How will the draft change?

[LookinUp]

It is for financial reasons, but they had a choice. They could invest in amateur player acquisition or they could sign a washed up player and a poor 1st round choice. That is the example I gave. The Pirates had every ability to sign Wieters, but they chose to redirect money they had. Financially, they were quite capable of signing him.

That is not a flaw in the system. That is showing a system where teams have multiple approaches at fielding a competitive club and will try to use what they think is optimal in terms of strategy. They went with the idea that you go low in the draft and go for the 'proven veteran.'

The system can be anti-competitive, but it is not now. What I am saying is that Stark's article does not apply to what is currently happening. Rather, it is probably quite applicable to what will happen in 5 years.

I get the bolded portion above and agree with your premise. However you can't ignore the fact that their tradeoffs w/ respect to when they're forced to make choices are implicated long before the tradeoffs of baseball's haves.

[LookinUp]

A real free market lets the market determine the number of competitors. Not some idea that Scranton can't have a team because Bud Selig and his cronies decided that professional baseball should be 30 fixed "real" teams and a few hundred teams solely dedicated to funneling players to those real team.

Yes, this is the exact point I was trying to make. Of course, it happened way before Selig, but you know that.

You have a very North American-centric viewpoint. Other sports in other parts of the world operate under very different rules. Most soccer leagues use an open system where anyone can form a team and join in the lowest levels of competition. As they succeed or fail in the market (and, of course, on the field) they move up or down to the level where they can best succeed. There are towns much smaller than Scranton in the top levels of many big European soccer leagues.

Right, I've used London as an example many times. In the context of the UK London is a media/population market similar to New York, LA, and Chicago combined. If the English Premier League used MLB's closed structure, and MLB's model of never putting more than two teams in any market, then Arsenal and Chelsea would have 5738 times the revenues of any other team, and they'd have payrolls that dwarf everyone else by leaps and bounds.

But in their open system there are four or five Premiership teams in London, and a good number of lower level teams there, too. This splits the market and keeps any one team from dominating, and exploiting the London market for a huge financial advantage.

Not that the open system doesn't have it's own flaws, but that's another discussion.

The point is that there are plenty of real world examples of wildly successful sports leagues that don't have a draft, don't have territorial rights, don't have a salary cap, don't really have comprehensive revenue sharing, and don't have their franchises hand-picked by an exclusive group of rich guys. Free market competition in Europe solves some of the problems that government-sponsored monopolies create in the US.

You've taken this discussion from a practical discussion of potential changes to the existing system to a highly theoretical discussion about changes that will absolutely not happen in the next 30 years. Your points are excellent though...so don't take this the wrong way.

I just know that the current non-free marketplace will continue to exist and that MLB will need to change the degree to which the deck is stacked against the smaller market teams in order to be successful over time.

That comment to Stark's blog was spot on. The draft is simply one example of the problem, and it will be exploited over time (as will the International FA market). Fixing the draft and international FA market in theory could go a long way toward solving the problem, but it's doubtful that it will result in true parity.

[LookinUp]

Because the return on investment is much, much higher on amateur talent. The Pirates or Royals wouldn't be any worse, and they'd probably be better, if instead of signing a bunch of mid-tier free agents like Jose Guillen they went and spent that money on international talent and overslot draft picks. Guillen has been a below-replacement performer for $36M. For $400k they could have signed a guy like Oscar Salazar, got equal or better production, then used the remaining $35.6M to become the kings of international and over-slot acquisition.

This would be a foolish move by the Royals because it would be precedent setting. Exploiting this particularly undervalued marketplace is a nice short-term strategy that will come back to bite teams like this in the butt moving forward.

The problem with the draft is that the previously unprecedented over-slot signings are becoming the norm. Whereas cheap talent used to be available, the smaller market teams are now forced to frequently go over-slot to compete on talent acquisition. The trend is unsustainable.

[DrungoHazewood]

This would be a foolish move by the Royals because it would be precedent setting. Exploiting this particularly undervalued marketplace is a nice short-term strategy that will come back to bite teams like this in the butt moving forward.

The problem with the draft is that the previously unprecedented over-slot signings are becoming the norm. Whereas cheap talent used to be available, the smaller market teams are now forced to frequently go over-slot to compete on talent acquisition. The trend is unsustainable.

Who cares if it's precedent setting? I thought the goal was to win more baseball games, to generate more revenue, to win more baseball games, and on and on.

