The announcement late Thursday night that Major League Baseball and the MLB Players Association have come to an agreement on changes to the terms of their agreement for a shortened or possibly canceled 2020 season was mostly full of good news for baseball fans, especially as players received their biggest demand: service time, even if there’s no season at all. However, the agreement also gave MLB the flexibility to make substantial changes to the draft. While nothing is decided yet (contrary to some public reports), there is the potential for this to be a disastrous move for amateur players and for baseball’s long-term health. I spoke to sources involved in the talks and those familiar with them from MLB, the union, player agents, and others; everyone asked to speak on background, due to the sensitive nature of the talks and the large set of unknown variables still involved.
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The idea of flexibility around the draft’s timing and structure makes sense given the extreme uncertainty around the public health situation in the United States, where COVID-19 cases continue to increase on a logarithmic scale and the federal government is undermining state efforts to get people to shelter in place. Amateur players are not returning to the field this spring, and the possibility of combines or showcases before a draft is slim because it may not be safe to have several hundred people – 200 or so players, scouts from 30 teams to watch them, and perhaps family members – gather in one place until at least June, by which point pitchers would have been off mounds for three months. (It would probably get a better TV/streaming audience this year than any such event would have in previous years, though.) Holding the draft on the scheduled dates with the typical format would be possible, but the results would be anything but normal, as scouts haven’t seen any of these players since at least early March, and in many cases haven’t seen them since last fall or summer.
Thus Major League Baseball asked the union – which has a say over alterations to the draft because of the existence of draft pick compensation for free agents – for the flexibility to move the draft date forward or back, to reduce the number of rounds in the draft (something MLB has wanted previously anyway), and to defer some portion of player bonus payments for an additional year (whereas now all bonuses must be paid in the player’s draft year or the following year). None of these changes are good for amateur players. The premium players probably won’t be adversely affected, but many players outside of the first round or two will be, and some might be disadvantaged enough that they choose not to sign.
Moving the draft date is the least troublesome part of the plan, although in my conversation with sources on all sides of the issue I found no consensus on whether it’s right to move it up, since players are done playing regardless, or to move it back, which would reflect the hope that players could either go play in summer leagues or attend some sort of pre-draft combines or showcases. The argument for moving it up would be that all players could go out and play in the minors this summer if and when professional baseball resumes, although there’s a nonzero chance that the minors lose all of 2020. The current draft date and signing deadline would still allow all players who sign to go out and play at least 45 days or so in pro ball, even if the season isn’t extended, and multiple sources mentioned the possibility of expanding the Arizona Fall League or lengthening its season to give more players the opportunity to regain the reps they lost this spring. Moving it up into May would pose logistical issues; we’re nowhere near the point where we should be scheduling anything, given the current public health situation in the United States.
The other two ways in which MLB may now choose to alter the draft are, in my view, unequivocally anti-player. Sources on both sides of the table specifically cited MLB’s expectations of reduced cash flow this year, and used that as justification for the possibility of a shorter draft with deferred bonus payments. Reducing the number of rounds in the draft, however, does little to improve the cash-flow situation of MLB teams. The most extreme proposal is to cut the draft to just five rounds, but doing so only eliminates 11 percent of the teams’ bonus pools and does little to reduce the cash flowing out to amateur players. (Undrafted players would be able to sign as free agents for up to $20,000 without impacting the signing teams’ bonus pools, more than $100,000 below the threshold in typical years.)
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All this would do is reduce the number of players available to minor league teams this summer and next spring, which might suit MLB’s long-term goal of eliminating minor-league teams, but doesn’t help with the longer-term, structural issue of ensuring the talent pool is stronger and more diverse. It also greatly diminishes the potential for players who aren’t drafted in the first round to still land first-round bonuses as over-slot guys later in the draft, because teams can’t save slot money by choosing college seniors in rounds 6 through 10 (as the Mets did last year) or wait and take a passed-over player in the eleventh round and use any savings from the first ten rounds to pay more than the slot for rounds 11 onward.
