2012 Draft Preview: Old Rules vs. New
One of Bud Selig’s primary mandates before and during the negotiations for the new Collective Bargaining Agreement was to cut irresponsible spending and overall costs in the amateur draft.
During negotiations in the previous CBA, done following the 2006 season, it was agreed by all parties that unsigned picks would be rewarded by compensation picks in the following year’s draft. It was thought teams would stay true to MLB’s assigned “draft slot”, which, combined with a shorter signing period would keep draft spending in line. Instead, the move backfired somewhat, with teams routinely giving over-slot deals, especially in later rounds, and draft spending rising almost eighty million dollars in five years.
While most of the new draft rules take place beginning in 2013, there are some which are effective this year, starting with a reduction in draft length from fifty rounds to forty and a further shortening of the post-draft signing period, from August 15th to six weeks after the draft, which this year is July 13th.
In an attempt to control bonuses, teams are assigned “bonus pools”, which is based loosely on the sum of values of each team’s picks in the first ten rounds, which are assigned jointly by MLB and the MLBPA. With a more punitive luxury tax and the possibility of losing picks in upcoming drafts, even the big-money teams are expected to hold firm to their pool allotment.
Obviously, this system favors the teams picking at the top of the draft, the first pick of the round (Houston) is valued at $5.625 million more than Boston’s thirty-first and final pick of the first round. As it stands now, the cumulative dollar value on a per pick basis is roughly $27 million less this year than last.
The Twins have the largest bonus pool at just over twelve and a quarter million, covering thirteen picks, the Angels have the smallest, with just over one and a half million to spread amongst eight picks.
Teams have the flexibility to spend their pool in any way they choose, as long as they remain under their pool budget. If a team signs a player for less than the slot amount, they in turn could use that money on another pick, however, if they fail to sign a pick, the dollar value is subtracted from their total. Additionally, while the budget amount doesn’t cover rounds eleven through forty, penalties will still be assessed if the player signs for an amount $100,000 or more over the assigned slot amount.
Under the old CBA, the only enforceable penalty would be a fine for not having a player’s contract offer approved by MLB prior to the signing deadline. Now, the penalties begin at one dollar over each team’s respective bonus total and escalates for each additional five percent up to fifteen.
Exceeding the bonus pool by up to 5 percent results in a 75 percent penalty tax on the overage, from 5 to 10 percent results in the same 75 percent penalty and the loss of a first round pick, from 10 to 15 percent the penalty is 100% of the overage and the loss of a first and second rounder, and after 15 percent it’s a 100 percent penalty and the loss of two first rounders.
The best part of the penalties, IMO, is the fact the money isn’t paid directly to MLB, it’s disbursed (along with the forfeited picks) to those teams which didn’t exceed their budget. So, in effect, the Yankees could essentially pay for Tampa to sign additional picks and give another team and extra selection in an upcoming draft.
Some other small changes include the banning of major league contracts to draftees, the adding of compensation picks from one round to three for the failure to sign a pick, and a mandatory forty percent offer to a player who fails a physical.
It’s going to be interesting to see how teams adjust to the new rules, especially with some more restrictive penalties coming in 2013. It’s almost like this year is a dress rehearsal for the big show coming later on. Among the changes on tap for 2013 and beyond is a reduced number of compensation picks for free agents and a “competitive-balance” lottery which provides additional choices for disadvantaged teams, which, for the first time, can be traded.
The draft begins on Monday, June 4th, and as in the past, the draft will be televised live on MLB Network beginning at 6pm EST.