New Draft Rules

Over the next couple of months, I’ll be spending the occasional blog post delving into past White Sox rookie drafts. Obviously the rookie draft holds an immediate influence over who shows up to play ball in Great Falls, and it should be interesting and revealing to delve into what tendencies the White Sox have in their annual draft strategy. Once the 2012 draft rolls around, we’ll already have built a great picture of what the Sox usually do, so we’ll be able to see how the deviated this time and analyze what that might mean.

Before we get into that, it’s important to note that some VERY major changes were made to the draft this season. When Major League Baseball and the players’ union agreed to the new collective bargaining agreement last offseason, substantial changes in draftee compensation – and international signings – came along with the other adjustments.  In order to prepare for our analysis of past White Sox draft classes, here’s a rundown of the changes that were made.

International Spending

The White Sox have traditionally been very quiet here, so these changes may not affect who we see in a Voyager uniform as much, but they’re still a major shift. Limits are being imposed on all spending on international signings starting this offseason. This year, the limit is $2.9 million, but in later years the limit will be different for every team with winning teams allowed less and losing teams allowed more. Penalties for exceeding the limit are very strict. Teams going over by less than 5% have to pay a 75% tax on the overage. Going over by 5-10% costs the 75% tax and the right to pay more than one player a bonus of over $500k the following offseason. 10-15% over means a 100% tax and that team can’t sign any player for more than $500k, and more than 15% over means no player can be signed for more than $250k. Basically, going over your limit by more than 5% substantially hamstrings a franchise’s ability to chase highly sought-after internationals the following offseason. Players from Japan, currently signed by a complex posting system, and professional Cubans over the age of 23 do not count under this budget. The idea, as written into the CBA, is that this system will be replaced with an international amateur draft by 2014.

Amateur Draft

The draft is seeing a huge host of changes, including harder bonus slotting, a quickened schedule, and a competitive balance lottery. The spending limitations will have the most pronounced effect on the Voyagers roster, though the other changes will cause the actions of the White Sox to have a little more effect on available draft picks. Since most of the Sox draft picks become Voyagers before too long, these little changes could obviously add or subtract an extra star or two from the Voyagers’ roster any given year.

The compensation changes are similar to the ones the NFL instituted two years ago. After seeing huge bonuses handed out to guys like Stephen Strasburg and Bryce Harper, the MLB decided to draw the line against the Scott Borases of the world and impose strict limits on bonuses that go to top picks.

Draft picks have always had slotted values, but these values were largely ignored in the early rounds and only used as guidelines in later rounds. These slots values will now be extremely important: each team will be given a different limit, based on total slot value, to hand out in bonuses for players drafted in the first ten rounds. Depending on what picks a team has, these limits will vary greatly. Teams may be allowed as little as $4.5 million to hand out or as much as over $11 million. Draft picks taken after the 10th round won’t count under the new limit unless their bonus exceeds $100k.

Like the international signing rules, penalties for exceeding the limit are harsh. Going over by 5% costs a team a 75% tax. A fair amount by teams are likely to end up in this region by going over by a few thousand dollars. Going over by more than 5% starts to cause extreme losses of draft picks. A 5-10% overage costs a team the tax and loss of their first round pick in the next year’s draft. 10-15% and the team loses a first rounder and a second rounder, and over 15% costs the team a 100% tax and their next two first round picks. Going more than 5% over the limit is essentially not an option for any reasonable team.

Some would expect teams to draft a couple players they have no intent of signing to save money, but new rules take that option off the table too. Any player drafted in the top ten rounds who isn’t signed has his draft slot’s value deducted from that team’s spending limit. This puts a premium on teams drafting players they know they can sign to avoid surprise limit problems. In the past, teams have generally taken care to draft players they know they can sign easily, especially in rounds 5-10, but this definitely adds more weight to that calculus. All the decisions will have to be made in less time too: the draft signing deadline has been moved from August 15 to the week of July 12, only about 5 weeks after the June 4 draft.