Deferring portions of the bonus payments into 2022 does address MLB’s cash flow questions, although it’s a drop in the proverbial bucket; the total of all slot values for the top ten rounds of the 2019 draft was $266 million, less than twice the median team payroll for 2019. Deferring $3-4 million per team into 2022 amounts to a delay in payment of less than 1 percent of the typical team’s cash outflows, which is a rounding error on an MLB team’s cash flow statement but a significant hit to any individual prospect, who is essentially giving the signing team an interest-free loan for two years for the amount of the deferred payout.
MLB’s goal-setting here around the draft appears to be a continuation of the league’s long-standing obsession with reducing bonuses, even though the draft (and, to a similar extent, the international free agency process) is the most cost-efficient way of obtaining new talent. A club may spend about $10 million in the draft and end up with $100 million or more in total value. If you draft one player who produces 3 WAR in value for you, directly or via trade, you’ve probably received a positive ROI on your draft class. The WAR threshold might even be lower than that, depending on how fast he gets to the majors and the team’s time value of money. Why is a $10 billion business this locked in on reducing short-term cash flow by a few million dollars – less than 1 percent of their total revenues for 2019 – when the ROI on amateur player bonuses often exceeds 100 percent?
The same questions and arguments apply to the proposal that slot bonuses stay flat for 2021, rather than the typical year-over-year increases we’ve seen in the current CBA. Amateur players have no leverage in these talks, as they’re not members of the union yet – the union would like to get those players into pro ball and to the majors quickly, so they can reach salary arbitration and help push all salaries up – and they have little recourse once drafted if they don’t like the team’s offer. The best amateur players in any given year are underpaid by more than half, based on the handful of examples we have of top amateurs becoming unfettered free agents (Aroldis Chapman, Travis Lee). Delaying or reducing their bonuses is regressive, and can’t do anything to encourage players who aren’t selected in the top few rounds to pursue baseball as a career.
The one bit of good news in all of this is that the talk of canceling the draft – which MLB broached as one possibility among many, but which I’m told they never seriously pushed in negotiations with the union – is dead. That was a non-starter for many reasons, not least of which is that every team source I’ve asked about the topic has said that they could draft right now if need be, and that teams drafting high would much rather make those picks and get those players into their farm systems as soon as possible.
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The sooner Spencer Torkelson and Austin Martin and Asa Lacy start their pro careers, the sooner they’ll see the majors. That is an argument in favor of an expanded Arizona Fall League, something multiple sources suggested to me as a real possibility, pending improvements in the public health situation before then. It’s also an argument against reducing the draft too far; three players taken after the sixth round in 2017 have already reached the majors, and 27 such players from 2016 have done so, including Tommy Edman and Zach Plesac. The draft is a highly cost-effective way to obtain major-league talent, but it’s not perfect, and many players who weren’t at all seen as top-five-rounds talents when drafted turned out to be first-round talents in retrospect. Paul Goldschmidt was an eighth-rounder out of a Division 1 college. Let’s not miss out on the Goldschmidts and the Albert Pujolses, or even the James Karinchaks and the Tony Gonsolins, just to save a few hundred thousand dollars per team this year.
If anything, MLB should be trying to pay amateur players more this year, knowing that many of them are probably facing economic uncertainty or hardship because family members may have lost their jobs or seen their incomes decrease during the economic downturn. Encourage players to sign quickly and get out and play, if the public health environment makes that feasible. It’s a small incremental investment in something that has historically yielded enormous returns. Doing so could also help boost attendance at low-level minor league parks; short-season leagues, like the Northwest and New York-Penn Leagues, could see their strongest talent levels in decades, and would have many players with some name recognition for fans who would play every day or throw more than ten innings over the summer.
Again, none of this is set in stone. MLB could choose to cut the draft to just ten rounds, or maybe more. They could choose not to defer payments to drafted players. They could try to stage showcases of some sort, although I received very mixed responses from player agents to that possibility, with the risk to pitchers of ramping up quickly to throw an inning or two for scouts raised as one major objection. There are also procedural questions still waiting for answers, such as whether MLB would lift the ban on scouts traveling, or whether players could send video to specific teams or would have to send any video of themselves to all thirty clubs. Let’s hope that whatever system we see doesn’t end up just transferring wealth from amateur players to MLB owners, which hurts those specific players and will only reduce the talent pool at a time when growing the game and maintaining player diversity are critical to the long-term health of the sport.
(Top photo of Lacy: AP Photo/Sam Craft)
