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Planning for the 2012 Draft - New Strategies, Pitfalls, and Considerations

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Much has been said about the recent Collective Bargaining Agreement and how it's significantly altered the nature of the draft, almost certainly for the worse. Personally, I think everybody is probably overreacting at least a little, and I'm more interested in applying the new rules to the last two drafts to see what things might look like going forward.

The last two drafts unfolded as follows:

2011 - Round 1: 33 picks Supplemental round: 27 picks Round 2: 30 picks.
2010 - Round 1: 32 picks Supplemental round: 18 picks Round 2: 32 picks

As you know, under the new guidelines, teams that lose a player now receive just a supplemental pick, and that's only if they offer him (at least) a 1 year contract that equals the average of the top 125 salaries in MLB (around $12 million right now). The team that signs that player still loses their first-round pick, but instead of transferring it to the player's old team, that pick now simply disappears. This changes the draft pretty significantly.

After the 2010 seasons, I count six free agents that would have received at least a 1 year/$12 million offer from their old teams - Victor Martinez, Adam Dunn, Carl Crawford, Adrian Beltre, Cliff Lee, and Jayson Werth. Under the new rules, their new teams would forfeit their next first round selection (Washington would actually lose their second since their first was protected), and since these selection slots now simply disappear, the 2011 first round would have ended with the 28th pick.

From there, the supplemental round would have been cut even more drastically. The six teams that lost the players mentioned above would receive a compensation pick, along with the six winners of the competitive balance lottery, and that's it. Round two of the draft would commence with the 41st selection and end with the 69th (Washington wouldn't have a selection to compensate for signing Werth).

Similarly, prior to 2010 season the only free agents likely to receive offers at or above the 1 year/$12 million threshold were John Lackey and Jason Bay, so the 2010 first round would have ended with the 31st selection (the Mets first round pick was protected), the supplemental round with the 39th, and the second round would cover selections 40 through 70.

The result of these new rules is that the front end of the next few drafts just got a lot shorter, and since the late first round, supplemental round, and early second round now all occur sooner, the value of these picks just went up pretty significantly. Under the old rules the second round routinely ended somewhere between picks 80-90, and now it's unlikely to ever go far beyond 70.

There's a bigger point here.

The new collective bargaining agreement attempts to curb draft spending by establishing slot recommendations and imposing a severe luxury tax and the loss of future first round picks on any teams who exceed the limit. However, now that supplemental and second round picks occur sooner, the loss of a first round selection hurts less and, unintentionally, of course, becomes less of a disincentive.

This can be confusing, but follow this example for a minute. Currently, the Rays field a competitive team, so they're likely to pick later in the first round of the next few drafts. They also fall into the competitive balance lottery and typically don't retain their key free agents, so they'll probably have some picks in the supplemental round. The draft is still probably their best chance at acquiring talent cheaply, even with the new rules. They're scheduled to pick 25th in the 2012 draft, and at that spot they're allowed a total draft outlay of somewhere around $4.5 - $5 million.

But suppose they let the word out that they're going way over slot this year.

This will cause them to lose their 1st round pick in 2013 (and 2014 as well), along with the financial penalty. Their 2013 first round pick is likely to be somewhere between the 20th - 25th selection, and they stand a decent chance of winning a supplemental pick between the 28th - 38th selection thanks to the competitive balance lottery. To add another wrinkle, BJ Upton is scheduled to hit free agency after 2012, and unless he falls of a cliff this season, the Rays can't afford to resign him, which means he'll reject a lowball, 1 year/$12 million contract offer, but that offer will earn them a supplemental pick once he signs elsewhere.

So, if they follow the slotting requirements, they'll have the 25th selection in 2012, and then two, and perhaps even three picks between the 20th-38th selection in 2013 (assuming they contend in 2012). Or, they could disregard the slotting requirement altogether, pay the fine, and potentially get a top-10 talent at the 25th selection in next year's draft, and then despite losing their 2013 first round pick, they'd still have one and perhaps two picks between the 28th - 38th selections.

Is that a reasonable tradeoff? I don't know, but I suspect this is the type of approach we'll see teams trying as the draft unfolds under these new rules. In the past, this probably was the one place in baseball where economic parity reigned supreme, because everybody could truly afford to spend what it took to acquire top amateur talent. Now the draft carries financial penalties, which some teams can afford better than others, and the threat of losing draft picks that are disproportionately valuable. A team like the Yankees or Red Sox could conceivably ignore the slotting requirements every year, and since they're typically picking later in the first round pick and can easily afford the overage penalty, this gives them an advantage that other teams don't have.