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April 10, 2012

The Process

Have Teams Used Extra Draft Picks Efficiently?

by Bradley Ankrom

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Last June, the Tampa Bay Rays became only the third team in the draft era to have 10 or more picks before the start of the fourth round. Their 13 selections topped the previous record of 11 set by the Montreal Expos in 1990. The Rays’ 10 extra picks were their consolation prizes after outfielders Carl Crawford and Brad Hawpe and relievers Rafael Soriano, Grant Balfour, Joaquin Benoit, Randy Choate, and Chad Qualls departed via free agency.

Teams began receiving compensation draft picks shortly after the abolishment of the reserve clause in 1975. Free agent compensation was established as a way to maintain the balance of talent within the league. Generally speaking, when a player left one team to sign a free agent contract with another club, the player’s former club could receive the first- or second-round pick of his new club in the next draft, as well as additional supplementary—or “sandwich”—picks depending upon the quality of the player it had lost. The literary and cinematic success of Moneyball has contributed to rising interest in the draft, and recent iterations of baseball’s Collective Bargaining Agreement have added more compensation picks than ever, affording a considerable advantage to teams who are able to maximize their selections.

Between 1978 and 1987, 19.5 percent of teams had at least one extra pick in the first three rounds of the draft. By 2001, that figure had risen to 30 percent. Overall, more than a quarter of teams had extra picks in the first three rounds between 1978 and 2001.

* * *

More than half (53 percent) of players ranking among the top 500 in WARP since 2007 have come from the first 100 picks of the draft. In theory, the more high draft picks a team possesses, the greater its draft class should perform. Historically, however, that hasn’t been the case.

We’ll use WARP earned within 10 years of the draft to measure the value returned by the top three rounds of each team’s draft class, and we’ll refer to that value as “WARP10” going forward. Additionally, we’ll look at how the WARP10 earned compares to the average value returned from that team’s picks in all drafts between 1965 and 2001, which we’ll call “expected value.” The expected value is highest for picks at the top of the draft and decreases as picks get further from the top, though the decrease is not exactly linear.

 

* * *

From 1978 through 2001, there were 643 team-year draft classes, and 43.4 percent of those had exactly three picks in the first three rounds. Classes with one or two picks made up another 30.8 percent, and classes consisting of four or more picks represented the remaining 25.8 percent.

On average, a class consisting of only one pick returned 4.48 WARP10. Going from one to two picks increased the average WARP10 by 47.8 percent to 6.62, and another 37.1 percent gain was realized by increasing the pick count from two to three. Interestingly, the addition of one compensatory pick actually decreased the WARP10 returned by 11.7 percent to 8.00. At five and six picks, the average WARP10 spikes to nearly 12 but drops off significantly at picks seven and on.

We can learn more about teams’ use of additional picks if we compare the WARP10 returned to the expected value of those picks.

Predictably, the expected value increases as the number of picks increases, with each additional pick being worth an average of 1.82 WARP10. That contradicts actual results, however, where the value returned peaks at five and six picks and drops off afterward.

Measuring the difference between the expected and actual WARP10 is a good place to start thinking about efficient use of resources. Teams with three or fewer picks outperformed their expected WARP10 by more than a full win. Four-pick classes fell short of expectations by nearly 20 percent, but five-pick classes beat expectations by 8.3 percent. Curiously, adding more picks to the class resulted in even worse performance against expectations, though the sample size dwindles toward the upper extreme.

The Minnesota Twins outperformed the expected WARP10 of their picks by 32.8 percent, leading all clubs with a gross difference of 72.77, followed by Seattle (72.76), Boston (67.25), Colorado (48.33), and Cleveland (43.29). The Rockies’ 48.3 percent difference was the best in the game, mostly due to having 15 fewer classes in the study.

At the other end of the spectrum are the Los Angeles Dodgers at -73.96. The Dodgers averaged just 3.66 WARP10 per class, the lowest among non-expansion teams and 1.51 WARP10 worse than the next-worst team, the New York Yankees.

Most Efficient Teams, 1978-2001

Team

Actual WARP10

Expected WARP10

Difference

Minnesota Twins

294.76

222.01

72.77

Seattle Mariners

322.84

250.11

72.76

Boston Red Sox

224.51

157.28

67.25

Colorado Rockies

93.45

45.13

48.33

Cleveland Indians

218.80

175.51

43.29

Least Efficient Teams, 1978-2001

Team

Actual WARP10

Expected WARP10

Difference

Los Angeles Dodgers

87.78

161.72

-73.96

San Francisco Giants

138.86

199.40

-60.52

Chicago Cubs

171.48

216.39

-44.91

Detroit Tigers

130.72

167.86

-37.11

Pittsburgh Pirates

165.24

196.05

-30.82

* * *

When I first saw this data, my thought was that teams were drafting more conservatively as they acquired more picks, perhaps due to their draft budgets not increasing proportionally as compensatory picks were awarded. However, that theory was put to rest when I noticed that the percentage of high school players drafted increased as the number of picks grew.

