Are You Ready for the "Competitive Balance Lottery" - Brewers win second round pick

[TooLiveBrew]

Rays team president Matt Silverman didn't mince words about what he thinks of this new system -- excerpt:

 

"We've been involved in baseball for seven years, long enough to see two new basic agreements get ratified," Silverman said. "From Day 1, we have advocated for meaningful change, especially when it comes to addressing the dramatic imbalances in our game. Meaningful change has not occurred. It must go well beyond a trifling draft pick that a team in our position may or, as (Wednesday) showed, may not be fortunate enough to receive."

 

The "competitive balance" lottery was added as part of the new labor agreement to provide an additional pick in next year's draft to small-market and low-revenue teams. But the Rays, despite being both, missed out, while less needy teams, such as the Tigers (and their $132 million payroll), Marlins and Orioles got extra picks.

 

MLB identified its 10 smallest markets and lowest-revenue clubs and, with seven on both lists, set a 13-team field for the 12 additional picks, six after the first round and six after round two. MLB also added the Tigers — as a revenue sharing recipient not in the top 15 markets — to the field for the second-round picks.

[trwi7]

This new CBA has basically boned small market teams.

 

Draft budget based on number of picks and where they are eliminates the oppurtunity for small market teams to collect great talent later in the draft.

 

Only get one pick if you let a free agent walk.

 

Teams likely aren't going to be willing to offer as much for rentals because they can't get draft pick compensation.

 

Well done, MLB. You suck.

[igor67]

As some one else pointed out the compensation system was actually favoring the bigger markets because you would actually come out ahead on picks by signing and letting multiple FAs go a year(lose 1 pick, get 2!). It's far from clear that going over slot was actually a cost effective strategy. It strikes me as more similar to playing the lottery to get rich, than a clear path to team improvement. This system practically guarantees a team at the top of the draft can take the best player (a big win for small markets) and not worry about whether or not it makes sense to offer major league contracts to these guys (again it has worked for the Nationals, but that ignores the previous mixed success of this system of investment). The amount of talent in the draft will remain the same, but the large markets will now consistently get less of it because of the competitive balance draft, and fewer supplemental picks. The Rays GM is just mad because they had poor luck this year.

[patrickgpe]

the only good thing this draft does is that it helps a team like the brewers trade Greinke by giving them a tradeable pick that they can include in any potential trade.

 

Igor is right, it was always odd to me how many first round picks the yankees and red sox would get a year the last couple drafts.

[Roderick]

This new CBA has basically boned small market teams.

 

Draft budget based on number of picks and where they are eliminates the oppurtunity for small market teams to collect great talent later in the draft.

 

Well done, MLB. You suck.

 

Doesn't the draft budget help the small market teams? You used to have players that the Pirates, Brewers wouldn't draft as the player would want too much and then the Yankees drafting after them would just pick them and pay them. Now that player is going to basically get paid the same amount whoever drafts him. Doesn't that allow the small market teams to draft the best talent?

[TheCrew07]

No it doesn't help the smaller markets who were diverting more money into the draft and international signing process as a strategy to procure cost effective impact talent. With the slotting and the 2.9 million cap on international signings (not counting Japan) teams like the Pirates who had diverted significant money away from free agency and more into the developmental side of baseball took a hit. Last year they could have easily signed Appel, this year there was simply no way they could meet his bonus demands and sign the rest of their picks which was bad for them but good for the rest of the division.

 

The new system isn't really any better than the old from a competitive advantage standpoint, it basically just expedites the signing process with the slotting and having the signing date moved up. It certainly helps get picks into the fold quicker but a major consequence is that many of the smaller market teams (including the Brewers in recent years) will no longer be going way over slot to attempt to pickup impact players on the cheap (compared to buying comparable talent on the FA market). As such those teams which can outbid the other teams for talent in the FA market have gained competitive advantage.

 

It's like anything with baseball, for every good there is a bad. The simple truth is probably that until there is a worldwide draft and complete revenue sharing there will never be true competitive balance in baseball.

[igor67]

Small market teams were adopting the dump money into the draft as a winning strategy much in the same way that a high school drop out buys lottery tickets. Draft picks at escalating costs are not good investments because of the risk factor. Because they could not win a bidding war with large market teams the only thing to do was pick up a lot of tickets and hope enough are winners to build a decent team. We've lived under this main stream economic approach for over a decade and the Rays are the only team to win a World Series following this approach. The number of playoff appearances for all of the teams that have adopted this build only through the draft approach is not particularly impressive either. Case in point Manny Parra, easily our most successful draft and follow and he cost 2 million plus all of his years of drawing the league minimum. Every other DFE dollar has been a waste and Parra arguably could have been replaced with more cost effective minimum wage veterans. Small markets will be better off consistently getting an extra pick and not paying the extortion prices to guys who fall or otherwise have artificially inflated value because of the limited number of minor league free agents.

