Budgeting a MLB Draft

When the MLB collective bargaining agreement was renegotiated this offseason for a new five year term, a lot of the rules were changed. The playoffs were expanded and compensation for free agent departures were adjusted, but perhaps most importantly, the rules surrounding the signing of international players and the MLB amateur draft were changed. In both cases, essentially the amount of money a team could dole out to international signees or draft picks was limited. 
No one really knows how these rule changes are going to end up working out. The owners and the players signed the CBA, and the GMs and scouts are left to figure out how to put it into practice. On the surface, the new rules seem to limit teams like the Rangers, Rays, and Blue Jays, who have been able to field competitive teams on lower budgets via the flexibility and creativity the prior CBA permitted with international signees and big spending in the draft.

Over the last two days, we have begun to get just a glimmer of an idea of how the new rules are impacting the way teams approach the rule 4 amateur draft. We’ll find out more about the effect on the international side of things once that signing period opens on July 2nd (though the Rangers’ jumping to attempt to sign Jairo Beras to a $4.5 million contract probably gives us some indication).

The Rangers have now made 18 draft picks in 2012, after the first 15 of 40 rounds have transpired. Thirteen of those picks came in the first 10 rounds, which is important. The new rules state that for this year, the Rangers can only spend $6.6 million in signing bonuses for all of their picks in the first 10 rounds, assuming they sign each of their picks in the first 10 rounds. If they don’t sign one of those picks from the first 10 rounds, the bonus amount budgeted for that slot is lost, and would reduce the $6.6 million total. After 10 rounds, like all teams, they can give out bonuses up to $100,000. If they give out a bonus above $100,000 to a pick after round 10, it counts against their $6.6 million bonus budget for the first 10 rounds. Finally, if they go over the $6.6 million, they are at risk of a penalty being enforced on them by Major League Baseball.

Confused yet?

Here is the total amount budgeted for each of the Rangers picks from the first 10 rounds:

Pick #29 – Lewis Brinson, high school OF – $1,625,000
Pick #39 – Joey Gallo, high school 3B – $1,324,800
Pick #53 – Collin Wiles, high school RHP – $954,800
Pick #83 – Jamie Jarmon, high school OF – $601,500
Pick #93 – Nick Williams, high school OF – $515,600
Pick #123 – Patrick Cantwell, college C – $381,700
Pick #156 – Alec Asher, junior college RHP – $277,600
Pick #186 – Preston Beck, college OF – $207,900
Pick #216 – Royce Bolinger, college OF – $155,900
Pick #246 – Cameron Schiller, college 2B – $141,400
Pick #276 – Cody Kendall, college RHP – $132,000
Pick #306 – John Niggli, college RHP – $125,000
Pick #336 – Joseph Shiver, college RHP – $125,000

It doesn’t take long to look at this list to begin to draw some inferences about what the Rangers game plan was entering this draft. Whether intentional or not on the part of the Rangers front office, the first five selections in the draft for the Rangers (with those slots that have the highest available budgets) were all high school players. All five of those high school players have been described as high-ceiling, raw, toolsy, projectable, and any other buzzwords you want to throw in there that mean “they’re young, not there yet, but they could be really good”. Brinson has been labeled as possibly having the “highest ceiling of any player in the draft”. Gallo is, according to several, “the best pure power prospect in the draft”. With those kinds of taglines, it is a wonder they fell to pick #29 and #39, respectively, for the Rangers to snatch.

Following the high school players, the Rangers grabbed eight consecutive college players. Five of those eight college players were seniors. Of all draft choices, college seniors are the most likely to sign (even for lower money), because they have the fewest remaining options. College juniors can return to finish their collegiate career. High schoolers typically have their own collegiate career waiting for them. Generally speaking, the more options remaining, the larger the bonus required to persuade the draftee to forego those options and sign the dotted line.

While I am not in position to say that the college players the Rangers drafted cannot still be quality prospects, they may serve an even greater purpose. If the Rangers are able to sign some or all of those college players below the slot for that draft position, it will only create opportunities to go above slot for the high schoolers, and incentivize the 18-year olds to begin their pro careers today, with the Rangers. For example, it has been reported that Gallo has a $2.5 million price tag, or $1.2 million above slot.

The objective of the Rangers for the past several years has been to find and sign impact players in the draft and in the international market. This organization has not used those opportunities to find role players. They are hungrily looking to recruit high ceiling prospects into the system, and once in the system, the player development process has been wildly effective in grooming those prospects to achieve that ceiling.

The new CBA took away some of the flexibility of the Rangers to pursue high ceiling players in the same manner as they have for the past several years. Through a creative draft strategy, the Rangers have gained back some of that flexibility, and are poised to bring in more impact players into a farm system that is already stocked with them at every level. Every front office in baseball is filled with incredibly smart people, but as a Rangers fan it is tough to not feel like this front office is one of the best.

Peter Ellwood is a Senior Staff Writer for Shutdown Inning. You can email him at Peter.Ellwood@shutdowninning.com or reach him on Twitter @Peter_Ellwood
Peter Ellwood

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