oh, but in four years that #1 pick they just overpaid might be ready for the big leagues. Maybe. If his arm doesn't fall off or if he doesn't lose interest in the game or if any number of things that keep prospects out of the majors doesn't happen.

I wonder how much people will love this new CBA when the Pirates lose the next Brien Taylor and the hope of retaining Jason Bay in a few years. The deck is already stacked against these teams, and the new CBA has just made it nearly impossible for them to compete on a yearly level. Someone a lot more suspicious of motives than me might accuse Bud and friends of deliberately forcing a handful of teams out of business. After all, he wanted contraction, didn't he?

[kingcharlesxii]

This should lead to more deadline deals for teams since they won't want to lose players for nothing. I'll be curious to see if that actually happens. Rental players will also likely cost less since teams won't have to factor in lost draft pick compensation when they trade them.

[Prodigal Son]

I always thought draft compensation was an ass-backwards concept anyways. Revenue disparity is what needs to be fixed, not free agency compensation.

I'm hoping this is a blessing in disguise. More teams trading prospective free agents to more teams who will resign many of them, keeping a lot of players off the FA market to begin with.

I think the old system really helped a team like the Yankees. Lots of FA's are available every year beause teams wanted the compensation draft picks. And teams in the poorer divisions of baseball weren't very responsible--they didn't care about the quality of their cast-offs since they knew they would all but surely go to another division anyways.

I'd be really happy about these changes if I was, say, an Orioles fan or a Braves fan (which I am). I think this will hurt the A's, but I thought that was an exploitive way of building a team anyway. It will hopefully also hurt the Yankees and Red Sox, too, though, since they will could have a lot slimmer pickings in FA now.

[Joshv02]

FA comp helped the RS and Yankees more than most teams b/c they were the teams that could afford to pay players who would be "Type A/B" FAs to begin with. Thus, when they didn't resign their aging stars, they received the comp pick. And, generally, they receive those picks from other good teams... which leads to...

In addition - and more fundamentally - teams could get extra picks by both signing FAs and allowing FAs to walk. Thus, the RS could allow a player to walk and sign a different type A FA and still come out with an additional draft pick (the sandwich pick). So, the system gave the incentive to for player churning - which helps teams with the resources the most.

[Skipaway]

The draft compensation basically makes it harder to evaluate the value of a free agent. Winning and losing picks simply means more questions to ponder. If you think the Yankees benefited more from it, it simply means they understood the system better.

More player churning is good for smarter teams too, more than for rich teams.

Without the draft compensation, it just dumbs down free agent valuation issues.

[TonyJ]

I think it is way too early to say whether this is going to be a good thing or a bad thing or just a different thing for small or big market teams. I actually think that it will overall be a good thing for small market teams, and quite possibly be very good indeed.

Most non-contending teams, regardless of revenue, have tended to trade players in their walk years for prospects who were close to the majors with a proven (or projected by scouts to develop in to Sammy Sosa) track record of success in professional baseball. Contending teams, regardless of revenue, have tended to keep those players and let them walk after the season.

Admittedly, the A's are a strange case. Billy Beane has used draft pick compensation to great success in Oakland, but I don't think that removing it from his consideration will reduce their success much, if any. Beane has kept players like Tejada, Giambi and Zito in their walk years not to get a draft pick, but because the A's were contending. He has also traded players like Mulder and Hudson and received a good return.

In addition, the lack of the additional picks at the end of each of the first two rounds will mean that the worst team will have the 31st and 62nd overall picks rather than the 45th and 77th picks. In the most recent draft, there were eleven teams who received supplemental picks after round one. Here are nine of them: Dodgers, Orioles, Giants, Diamondbacks, Phillies, Braves, Indians, Red Sox, Yankees. These teams have varied in their success in recent seasons, but none of them could be classified as low revenue. I just do not see how the lack of draft pick compensation is bad for the worst teams, regardless of market size. I think it is to their advantage, frankly.

Salary slotting for draft picks, on the other hand, is a huge boon for low revenue teams. Let us say that in the end it does turn out that small market teams were hurt by not receiving compensation for the loss of free agents. Salary slotting more than makes up for it. This seems fairly obvious to me.

The lack of any cap on salaries and the option of the player to return to college or play in an independent league has allowed players who are highly rated to more or less set their price for signing. This has meant that teams will only select a player if they think they can sign him, regardless of his talents. Hell, the fact that the "signability pick" even exists is evidence that this is fantastic news for low revenue teams.

It is certainly true that the baseball draft is more of an inexact science than the basketball or football versions. It is also true that teams are getting much better at identifying draftees with a chance of success. It is also a given that, on balance, the level of chances of success for players taken highly in the draft are higher than those taken lower. This change allows low revenue teams to select those draftees with the highest perceived chances of success with much less consideration for whether or not they can sign him.

This also gives teams cost certainty for drafted players. Under the current system, the cost of signing draftees for each team varies entirely on how much the owner is willing to spend on them in that given season. Under the new agreement, the amount the owner absolutely has to spend on a pick is a given. High revenue teams will still be willing and able to pay their draftees more than low revenue teams in order to inflate costs, but I think "signability choices" will largely disappear, just as they have in the NFL and NBA.

It remains to be seen, in any case.

[Skipaway]

Originally Posted by TonyJ

Most non-contending teams, regardless of revenue, have tended to trade players in their walk years for prospects who were close to the majors with a proven (or projected by scouts to develop in to Sammy Sosa) track record of success in professional baseball. Contending teams, regardless of revenue, have tended to keep those players and let them walk after the season.

I think that's already accounted for in trades, and that's why even a two month rental can sometimes net you a lot of prospects in trades. Teams are already aware they are losing out the chance to gain draft picks by trading away ending contracts.

