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May 18, 2011

Future Shock

2011 Draft: Who's Got the Leverage?

by Kevin Goldstein

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Most of the talk about the 2011 draft has been about the talent itself, especially the cornucopia of hard-throwing pitchers that could comprise up to two-thirds of the first round. One ignored aspect concerning this draft is the fact that it is the last one to be conducted under the current collective bargaining agreement. What happens to the draft in 2012 and beyond is anyone's guess.

To be clear, the draft has always been the red-headed stepchild of the talks between the union and the players. Unless a selection is a highly-rated talent who signs a big-league contract, he's not even in the union until he gets to the majors. The only reason the draft is even subject to the negotiations are the rules concerning free-agent compensation picks.

While there is currently no reason to expect any sort of labor strife, the draft will play a more prominent role in the off-season talks. Bonuses have grown dramatically over the last few years, and even some veteran players have expressed concerns about 18-year-olds signing for bonuses well beyond the average major-league salary. There are many factors in play for the 2012 draft, and while concepts like a world draft and giving teams the ability to trade picks are long shots, there's a chance—albeit hardly an overwhelming one—that we could see a true slotting system next year in a vein similar to that of the NBA.

The draft is surely going to change, but how does that vague knowledge change this year's draft in terms of leverage? Both sides have a fair argument to make.  

On one side of the ledger is the teams themselves, who have yet to show any discretion when it comes to handing out bonuses, despite Major League Baseball's continued efforts to keep them in check. However, the threat of hard slots in the future could allow them to play a now-or-never game with drafted players. There is no guarantee that such strict slots will be a part of future drafts, but they are certainly possible. Teams could choose to tell players that if they don't take money now, the next time they are drafted they'll have no negotiating power whatsoever, and simply be subject to non-negotiable guidelines. Right now, there are slot recommendations from the commissioner's office that few teams follow.

The players and their representatives have their own version of now-or-never. This could be the last chance for smart drafting teams like the Red Sox, Royals, and Pirates to stock their system with high-ceiling talent. Those that are willing to pay now reap the rewards. A willingness to go over-slot in later rounds can mean a team is adding multiple top-100, or even first-round, talents with picks designed to be far less substantial. This is the final opportunity to take advantage of those scenarios; while a true slotting system might lessen bonuses down the road, it will also even the playing field when it comes to talent distribution.

So who will win out?  The shocking part of the discussion is that even the teams that want the leverage admit that in the end, they probably won't have it. “Every year we think we have reached new heights in the draft and then it increases again,” lamented one American League executive. “Who doesn't get paid?” he asked. “Luke Hochever and Aaron Crow both sat out a year, had nowhere to go, and got paid. Seattle paid both Josh Fields and James Paxton when they had zero leverage. If the teams have had any leverage in the past, they sure haven't used it.”

The problem, of course, is that the lure of adding talent is just too big. While there is much wailing and gnashing of teeth at the commissioner's office on Park Avenue, the reality is that draft bonuses, even relatively sizable ones, are too much of a drop in the bucket of a team's economy to worry more about sending some kind of undefined lesson than signing a player. “Teams are desperate to add prospects all of the time,” said a National League front-office veteran, “and the idea that they won't sign players when they know full well that other teams will pay is absurd. Clubs can't afford to let top talent get away with some kind of 'wait until next year' approach.”

If fact, while the agent and players lament the recommended slot system that creates unfair balancing (for example, the depth of this year's draft make the 23rd pick far more valuable than last year's) and MLB’s prescribed signing delays for over-slot bonuses, it seems like even teams are opposed to the system that they are supposed to be currently benefiting from.

“Knowing this could be their last chance to gain a competitive advantage by going over-slot to sign elite prospects, I fully expect the doors to be blown off the ridiculous bonus system,” the NL executive said.

“I know the agents are not worried about this at all,” added an American League team vice president. “I had one very prominent agent tell me, 'We will take our chances whatever new system that MLB comes up with. This is the same thing you guys said before the last changes were implemented.'”

Still, there are certainly some holdouts that believe teams could have the advantage during the two-month signing period. “A lot of people are assuming that because this is the last year of the current system, teams are going to do everything they can to sign every guy,” said a American League scouting director. “The players face an uncertainty that is even worse. We know there will always be players, they don't know that there will always be money.”

Still, any sort of effort to exercise leverage will require cooperation, or as the players union might classify it, collusion. Just a handful of teams holding firm at slot levels or below could be forced to sit idly, while the teams willing to spend money gobble up top talents with multiple picks. That's the same kind of situation that has created a system that once had just a few teams going over the recommended slots; now it’s an overwhelming majority.

Major League Baseball has implemented countless rules since 1980 to curb bonuses with few, if any, results, and there little reason to believe that anything is going to change by the mere threat changes in 2012. “It's very simple,” surmised the National League executive. “Whenever it comes down to teams versus players and there is money involved, the leverage always lies with the players.”

 In other words, the more things change, the more they stay the same. 

              A version of this story originally appeared on ESPN Insider Insider.

Kevin Goldstein is an author of Baseball Prospectus. 
Click here to see Kevin's other articles. You can contact Kevin by clicking here

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