On Saturday, we wondered if the new CBA would make the MLB draft more like the NBA and NFL drafts, in which each pick has less perceived talent than the previous pick. In other words, the best available player is taken off the board. Obviously, NBA and NFL teams can differ on who is the “best available player”, but generally, the later you get into the draft, the lesser the talent level. Baseball didn’t necessarily work like this due to “signability” issues. More talented kids could drop until later in the draft because the word was that they wanted big $$ to sign, and teams with aggressive draft strategies would be the ones who paid. All that has now changed due to the new labor deal:

From MLB:

Each Club will be assigned an aggregate Signing Bonus Pool prior to each draft. For the purpose of calculating the Signing Bonus Pools, each pick in the first 10 rounds of the draft has been assigned a value. (These values will grow each year with the rate of growth of industry revenue.) A Club’s Signing Bonus Pool equals the sum of the values of that Club’s selections in the first 10 rounds of the draft. Players selected after the 10th round do not count against a Club’s Signing Bonus Pool if they receive bonuses up to $100,000. Any amounts paid in excess of $100,000 will count against the Pool.

B. Clubs that exceed their Signing Bonus Pools will be subject to penalties as follows:
Excess of Pool Penalty (Tax on Overage/Draft Picks)
• 0-5% 75% tax on overage
• 5-10% 75% tax on overage and loss of 1st round pick
• 10-15% 100% tax on overage and loss of 1st and 2nd round picks
• 15%+ 100% tax on overage and loss of 1st round picks in next two drafts

Competitive Balance Lottery

A. For the first time, Clubs with the lowest revenues and in the smallest markets will have an opportunity to obtain additional draft picks through a lottery.
B. The ten Clubs with the lowest revenues, and the ten Clubs in the smallest markets, will be entered into a lottery for the six draft selections immediately following the completion of the first round of the draft. A Club’s odds of winning the lottery will be based on its prior season’s winning percentage.
C. The eligible Clubs that did not receive one of the six selections after the first round, and all other payee Clubs under the Revenue Sharing Plan, will be entered into a second lottery for the six picks immediately following the completion of the second round of the draft. A Club’s odds of winning the lottery will be based on its prior season’s winning percentage.

And the rules have changed for International Free Agents as well (which is how the Yankees signed Ivan Nova and Jesus Montero, for example)

For the 2012-13 signing season, each Club will be allocated an equal Signing Bonus Pool.

3. For each signing period after 2012-13, Clubs will be allocated different Signing Bonus Pools, based on reverse order of winning percentage the prior championship season (i.e., the Club with the lowest winning percentage the prior season shall receive the
largest Pool).

4. Bonus Regulation of International Amateur Players

A. Beginning in the 2013-2014 signing period (July 2, 2013 – June 15, 2014), Clubs may trade a portion of their Signing Bonus Pool, subject to certain restrictions.
B. Clubs that exceed their Signing Bonus Pools will be subject to the following penalties in the 2012-2013 and 2013-2014 signing periods:

Excess of Pool Penalty (Tax on Overage/Draft Picks)
• 0-5% 75% tax
• 5-10% 75% tax and loss of right to provide more than one player in the next signing period with a bonus in excess of $500,000.
• 10-15% 100% tax and loss of right to provide any player in the next signing period with a bonus in excess of $500,0000.
• 15%+ 100% tax and loss of right to provide any player in the next signing period with a bonus in excess of
$250,000.


Debate has erupted from these changes as to who benefits the most from the new rules — big market teams or small market teams?

People like Dave Cameron of Fangraphs, Tom Verducci of SI, and Scott Boras of I Robbed the Yankees on the Rafael Soriano contract are among those who believe the changes benefit large market teams.

Verducci:

The one piece of this CBA that doesn’t make sense is how the owners swung their hammer at amateur players — specifically, penalizing teams for overspending on draft bonuses according to newly established thresholds. Tamping down the ability of teams to evaluate the value of draft picks is a strike against the heart of competitive balance. This rule doesn’t harm the Red Sox, Yankees and Phillies. It harms teams such as the Pirates, Nationals and Royals, who spent the most money on draft bonuses over the past three years and are better positioned because of it. (The Red Sox, Yankees and Phillies rank 10, 16 and 20 in bonuses over the same period.)

Moreover, the reward for small- and middle-market teams that do well, such as Tampa Bay and Milwaukee, is to be given less money to spend in the draft because they will be drafting later. And if they do exceed a threshold, they can be penalized with the loss of draft picks — the very important currency that helped create parity. And are not some drafts — such as 2005 (perhaps the best ever) — stocked with more great players than others? Of course. So why should spending be treated the same every year?

It makes no sense, and it is why many teams, such as Oakland, Kansas City, Cleveland, Tampa Bay and Pittsburgh, consider this cap on draft spending to be counterproductive.

Boras:

His reasoning: With a set amount of money to spend on draft picks each year, it will take longer to accrue superior talent and improve.

“Before, you’d do it by using the draft effectively and scouting aggressively,” he said. “It’s going to take (the Astros) even longer now to get good. You have to add three or four years on now because you cannot use the draft to supply the team talent, which decreases the franchise value.”

He said the current system was “working beautifully,” citing the recent uptick in talent and interest of clubs that spent big money on marquee players in recent drafts, such as the Pittsburgh Pirates (pitchers Jameson Taillon and Gerrit Cole) and Washington Nationals (who signed Boras clients Stephen Strasburg and Bryce Harper to major league contracts, another practice eliminated by the CBA).

“Where would Kansas City be without their draft?” Boras said of the Royals, who had nine of Baseball America’s top 100 prospects this past winter. “They were getting the best players in the draft, and were paying for them.

“Look at what the draft did for Milwaukee. They drafted Ryan Braun and Prince Fielder and Rickie Weeks. Just those three have meant more than $100 million in value for the franchise.”

Finally, in a concept he’s driven home before, Boras says the drag on signing bonuses will drive elite athletes to other sports. At Tuesday’s news conference, Selig said he had “no concerns about that at all. … I don’t believe that’s a possibility.”

For those who believe the new rules benefit small market teams, the arguments are as follows.

Due to the severe taxation penalties and essentially the elimination of “signability” cases, the top draft talents will go to the worse teams — just like in the NBA and NFL. Big market teams will no longer be able to game the system and sign talented “signability” cases who’ve dropped in the draft. Also, Boras used Gerrit Cole and Stephen Strasburg as example of smaller-revenue teams using the draft to build, but those players would still be available to those same teams and wouldn’t require nearly as much money to sign.

There’s also the addition of 12 picks in what’s termed the “Competitive Balance Lottery” which will be given to the smallest-revenue teams.

Lastly, in regards to international free agents, teams will be able to spend based on their prior season’s winning percentage — the worse the record, the more money available for IFAs.

So the debate rages on. At NoMaas, we’ll do our best to bring you thoughts from Yankee decision-makers and get their opinions on these changes. Until then, we ask…