Agents have recently taken to demanding major league contracts for their top picks. In addition to bringing in more salary for their client, it starts a player’s free-agent clock, meaning they become a free agent 6 years after signing instead of having to fight up through the minors and then wait 6 more years before they can get a lucrative free-agent deal. This is no longer allowed. Draftee contracts can only be standard minor league deals. This only really affects the top few spots in the draft.

Perhaps the most out-of-the-box change to the draft is the competitive balance lottery. In addition to upgrades to the luxury tax system, the competitive balance lottery will give added benefits to poorer teams by offering them the chance to win draft picks in addition to their luxury tax proceeds. The teams with the 10 lowest total revenues and the teams with the 10 smallest markets – obviously there will typically be a lot of overlap between these two lists – will be entered into a lottery to win 1 of 6 “sandwich” picks added to the end of the 1st round. Teams that don’t win one of those 6 picks will have their names entered into the drawing for 6 more picks attached to the end of the 2nd. A team’s chances of winning in these lotteries will be determined by the previous season’s record. These picks will also break a long-held tenant of MLB drafts picks: they will be fully tradeable.

Effects on the Voyagers

These rule changes might affect the Voyagers less than they do the minor league franchises of most other teams. The White Sox have consistently had some of the very lowest draft spending for many years – they spent less than 3 million on bonuses last season – so they won’t have to change their strategies too much to stay under their bonus limit. As I mentioned above, they have been almost totally uninvolved in the market for big-ticket international free agents for many years as well, so don’t expect those restrictions to suddenly curtail their behavior. Forbes also recently reported the White Sox have the 10th highest revenue in baseball, so don’t expect them to be eligible for any extra lottery picks soon.

Without many effects through these changes, the biggest effect on the Voyagers’ rosters will likely be a result of any overall macro changes caused by the new rules. It is difficult to predict what these may be, however, as nobody is really quite sure and there are plenty of competing theories. The changes were made ostensibly to give smaller market teams an advantage in player development, but there are a few who have argued that the changes will eliminate an advantage small market teams have held: the ability to gamble by spending big on the draft. A small market team can never hope to sign free agents with the big boys, so their only chance to compete is to hit a few lucky drafts in a row and develop lots of young players before they all get bigger paydays elsewhere. I don’t find that alternate theory very convincing – this “draft roulette” strategy hasn’t really existed anywhere in reality and many of the big market teams are also the big spenders on draft day – but there is still dissent over how helpful the changes will be to poor teams.

Others, mostly agents unhappy with the changes, have also argued that the substantially lower amount of money available to young ballplayers will shrink the available talent pool in the draft. Agents argue that without the possibility of huge, over-slot bonuses more high school ballplayers might opt to go to college for a couple of years, or more multi-sport athletes might decide to try their hand in the NBA, NCAA, or NFL rather than playing pro baseball. These examples aren’t totally without backing: Minnesota Twins star Joe Mauer, for example, was given an over-slot contract from the Twins to induce him to walk away from a scholarship offer to play quarterback for Florida State. For the most part, though, examples of elite athletes equally gifted in multiple sports are few and far between. It is hard to imagine many ballplayers who would have taken $5 million to play minor league baseball instead of taking their scholarship offer to Texas would choose Texas over the allure of the major leagues just because their offer dropped to $3 million. Last, even if a few prep sluggers decide to play college ball for a few years before signing a pro contract, can we really call that a bad thing? Those players will still join the MLB talent pool someday. Now they’ll just come in having been seasoned in college for a few years, have an education, and add their talents to the exciting, if underappreciated, tapestry of college baseball. That seems like a wash, at worst, for pro baseball and a possible big gain for the college game.

While it doesn’t seem the changes will have a direct impact on the White Sox particular draft strategy, the overall effects on the landscape of the draft could be profound enough to cause a noticeable shift in MLB draft trends. As I promised 1,800 words ago, we’ll all get a good look at the White Sox tendencies over the next couple of months in this space. Once the actual draft results roll in, we might get a better idea how the new rules have changed which players show up in Great Falls.

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