If it's not accounted for by some GMs, you could only argue that they are dumb.

[Skipaway]

To make sure the draftee salary slot works, MLB can simply use the revenue sharing money to pay for the salary, so the slot money wouldn't work like a penalty for teams with high picks.

[JDOldSchool]

Originally Posted by Skipaway

To make sure the draftee salary slot works, MLB can simply use the revenue sharing money to pay for the salary, so the slot money wouldn't work like a penalty for teams with high picks.

That would be a good idea idea, especially since some teams aren't using that money to improve their team anyway.

[mikev]

Originally Posted by JDOldSchool

That would be a good idea idea, especially since some teams aren't using that money to improve their team anyway.

Which is, IMO, the biggest issued that needs to be addressed in the CBA. What good does it to, baseball-wise, to give the Marlins 25M in revenue sharing/luxury tax money when they only spend 15M on their entire team?

[mgom27]

Wouldn't you like to see the Drafted person go up and shake Bus Selig hand,get his picture taken and be on TV?
Lots of Kids would wtach it because it's happens in the Afternoon and Kids are home for the Summer!
A suggestion before a Team aquires a rent person they try to sign him to a extension before the Trade happens if not they don't aqiure the person!

[bababui]

Originally Posted by mgom27

Wouldn't you like to see the Drafted person go up and shake Bus Selig hand,get his picture taken and be on TV?
Lots of Kids would wtach it because it's happens in the Afternoon and Kids are home for the Summer!
A suggestion before a Team aquires a rent person they try to sign him to a extension before the Trade happens if not they don't aqiure the person!

Are you Bud Seligs alias?

[LivnLegend]

I'm not sure how much it will hurt small market teams. Many small market teams, under the old system, traded away pending free agents for prospects or young players, rather than waiting for the compensatory draft picks. You have to go back several years to find the last compensation picks that Kansas City or Tampa Bay earned. Meanwhile, large market Red Sox and Dodgers, to name a couple, have piled them up.

It's the contending small market teams that will have more trouble. If the Athletics are competing for a division title and know they aren't going to re-sign a star free agent, it's going to make it a tougher choice whether to trade him or not.

[Joshv02]

Maury!

[QuestGAV]

I think the bonus slotting is a bigger deal for small market teams than the lack of compensation. As others have noted, the comensatory picks can be (and have been) exploited just as well by the high revenue teams. Both things suck for the Red Sox though, I was looking forward to them picking up a Craig Hansen-type player on a yearly basis.

[Skipaway]

Originally Posted by LivnLegend

I'm not sure how much it will hurt small market teams. Many small market teams, under the old system, traded away pending free agents for prospects or young players, rather than waiting for the compensatory draft picks. You have to go back several years to find the last compensation picks that Kansas City or Tampa Bay earned. Meanwhile, large market Red Sox and Dodgers, to name a couple, have piled them up.

Actually it has been great for small market teams if you track those kind of trades.

Generally, you'd see a good player with ending contract traded for two or three good prospects already with experience in the minors.

That's way better than sticking with the player and wait for one or two picks, since the new draftees would be further away from the major leagues and more risky.

For a small market team, it's of course better getting prospects with some experience already, instead of wasting time and money to develop draftees.

Taking away this draft compensation would mean you could ask for much less when you trade away players with ending contracts.

[Skipaway]

Assuming poor teams always trade ending contracts to rich teams.

1. Get drafted by a rich team, since the rich teams hold more picks. Get huge bonus off the rich team.
2. Developed in the low level leagues by the rich team.
3. Traded to a poor team once reaching AA or AAA, more sure of making the major leagues.
4. Playing with the poor team through the first and cheap part of his career.
5. Traded to the rich team before his contract ends.
6. Signed as a FA somewhere.


You'd see how this system works. The rich teams get to handle the more risky part of drafting and early development, since they are more resourceful and could take more risks.

[Syd Thrift]

Originally Posted by QuestGAV

I think the bonus slotting is a bigger deal for small market teams than the lack of compensation. As others have noted, the comensatory picks can be (and have been) exploited just as well by the high revenue teams. Both things suck for the Red Sox though, I was looking forward to them picking up a Craig Hansen-type player on a yearly basis.

Yeah, I remember too many drafts in the 80s with the Mariners going for the pick they could sign rather than the better player. This should eliminate some of that, although for the player there's still the option to go back to school or to just play in an indy league for a year if he doesn't like the slot he was picked at.

[JDOldSchool]

Originally Posted by mikev

Which is, IMO, the biggest issued that needs to be addressed in the CBA. What good does it to, baseball-wise, to give the Marlins 25M in revenue sharing/luxury tax money when they only spend 15M on their entire team?

Right, but then some teams do spend the money they have and they spend it wisely. Now they're told exactly how much they have to spend. If you're not going to allow trading of picks, you shouldn't mandate what they have to pay people. It actually hurts small-market teams more to do poorly now because they commit themselves to a certain price tag for a player in the draft.

I haven't heard the numbers, but unless this drastically lowers the bonus money, it's an idea that seems a lot better in theory than in practice.

[mikev]

Originally Posted by JDOldSchool

Right, but then some teams do spend the money they have and they spend it wisely. Now they're told exactly how much they have to spend. If you're not going to allow trading of picks, you shouldn't mandate what they have to pay people. It actually hurts small-market teams more to do poorly now because they commit themselves to a certain price tag for a player in the draft.

I haven't heard the numbers, but unless this drastically lowers the bonus money, it's an idea that seems a lot better in theory than in practice.

My point was that it's BS for teams like Florida to do what they did, firesale and get rid of every expensive player they have and then pocket the money from luxury tax/revenue sharing as profit, when that's not what it's intended to be.