[splitterpfj]

The Pirates took a big gamble when they drafted Appel. He was considered the top pick in the draft, but he slid to them strictly because teams knew he'd be a tough sign.

 

Pittsburgh took a shot, because of his obvious talent, but they knew at the time what their top offer could be, and they knew at the time what Appel's demands were...it wasn't a match, and they found that out.

 

What's worse for Pittsburgh is, some of the kids they took later in the draft tried to play them by raising their demands after the draft, so they wound up with no Appel, and without some of the kids they took a little later too. It's a learning process for players, agents, and teams right now, and given the way things played out, the Pirates are Exhibit A at the moment.

 

It would have been far worse if Pittsburgh had caved in and paid Appel...that would have cost them big, and it would have emboldened agents and players to pound the table, slotting system or not.

[igor67]

Given the relative talent of the two drafts I'd say the Pirates have a lot of incentive to just wait next years pick. Boras has been very effective, but it is largely by being able to play Russian roulette multiple times with someone else's head. I wonder if we might see a movement with more fixed values away from agents in general. Some of that has happened in other sports. Really it is the only way to maximize your bonus now.

[TheCrew07]

Small market teams were adopting the dump money into the draft as a winning strategy much in the same way that a high school drop out buys lottery tickets.

How are those 2 even remotely close in concept or practical application? If you aren't able to compete for impact players in FA why it is playing the lottery to try and stockpile talent that you can develop? Do anything else and you're playing right into the hands of the system... just pay guys slot, let your best players go to the highest bidder, hopefully draft/develop as well the 2nd time and repeat, and always struggle to put a complete team on the field. I for one applaud teams for taking a different tact and trying to exploit holes in the system to their advantage.

 

Draft picks at escalating costs are not good investments because of the risk factor.

I agree that the initial costs have gotten out of hand, especially with all of the corruption in Latin America. However, young players are certainly no more risky that signing aging/established FAs to contracts. "Proven" MLB talent being a relatively "safe" investment is a myth of epic proportions, 1 lost season of a marque player ($20M) is the equivalent of signing #5 overall pick with a slot value of $3.5M almost 6 times.

 

We've lived under this main stream economic approach for over a decade and the Rays are the only team to win a World Series following this approach. The number of playoff appearances for all of the teams that have adopted this build only through the draft approach is not particularly impressive either.

 

When did the Rays win a WS? But beyond that, your premise is still incorrect. Many of the mid to large market teams also spend a ton of money on the front end of the talent acquisition process or are draft develop teams who spend money 2nd. Off the top of my head the Braves, Giants, and Rangers all are draft and develop teams that also can spend money. The Rangers have done the best job making trades of both types, buying and selling, and no organization is more progressive from a pitching development standpoint than Texas. Boston and NY have spent a ton of money in Latin America and going over slot to keep the home grown talent cycle going as well. While they are certainly some success stories of Latin players signed on the cheap blossoming into impact MLB players, typically the teams that are the most active and spend the most are going to have the best results.

 

Here's an article from earlier this season that tackles the international subject in pretty good detail.

Tigers, Rangers Stand Out For Overseas Efforts

 

I would argue that the reason small market teams don't sustain success is because most play right into the hands of the the "haves" by going all in when they think they have a chance. In order to compete in an unbalanced system no team that isn't able to realistically compete in FA won't be able to sustain itself without a continual cycle of talent because they can't afford to buy talent if they don't develop it. There are teams who've taken an extremely different approach, the Rays being the first, which is why I've talked about them so much.

 

The idea should be to exploit the market and be out in front trends, not playing follow the leader, that's what made the Rays special. They signed players to a different type of contract than other teams were, avoided arbitration and bought out FA years adding team options for core players, and were really the first team to figure out that to compete with the big boys when you don't have money to spend it all comes down to pitching.

 

The problem with the Brewers hasn't been just 1 thing, it's been in the approach to organization building.