Picks

HS%

2Y%

4Y%

1

55.26%

2.63%

42.11%

2

47.19%

3.75%

48.44%

3

48.51%

3.70%

47.55%

4

46.39%

3.61%

49.44%

5

50.40%

3.20%

46.40%

6

53.85%

1.28%

44.87%

7

61.22%

4.08%

34.69%

8

43.75%

0.00%

56.25%

10

80.00%

10.00%

10.00%

11

63.64%

0.00%

36.36%

Given the increased percentage of high schoolers (the most volatile of draft picks) taken by teams with five or more picks, it appears my initial theory was backwards: teams are taking more‚Äč risks with their extra picks. That would go a long way toward explaining the unexpected drop in value returned in classes with more than six early-round picks. If true, we should find significant variance in the WARP10 totals of the classes with the most picks.

Picks

Count

Standard Deviation

1

38

10.938788

2

160

12.365745

3

279

12.725210

4

90

11.228743

5

50

12.392141

6

13

14.653224

7

7

6.267053

8

4

10.568720

10

1

0.000000

11

1

0.000000

It appears that theory holds up better than my initial suspicion, though not overwhelmingly so. The extremely limited sample of classes with seven or more picks likely precludes us from being able to draw any concrete conclusions from the data, but it does seem reasonable to hypothesize that the reason for the disappointing returns of the larger classes is that teams became less risk-averse as the number of picks at their disposal increased.

Related Content:  Draft,  Draft Picks,  Draft Strategy

7 comments have been left for this article. (Click to hide comments)

BP Comment Quick Links

jonathanaustin

Thanks for the interesting article, although I think you overlooked a possible explanation for these results, at least over the last decade or so. Teams with less draft picks are typically the ones who have signed expensive free agents (and therefore had to forfeit picks). These same teams are the ones who make pre-draft arrangements with talented players and their agents to overpay them and discourage teams with higher picks from drafting these players. As a result, the Yankees may get a first round talent in the third round by paying first round money. Similarly, the teams with multiple extra picks are often small market clubs like the Rays that are cash strapped. They are often forced to overdraft players because of signability issues.
I realize the Yankees are towards the bottom of the list, but I believe if you looked at their performance in the last 15 years or so, when the draft became more of an auction, with the best players going to the highrst bidder rather than the team with the highest pick, the Yankees performance (and those of the other big spending teams) would be significantly better.

Apr 10, 2012 01:29 AM
rating: 0
 
Morris Greenberg

Interesting point, although looking at the most efficient and least efficient teams, it looks like this idea might not work out in reality. Colorado and Minnesota are among the most efficient, while Los Angeles and Chicago are among the least. True, there could be outliers, but that's already 4 out of 10 teams shown.

Apr 10, 2012 02:32 AM
rating: 1
 
Bradley Ankrom

I could see that being the case, but what data could be used to prove it? I hate that I have to stop at 2001 in order to get a decent amount of seasons for each class, especially since that cuts it off right before the so-called "Moneyball" draft era.

Apr 10, 2012 06:29 AM
rating: 0
 
RotoAllah
(453)

Actually, the problem is not that teams are taking *more* risk as the number of picks increases, its that they are taking *bad* risks. In an efficient market, we would expect that as risk increases, so should return to compensate for that risk. Over time the winners should make ehough that even though there are more misses, the hits are enough to compensate. But in reality there are more misses AND the hits are not as good as they should be. So the problem is really that teams haven't gained enough return to justify the additional risk they are taking. This is a great analysis. It would also be interesting to see if the value was squandered on the "extra" picks, or on all of the picks - or put another way, are teams just wasting the incremental picks or do they draft suboptimally at all picks? Presumably you have the data to run this if you feel it has value...

Apr 10, 2012 07:07 AM
rating: 3
 
Peter7899

This research might add some perspective on why the Rays balanced the risk in their selections in the 2011 draft. They took several high floor players as well as several high ceiling players.

Apr 10, 2012 10:55 AM
rating: 0
 
John Douglass

One reason teams might look like they're not getting a good return on HS players is the WARP10 factor--taking 10 years post-draft.

The HS player will virtually always take longer than the college player to reach MLB. He'll hit his peak ages of 26-28 when he's in years 8-10 of that WARP10 span and age 29 won't land there, assuming age 19 is Year One. All of the college player's peak years will land in the WARP10.

Take the HS players and the College players. Look at what they do in their first six seasons in MLB--the years before they become free agent-eligible.

Apr 11, 2012 08:30 AM
rating: 0
 
AWBenkert

Please - abolition, not abolishment.

Sep 23, 2012 04:58 AM
rating: 0
 
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