This year’s draft represents a dramatic sea change for a Red Sox team that flexed its considerable financial muscle in the acquisition of top amateur talent in recent years. The new Collective Bargaining Agreement has changed the rules for how teams acquire amateur players in significant fashion.
Major League Baseball desperately wanted to constrain the bonuses that have been given to high school and college players by teams like the Red Sox. In order to do so, a number of penalties were put in place to punish teams for spending beyond those slot recommendations.
In recent years, the Red Sox had made a habit of blowing away slot in an effort to get as many high-ceiling, impact players as possible. For instance, the team signed Anthony Ranaudo in 2010 to a $2.55 million bonus that was in line with what MLB recommended for a top-10 pick; while giving first-round money to second baseman Sean Coyle (third round) and third baseman Garin Cecchini (fourth round). Outfielder Brandon Jacobs received sandwich-pick round money ($750,000) despite being taken in the 10th round. Will Middlebrooks, a 2007 fifth-rounder, received a $925,000 bonus (sandwich round money). That same year, sixth-rounder Anthony Rizzo was given $325,000, a bonus in line with a third-round pick.
The strategy had its risks (the team has seen players who received big bonuses turn into busts, such as left-hander Mike Rozier, a 2004 12th-rounder who got $1.575 million and was released in 2008 without ever having spent a day as high as Double-A. But, the emergence of a single player like a Middlebrooks is worth tens of millions of dollars to a franchise, and overall, given the number of top Red Sox prospects and trade chips acquired by shattering slot-recommended bonuses, the strategy was quite successful.
The draft was always about more than just big spending for the Red Sox, but still, the opportunity to get talent by paying for it represented a significant part of how the team operated. And it is an approach that the Sox no longer have available to them, at least not as they’ve operated in recent years.
There are three critical changes to the draft under the new CBA:
The new Collective Bargaining Agreement defines a bonus pool for a team’s selections in the first 10 rounds. Beyond the 10th round, teams can give players bonuses of up to $100,000; however, any bonus figure that exceeds $100,000 will count against a team’s bonus pool from the first 10 rounds.
The penalties for exceeding the bonus pool from the first 10 rounds are severe:
Exceed pool by 0-5 percent: 75 percent tax on the overage
Exceed pool by 5-10 percent: 75 percent tax on the overage and loss of subsequent season’s first-round pick
Exceed pool by 10-15 percent: 100 percent tax on the overage and loss of 1st and 2nd round pick in next year’s draft
Exceed pool by more than 15 percent: 100 percent tax on the overage and loss of a team’s next two first-round picks
Teams will be loathe to blow away slot in a fashion that will cost them a future draft pick. So, realistically, it would be startling to see teams outspend their bonus pool by more than five percent.
In the case of the Red Sox, their bonus pool for the first 10 rounds of the 2012 draft is $6.884 million. Beyond that, they can spend an additional $344,000 or so, whether by spending over slot for picks in the first 10 rounds or dishing out bonuses or more than $100,000 after round 10.
USE IT OR LOSE IT
Let’s say that an elite talent in the draft falls to the Red Sox with their first pick this year at No. 24. Couldn’t the team simply give its entire bonus pool of $6.884 million to that player in an attempt to sign him?
Simple answer is no. If a team doesn’t sign a pick in the top 10 rounds, it “forfeits” that slot in its bonus pool. So, if the Red Sox do not sign their second first-round pick (No. 31 overall), their pool would be diminished by the $1.575 million slot for that pick.
As such, figuring out a draftee’s signability will prove more important than ever. Teams won’t have the option of simply reallocating money that had been earmarked for one player and giving it to another if they fail to find middle ground with him.
That said, the new CBA does not prevent reallocation completely . . .
REDISTRIBUTING THE BONUS POOL
Let’s say the Sox have two players in mind for the No. 24 pick. One is willing to sign for the slot recommendation of $1.75 million. The other is willing to sign for $1.5 million.
If the Sox sign the player for the under-slot bonus of $1 million, then they can reallocate the remaining $750,000 as they see fit -- perhaps giving it to a later-round high-school player with signability questions (someone like a Middlebrooks). In essence, finding a player who will sign for less than slot will free a team to pursue players with signability questions, particularly after the first five or so rounds, since the cost of not signing an eighth-round draftee (for example) would be $133,500 to the signing pool – a sum that is far from devastating.
In a scenario where the Sox sign their top pick for $1 million, they could offer their eighth-round pick something in the vicinity of $900,000. In other words, the way to maximize the number of impact selections a team might make is by finding players who will compromise on their bonus figures. Whether players actually prove willing to do so is another question entirely, since the use-it-or-lose-it aspect of the new draft rules will give players considerable leverage to demand at least slot bonuses in negotiations.