We've established that the Royals aren't too smart for signing a bunch of mid-tier free agents that help them finish in 4th place. You claim they'd be stupid to spend a ton on amateur talent. So what's left? How are they supposed to win? Sitting around and waiting for the system to be fixed so that they can compete? I guess their fans (what's left of them) just get to mark time with 70-win teams until the other owners get around to that?

[birrman54]

The idea of a drafting team holding a kid hostage throughout his college years made me want to vomit.

[LookinUp]

Who cares if it's precedent setting? I thought the goal was to win more baseball games, to generate more revenue, to win more baseball games, and on and on.

The Royals will care when they can no longer afford top notch young talent because they've exascerbated the inflation of market prices. It's a good short term solution, but bad in the long run.

We've established that the Royals aren't too smart for signing a bunch of mid-tier free agents that help them finish in 4th place. You claim they'd be stupid to spend a ton on amateur talent. So what's left? How are they supposed to win? Sitting around and waiting for the system to be fixed so that they can compete? I guess their fans (what's left of them) just get to mark time with 70-win teams until the other owners get around to that?

The only way I can see them winning is to do what McPhail's done, which is to try like hell to exploit the market where they can w/o pushing it to a place that they can't sustain. I agree that they need to invest in the minors of course, but they have to measure what they do.

[QBsILLEST1]

The Royals will care when they can no longer afford top notch young talent because they've exascerbated the inflation of market prices. It's a good short term solution, but bad in the long run.

The only way I can see them winning is to do what McPhail's done, which is to try like hell to exploit the market where they can w/o pushing it to a place that they can't sustain. I agree that they need to invest in the minors of course, but they have to measure what they do.

Well, it hurts them pretty bad that their Evan Longoria/Matt Wieters cornerstone type player is looking more and more like a bust every day. Imagine if MW ended up becoming what Alex Gordon has become. It would hurt our system, but with all of the talent we already have here, it would be a cushioned fall, the Royals dont have as much talent to compensate for that big of a bust and it really cripples them.....

[Wingman]

The idea of a drafting team holding a kid hostage throughout his college years made me want to vomit.

That's what the NHL does... and it actually works quite well.

[srock]

The idea of a drafting team holding a kid hostage throughout his college years made me want to vomit.

It will make most kids who want to go to college skip the draft entirely until they are actually ready to sign. Hence, reducing the amount of unsigned draft picks.

[DrungoHazewood]

It will make most kids who want to go to college skip the draft entirely until they are actually ready to sign. Hence, reducing the amount of unsigned draft picks.

And it'll cut off a good source of talent for teams like the Orioles. There will be no more guys who end up as 22nd round picks because they want to go to U of Texas, but who get lured to Baltimore by dangling $800k in front of them.

[srock]

The draft has always been something I have questioned and I agree it is a mess.

There are many many possible ways to fix it and the larger economic issues in baseball but I would like to throw out two.

First, as Drungo described, the open model used by European soccer leagues. If MLB folded and I was starting a new pro ball league from scratch, this is the system I would put in place. But, I don't see MLB folding anytime soon and making such a mammoth change would be far to risky for MLB. Not going to happen.

Second, tweaking the system currently in place, is the situation in our current reality. Revenue sharing, amateur draft, rule 5 draft, international talent is still the wild west. What to do?

I propose just dumping the draft all together. Dump the service time rules and the rule 5 and any resemblence of a player being "under team control". Just go to a pure market system. Every player not under contract is a free agent.

However, this won't work with the current alignment of teams. The big market teams simply have to much revenue that is not shared. Something has to balance the ability of the Yankees to buy all the young talent in the world.

Best option: NFL style salary cap based on the league wide revenues. (I don't know if the MLBPA would ever agree to anything like this). Each team has the same amount of money to spend each year. Don't spend it, it goes back to the league. So if a team isn't in contention it can skip signing star free agents and instead sign more 18 year old's out of the Dominican and more college pitchers. Already have a stacked minor league system? Go ahead and trade for ARod.

Persuade the Union by letting any player signed by a ML team be in the union. So the union grows to represent all minor league players on affiliated teams.

If the union still won't go for it, then I guess more revenue sharing is in order. But I would push for some controls forcing teams to use the revenue sharing money on players instead of just pocketing it.

