Those youngsters, paid peanuts their first three seasons in the majors and earning a fraction of their free agent worth the next three through arbitration, are baseball gold. The Bucs are the game’s most aggressive plunderers: no team tops its $52 million spent in the draft since 2007, including a record $17 million in 2011.
Previously, clubs got little more than an icy glare from Bud Selig for exceeding the recommended signing bonuses issued by the commissioner’s office. That allowed the Pirates to pay premium talents like Robbie Grossman, Stetson Allie and Josh Bell who fell due to signability concerns. But baseball’s new Collective Bargaining Agreement has teeth, levying taxes and the loss of first-round draft picks if teams blow past their recommended spending amounts. That presents challenges to the Pirates’ draft strategy, experts say, but it doesn’t mean their treasure hunt is over.
The new CBA assigns each organization a “bonus pool” for the first ten rounds, which varies depending upon where the team selects and how many picks it has (picks after round ten don’t count if bonuses are under $100,000). The penalties for exceeding the bonus pool are severe. Go over by 5.1 to 10 percent, and you’ll pay a 75 percent tax on the extra amount and lose a first-rounder. Exceeding the pool by 10.1 to 15 percent requires a 100 percent tax and surrendering a first and second-rounder. Spend more than 15 percent over the pool, and you’ll get a 100 percent tax and fork over two first-rounders. If a team fails to sign a pick in the first 10 rounds, it loses that bonus pool money and can’t use it to sign another player for more later on in the draft (i.e., if the Pirates don’t sign their first-rounder, they lose the recommended bonus money for that pick and can’t carry it over to use on a second or third-rounder).
“I know a lot of player development and farm system people who aren’t happy with what their owners have agreed to,” says John Sickels, minor league analyst and author of The Baseball Prospect Book.
Those restrictions elicit fear that the Pittsburgh’s and Kansas City’s of the game won’t be able to gamble on top high school talent that falls in the draft, dishing out big signing bonuses in hopes of saving money in the long run by developing a star. Some also fear baseball will lose multi-sport stars like Matt Kemp, a standout basketball player taken in the sixth round by the Dodgers in 2003. But a key question remains unanswered: how big are the bonus pools?
Baseball America reported teams spent a combined $192 million in the first ten rounds in 2011. The slot recommendations were just $133 million. If the new CBA had been in place last year, many teams—Pittsburgh included—would have paid a 100 percent tax and coughed up two first-rounders. Odds are, Bell’s tape-measure power would be on display for the Texas Longhorns, not the Bucs.
But the bonus pools, now negotiated with the players union, aren’t expected to be so Draconian – early estimates are in the $180 million range.
“For situations where both the player and team are on the fence, this could kill those deals,” says Fangraphs analyst Matt Swartz. “But I think the biggest difference is going to be that draftees get less money and still sign. I believe that the number of athletes lost to other sports is overblown. Baseball is the only way for an 18-year-old to get paid to play sports right away.”
The spending caps might encourage some prospects to go to college instead of signing out of high school, Swartz says, “but I don’t think this will change which 26-year-olds are in the MLB. It just might change where they spend ages 18-22.”
“Other sports have salary limitations too, and baseball players have a better chance to stay healthy and have long careers,” Sickels says. “A few may pick other sports, but it won’t be as many as the doomsayers project.”
Kemp is more the exception than the rule among multi-sport athletes, says Fangraphs analyst Marc Hulet. “For every Kemp, there’s Josh Booty [a fifth overall pick who hit .198 in the minors and quit to play quarterback in the NFL].”
The Pirates could also snag an extra high pick as part of the CBA’s “competitive balance lottery,” which starts in 2013 and gives six selections between the first and second rounds to teams with the 10 lowest revenues and smallest markets who don’t exceed the bonus pool. Odds are based on winning percentage the previous year. These picks can be traded.
“I think this could be a big deal,’ Swartz says, estimating that 12-14 wins per year could trade hands from larger to smaller-market clubs. “That might not be as useful as when you could wow a potential draftee planning on going to college, but it’s not insignificant.”
Identifying those with an eye for talent is still paramount under the new rules, say Swartz and Hulet.
“Teams like Pittsburgh will be best served by trying to find the best amateur scouts,” Swartz says. “That will be the best way to counter their market size disadvantage.”
“The Rays signed David Price for more than $5 million in 2007, but they also signed Matt Moore for $115,000,” Hulet says. “The good teams that have always been able to sniff out talent in later rounds will still be able to locate and sign talent. They just might have to work a little harder at it.”