New
Constraints on Signing Bonuses Puts New Spin on This Year’s Process
The
2012 draft is less than two months away, and there has been as much
discussion this spring among scouts about the potential impact of the
most-sweeping changes in the draft’s 47-year history as there has
been about the available talent pool.
For
sure, there isn’t a clear-cut talent at the top of the draft board
for the Houston Astros to choose from, like San Diego State
righthander Stephen Strasburg in 2009 or Las Vegas teenage star Bryce
Harper a year later—both slam-dunk selections as the No. 1 pick.
Rather, the field is somewhat muddled and there’s been more talk
about how the Astros, and the teams drafting behind them, will deal
with the new financial parameters that are now in place.
Record
spending on signing bonuses in recent drafts, which came to a head in
2011, prompted baseball’s power brokers to undertake multiple
changes to the game’s primary talent procurement process as part of
a new Collective Bargaining Agreement between owners and players. The
modifications, ratified in November 2011, go into effect with this
year’s draft.
There
may not be a hard cap on individual draft slots, as owners initially
pushed for, but stricter, enforceable measures were implemented that
will limit the total amount that teams can now spend on players
signed in both the domestic and international markets. If teams
exceed the imposed limits, they will be subject to significant taxes
and even the loss of premium draft picks.
“There’s
still a lot of mystery how this draft will unfold,” said an
American League scouting director. “We’re not totally sure how to
approach it, and I know other clubs aren’t, either.”
With
the lack of a consensus top talent in this year’s draft, there are
questions whether the Houston Astros will even spend to their
allowable limit of $7.2 million to sign the pick, no matter who they
end up taking.
The
Astros, understandably, aren’t tipping their hand on their strategy
with the No. 1 selection, but there has been much speculation in the
industry that they are targeting a pitcher, with three significant
college righthanders reportedly on their short list: Stanford’s
Mark Appel, Louisiana State’s Kevin Gausman and San Francisco’s
Kyle Zimmer.
Houston
might have also given final consideration to California prep
righthander Lucas Giolito, but he all but took himself out of the
running in March by injuring the ulnar collateral ligament in his
pitching elbow. It’s unclear whether Giolito will pitch again in a
game environment prior to the draft, set for June 4-6.
If
the Astros don’t opt for a pitcher, that would almost certainly
bring the likes of University Florida catcher Mike Zunino and Georgia
prep outfielder Byron Buxton into the mix. They appear to be the
consensus best everyday talents in the draft.
The
Minnesota Twins and Seattle Mariners pick second and third,
respectively, and have essentially the same players on their
preferred list, though have proportionately less money to spend than
the Astros. The Twins have been assigned an upper limit of $6.2
million to sign the second pick in the draft, the Mariners $5.2
million to sign the third.
Despite
the best efforts of the commissioner’s office to limit runaway
growth on signing bonuses to draft picks in recent years, they rose
for the fifth year in a row in 2011. Collectively, teams spent more
than $228 million on bonuses to players subject to the draft in 2011,
including roughly $192 million in the first 10 rounds. The overall
amount shattered the previous record of $195,782,000, set a year
earlier.
The
new CBA mandates that teams cannot spend more than $185,153,500
combined on bonuses to players in the first 10 rounds in 2012, a
slight reduction from the amount spent a year ago. Each team has been
assigned an upper limit for each slot, depending on its position in
the draft rotation.
For
the Astros, the allowable amount they can spend on their first 11
picks—their own 10 picks plus a compensation selection between the
first and second rounds for the loss of shortstop Clint Barmes to
free agency—is $11,177,000. The Twins, in turn, have $12,368,200
available for 13 picks in the first 10 rounds; the Mariners have
$8,223,000 for 11 selections.
Those
amounts are in contrast to 2011, when the Pittsburgh Pirates paid out
a record $8 million to sign No. 1 overall pick Gerrit Cole and
subsequently spent a record $17,005,700 to sign all their draft
selections, more than $5 million over the previous mark.
The
new, restrictive draft measures were enacted to both curb continuing
runaway inflation on signing bonuses, such as occurred with the
Pirates a year ago, and also better assure that the best prospects
end up with the weakest teams, restoring the original premise of the
draft.
As
the team with the poorest record in 2011, the Astros have been
granted the most money to sign their 2012 draft picks. Each
succeeding team will have progressively less to spend on both their
first-round pick and all picks cumulatively through the first 10
rounds
The
amount available for the Astros to sign the top pick this year is
conveniently 10 percent less than the amount Pittsburgh spent on
Cole, and yet it’s open to question whether there may be a headline
player in this year’s talent pool that might tempt the Astros to
cough up as much as $7.2 million. Conceivably, the Astros could end
up spending less than that slotted amount and allocate the difference
to other picks in the first 10 rounds without being penalized.
However,
if the Astros were to sign all 11 of their picks in the first 10
rounds and exceed their limit of $11,177,000 in the process, they
would be penalized for going over the limit.
A
team overspending by up to five percent of its allotment will be
subject to a penalty of 75 percent of the amount by which it exceeds
the threshold. If it spends upwards of 15 percent more, it could
stand to be punished with a 100 percent tax on the overage and the
loss of first-round picks in each of the succeeding two drafts.
There
have been numerous upward and downward adjustments to the allotted
bonus amounts each team is assigned in the first 10 rounds, mostly
stemming from free-agent compensation. There will be 30 supplemental
first-round Type A and B selections this year (31, if free agent
first baseman Derrek Lee eventually signs a major-league contract).
Several teams have also earned bonus picks for their failure to sign
premium draft picks a year ago—most notably the Toronto Blue Jays,
who failed to come to terms with first-rounder Tyler Beede.
The
30th and last team in the draft rotation, in this case the
Philadelphia Phillies, have been earmarked $1.6 million for their
first-round selection and a total of $4,916,900 for all their
selections through the first 10 rounds.
In
all, the Blue Jays, Cardinals and Padres will have 14 selections in
the first 10 rounds, and their signing bonus pool for 10 rounds has
been adjusted upward to reflect that. The Twins will have the most
money overall to spend ($12,368,200), while the Angels ($1,645,700)
will have the least. The Angels have only eight selections in the
first 10 rounds as they forfeited their picks in the first two rounds
for the off-season signings of first baseman Albert Pujols and
lefthander C.J. Wilson.
Additionally,
a team may spend up to $100,000 on a player drafted after the 10th round or signed as a non-drafted free agent, without being penalized.
But if it signs a player for more than $100,000, the excess amount
must be applied against the team’s allotment in the first 10
rounds. For instance, if a team signs a 14th-round pick to
a bonus of $500,000, the additional $400,000 will apply to the team’s
signing bonus pool.
Numerous
other changes to the draft will go into effect this year, including a
reduction in the number of rounds from 50 to 40 and a new, mid-July
signing deadline. In the case of 2012, that deadline will be July 13.
Sweeping
changes are also in the works to limit the amounts that teams can
spend on the international market. For 2012, each club has been
assigned the same upper limit, $2.9 million, but that figure will
change in succeeding years as Major League Baseball moves towards the
implementation of a full-blown international draft, possibly by as
early as 2013 or 2014.