[crawdad]

I get the bolded portion above and agree with your premise. However you can't ignore the fact that their tradeoffs w/ respect to when they're forced to make choices are implicated long before the tradeoffs of baseball's haves.

Again, my point is that the draft does not have much money associated with it and that any team can participate and spend lots of money there . . . but that teams choose not to. Often this choice runs opposed to the acquisition of talent that has no purpose in helping them win.

I mean it is like having a discussion about health care, but getting held up on the cost of a band aid. The draft s nothing and actually works because so little money is involved. It does bear the risk of being maniulated by richer teams . . . but it has yet to happen.

[DrungoHazewood]

The draft has always been something I have questioned and I agree it is a mess.

There are many many possible ways to fix it and the larger economic issues in baseball but I would like to throw out two.

First, as Drungo described, the open model used by European soccer leagues. If MLB folded and I was starting a new pro ball league from scratch, this is the system I would put in place. But, I don't see MLB folding anytime soon and making such a mammoth change would be far to risky for MLB. Not going to happen.

Second, tweaking the system currently in place, is the situation in our current reality. Revenue sharing, amateur draft, rule 5 draft, international talent is still the wild west. What to do?

I propose just dumping the draft all together. Dump the service time rules and the rule 5 and any resemblence of a player being "under team control". Just go to a pure market system. Every player not under contract is a free agent.

However, this won't work with the current alignment of teams. The big market teams simply have to much revenue that is not shared. Something has to balance the ability of the Yankees to buy all the young talent in the world.

Best option: NFL style salary cap based on the league wide revenues. (I don't know if the MLBPA would ever agree to anything like this). Each team has the same amount of money to spend each year. Don't spend it, it goes back to the league. So if a team isn't in contention it can skip signing star free agents and instead sign more 18 year old's out of the Dominican and more college pitchers. Already have a stacked minor league system? Go ahead and trade for ARod.

Persuade the Union by letting any player signed by a ML team be in the union. So the union grows to represent all minor league players on affiliated teams.

If the union still won't go for it, then I guess more revenue sharing is in order. But I would push for some controls forcing teams to use the revenue sharing money on players instead of just pocketing it.

You dance around it, but I think you have it backwards: You institute market-size based revenue sharing as option #1, and then if you can't get that right maybe you look at caps and floors and all that half-solution mess.

I truly believe that caps are only good for limiting player compensation, and do almost nothing for competitive balance. People see the NFL's cap and connect that to parity, but the parity is almost completely the result of their national (and shared) revenues being a very large proportion of their total revenues.

You can design revenue sharing plans that incentivize success. I've yet to see a cap/floor plan that does that.

[srock]

You dance around it, but I think you have it backwards: You institute market-size based revenue sharing as option #1, and then if you can't get that right maybe you look at caps and floors and all that half-solution mess.

I truly believe that caps are only good for limiting player compensation, and do almost nothing for competitive balance. People see the NFL's cap and connect that to parity, but the parity is almost completely the result of their national (and shared) revenues being a very large proportion of their total revenues.

You can design revenue sharing plans that incentivize success. I've yet to see a cap/floor plan that does that.

Regardless of the exact implementation, be it salary caps/floors or revenue sharing or both, the end result needs to pin the amount a team spends on players to league wide revenue. And it needs to require (or at least strongly encourage) teams to spend that money on players and player development.

I suspect those negotiating the deals know this, but the changes evolve slowly due to competing ideologies about how to best implement the required changes.

[Mashed Potatoes]

I'll actually be sad when the draft is altered. As currently constructed, this is one of the few places where the O's can catch up to the big boys, who for whatever reason haven't flexed their financial muscles here as much as they could.

I mean honestly, we're talking about 8.8 million being a big number here, the cost for bringing in over 20 very talented players. Yet we also spent approximately the same money on Aubrey Huff's sub-replacement level production in a year with no chance of competing.

If I was GM I would invest at least 15 million in the draft every year.

A strange idea just popped into my head, if we continued to draft a ton of blue chip prosects in later rounds and actually sign them, it might require creating a new minor league affiliate to house all of the players. I wonder what the cost would be to create and run a new minor league team, and if the cost might be worth it if the result was more young talent to develop and tap into. Just playing with an extended hypothetical, certainly not something I'm advocating for.

The fairer the draft becomes, the more likely an untapped market inefficiency is closed, which IMO hurts the non-Boston/MFYs of the AL East.

Something to think about once it is restructured is, are there any new inefficiencies to exploit?