 

Case in point Manny Parra, easily our most successful draft and follow and he cost 2 million plus all of his years of drawing the league minimum. Every other DFE dollar has been a waste and Parra arguably could have been replaced with more cost effective minimum wage veterans. Small markets will be better off consistently getting an extra pick and not paying the extortion prices to guys who fall or otherwise have artificially inflated value because of the limited number of minor league free agents.

How is Parra's money spent worse than Arnett, or any other failed 1st round pick? I'm on record as being incredibly frustrated by Parra, but in any given year how many LHP with more than 2 plus pitches who throw in the mid 90s are there? He was tremendous until he got to MLB but that's a trend that also true in every single sport, unfortunately no team or league has figured out how to adequately assess what's going on in someone's head and how they will ultimately perform regardless of their physical talent.

 

The same economic trend you highlighted with draft picks is also true of MLB FA... there are a limited number, TV contracts jump the revenue, which artificially inflates the salaries of the marquee players and has a trickle down effect. Braun's 2nd extension will probably look pretty good by the time it rolls through the way contracts escalated this past off season.

 

The point is that any rule which places limits as to how much talent teams can acquire and develop indirectly favors the teams that can spend in FA where are there no limits except what a team is willing to pay. There just isn't very good value in that mid tier of FA and small market teams aren't going to catch up if they are signing Wolf/Lilly type players while the other teams are signing Sabathia/Greinke. The disparity in talent is just too great and realistically small market teams aren't going to be able to retain every marquee player they develop, especially if they spend too money on players in that middle tier talent wise, there just isn't enough money left. The Brewers could have easily afforded Greinke if they weren't paying market rates on average for Ramirez, Weeks, and Hart. Which is another reason to cycle talent and only worry about locking up "core" talent.

 

If you don't cap or limit every aspect of the sport eventually the teams with the most means will gain the greatest advantage. Basically what's happened is that MLB has funneled more money into the hands of the MLB players and placed a greater emphasis on FA. Of course all things are not equal in terms of drafting and development, some teams have better scouting departments and/or better developmental strategies, but as fans of small market team how do we have a warm and fuzzy about our future when the system is tilted against us from the start?

 

If we don't find ways to exploit the market or do a better job developing the talent we have how do ever come out on top over any meaningful length of time? We've been largely mediocre around the 2 playoff appearances, we haven't been legitimate contenders every season, but there's also a wide gulf between what the Brewers have done and teams like the Rays or Rangers for example. It's not luck, it's not draft position, it's a difference in philosophy starting at the front of the talent cycle all the way through the back end.

[igor67]

Brain lock on the Rays thing, though it only strengthens my point.

 

Not only is there no guarantee that the draft and pay a whole bunch of guys premium value will work, it rarely produces success at all. The argument was advanced that this new system hurts small market teams by 'taking away' this over pay in the draft strategy. Texas doesn't belong in the mix because they are a very large market and aren't forced into penny pinching. My counter argument is very simple for all the sabermetric rattling this strategy wasn't viable from the beginning it was just the only possible way it might work out, hence the lottery analogy. Even within the first round the expected caliber of production falls off dramatically throughout the round. Even then beyond about the 10th pick they already become noticeably more risky than the average free agent signing. By risky I mean washing out and providing no actual MLB production.

 

I am not advocating an ignore the draft position or anything of the sort. I am pointing out that the historical record on the sabermetric revolution is not a roadmap to unbridled success. My specific goal here is to argue that this means small market teams have lost nothing of any real value in this new labor agreement, but instead have actually gained something of significant value a high round nearly guaranteed extra draft pick. Under the vaunted overslot scheme to find better value you would have to sign two players a year to overslot money consistently to be getting more talent, and that ignores my previous comments about dramatically higher risk.

Sub point at 22 year old in AAA is not a dramatically different performance risk than your average free agent. A new draftee however clearly is, half or less of second round picks see any MLB time at all! That is a gigantic difference in risk. Or put another way any player who can hang around for a few years as a regular bench guy is a win compared to other second rounders in terms of value at the major league level.

It is also worth pointing out that there is a FA limit, at least in practice the luxury tax threshold has clearly been a behavior modifier on the upper end. As a result evening out money that gets spent in the draft is actually a huge benefit to small market teams because previously there was nothing stopping deep pocketed teams interested in development like Boston and Texas from going crazy and spending 4 or 5 times what the Rays could spend on international FA and falling draftees. Now there is a limit and on a percentage basis every extra dollar spent on development took away a larger percentage of the total budget for small market teams than it did for large market teams. The playing field is still quite uneven, but it is a little better than the old version which was everything a plucky small market could do, a big market could do better.