IT’S ALL ABOUT SCOUTING
The draft rules have changed significantly, and with those changes comes a need for the Red Sox -- one of the most aggressively spending teams in the draft in recent years -- to adapt.
They’re not alone. By last year, nearly every team in baseball was ignoring Major League Baseball’s slot recommendations in order to pay for the best talent available. It was easy to do so in a world without penalties.
No longer. Teams now will be forced to work within the parameters laid out by MLB. And in a world where teams can no longer buy their way to successful drafts, the work of scouts to identify the best talent -- and the talent that is willing to sign -- will be more powerful than ever.
A PRIMER ON THIS YEAR’S DRAFT
When? Monday, June 4 (Round 1 and Supplemental First Round); Tuesday, June 5 (Rounds 2-15); Wednesday, June 6 (Rounds 16-40)
Where do the Red Sox pick? The Red Sox have three picks in the first and supplemental first round, picking at No. 24, No. 31 (originally the Phillies’ first-round pick) and No. 37 (a compensation pick)
How’d they get those extra picks? (Or, thanks three million, Cinco) Both the No. 31 and No. 37 picks are the byproduct of Jonathan Papelbon’s signing with the Phillies, which netted the Sox Philadelphia’s first-round selection and also gave the Sox a supplemental first-round pick in the so-called sandwich round that falls between the first and second rounds.
In a world of draft bonus pools, that’s huge. In past years, a team that lacked extra picks could sign some lower-round players for above-slot deals. No longer.
Had the Sox re-signed Papelbon, they would not have gotten the two picks for his departure, and their bonus pool would have dwindled by nearly $3 million, from $6.884 million to about $3.915 million. That is a huge difference. With the extra picks and bonus pool, the Sox could draft and sign two players for slot. Or, they could distribute the money to several players -- perhaps by signing the Nos. 31 and 37 picks to bonuses of about $1 million and redistributing the other roughly $1 million of their bonus pool to someone like a Middlebrooks in the fifth round or later.
In the new system, the significance of getting compensation picks for departing free agents is bigger than ever. In its own right, the Red Sox wouldn’t have wanted to get saddled with a four-year, $50 million deal for a closer. But in a world where that closer’s exit represented an increase in the Sox’ bonus pool of more than 75 percent, letting Papelbon walk became something of a no-brainer.
How much do the Sox have to spend? The Sox have a bonus pool of $6.884 million to spend on their 12 draft picks in the first 10 rounds. (That is the 10th largest bonus pool of any team.)
The next $344,000 they spend beyond that would be taxed at 75 cents on the dollar, but would not cost the team a future draft pick. From rounds 11-40, the Sox can sign players to bonuses of up to $100,000; any bonus figure beyond $100,000 would count against the bonus pool from the first 10 rounds.
How do you get $6.884 million? Thanks to Baseball America, here are the recommended bonuses for each of the Red Sox’ picks in the first 10 rounds:
Rd. 1 (No. 24): $1.75M
Rd. 1 (No. 31): $1.575M
Rd. 1s (No. 37): $1.394M
Rd. 2 (No. 87): $566K
Rd. 3 (No. 118): $401K
Rd. 4 (No. 151): $291K
Rd. 5 (No. 181): $218KâÃÂ¨
Rd. 6 (No. 211): $164K
Rd. 7 (No. 241) $143KâÃÂ¨
Rd. 8 (No. 271): $134K
Rd. 9 (No. 301): $125K
Rd. 10 (No. 331): $125K
How is this draft? Meh. Last year, the amount of college talent – particularly college pitching – was staggering. As Baseball America’s Jim Callis pointed out, the player who could well go No. 1 overall this year (Stanford right-hander Mark Appel) might have been the No. 8 overall pick in last year’s draft, something that is more a commentary on last year’s draft class (considered one of the best ever) than this year’s.
That said, there is talent in every year’s draft, and it’s the job of scouts and scouting directors to find it.
What to make of where the Red Sox pick? The Red Sox find themselves in a familiar position in the back of the first round. In the last 10 years, the Sox have picked higher than No. 24 just four times (2003, when they took David Murphy at No. 17; 2005, when the team popped Jacoby Ellsbury at No. 23; 2010, when Kolbrin Vitek was the first round choice at No. 20; and last year, when the team selected Matt Barnes with the No. 19 pick).
Meanwhile, the Sox are one of just two teams with as many as three picks out of the top 37. The Cardinals (Nos. 19, 23 and 36) are the other.
What’s the big deal? At a time when the cost of free agents is exorbitant, and when it has become almost impossible to acquire elite talent in the middle of players’ prime years on the open market, the draft and the international amateur signing period represent the most dramatic and meaningful ways to build a team for long-term success.