FanPost

Why I Don't Think the New Draft Provisions in the MLB CBA Will Be That Bad

Most commentators are against the changes in draft compensation.  Commentators including Jonah KeriMaury Brown, and Deadspin's Jack Dickey have condemned it, and I'd also like to recommend this satirical post from Bucs Dugout.

It's not too hard to see who would like it, though.  With some further investigation, we see that the higher a team picks in the draft, the more that team gets to spend, so small market teams can still get a little bit of an edge in the draft.  Big market clubs who consistently make the playoffs like that they can just pay to break the cap and then skip their picks from the end of the first and second rounds, which they may have otherwise lost pursuing free agents anyway under the old system.  Owners in general will like how the punitive rules will allow them to enforce not giving a lot of money to draft picks, especially ending giving amateur players major league contracts.  In particularly, it allows teams to curb the arms race of pursuing players that have signability issues because paying a lot for that hard to sign player can cost them their next year's draft pick, which might scare them more than losing that pick this year, ultimately taking leverage out of the amateur player's hands.  The MLBPA, of course, would be in favor of it, because it will make cheap young talent a more scarce commodity in MLB, so more teams will turn to signing veteran free agents.  When Kenny Lofton, Jermaine Dye, Barry Bonds, and many other veteran players have to retire when nobody gives them an offer in the offseason, that's bad for the MLBPA, but when teams won't have as many good players to pull out of the minor leagues, then signing an aging veteran makes more sense.

Agents, including Scott Boras, will naturally oppose such measures, because they also represent the unsigned players, and this will ultimately require them to take less money or go to college.  If you don't give Andy LaRoche $1,000,000.01, then he goes to Rice on a full ride.  And if you look at what most commentators are saying about what will happen with the future of the draft, they figure that more amateur players will go on to college, where they will find more scholarships available for higher-revenue sports like basketball and football (Nolan Reimold only got a half scholarship to Bowling Green, according to a guy I worked with who played basketball there).  But because of the minor league gauntlet and the steep learning curve in baseball, it's understandable when multi-sport athletes go to college for basketball or football, and get drafted in those sports.  Also, unlike the NFL and NBA, MLB has a strong minor league system that every player has to go through to reach the majors (with only the most occasional exceptions; in the last 15 years, only Xavier Nady and Mike Leake have made their professional debuts in the Majors).  But there is still another trick that MLB has.

Scholarships

The key might be for teams to improve their non-monetary compensation, particularly their college scholarship program (H/T JC Bradbury's old blog Sabernomics).  Highlights from the FAQ:

What is the maximum amount that will be reimbursed per semester or quarter?

The maximum reimbursable amount is determined by the amount specified in the participant's first Minor League Uniform Player Contract....

How are participants reimbursed under the Plan?

We would prefer to be billed by the college directly. All bills and statements covering reimbursable expenses for a semester should be submitted at one time, if possible. If the participant is required to make payment, the participant must submit the receipts verifying that the bills have been paid. Reimbursement checks will be made out to the participant, not to parents or other third parties.

To facilitate payment upon enrolling in school, participants should submit a statement stating the name of the school, the number of credit hours being taken and whether the school operates on a semester or quarter/trimester basis. The statement should include a listing of all actual allowable expenses and an indication as to whether or not such actual expenses have been paid. The statements should be sent to the Club's College Scholarship Plan administrator.

What expenses are covered under the Plan?

The Club is liable up to the maximum semester allowance for the participant's cost of tuition, fees, room and board (both housing and meals) and textbooks (not included are computers, calculators or materials other than textbooks) required for the course of study.

How is a participant residing off-campus reimbursed for living expenses?

If a participant resides off-campus, the participant shall be reimbursed through the college, if possible, limited to the extent the participant would have been charged for on-campus residence. If the school does not have room and board facilities, the participant will be reimbursed at the rate of $15 per day.

To qualify for reimbursement of room and board expenses, the charges must be verified in a statement by the college/university. The meal charges will be based on a semester/quarter meal plan.

A participant who lives off-campus may qualify for the $15 per day allowance by presenting the following documents to the Office of the Commissioner of Baseball: (1) a copy of the participant's signed lease or a letter from the landlord verifying that the participant is a tenant, (2) a receipt from the landlord showing that the participant has paid the first month's rent and (3) written verification by the college/university of the first day of class and the last day of class. The participant's allowance will then be based on the number of days the participant is in attendance at school for the term. Total room and board allowance, however, when added to the other covered expenses, may not exceed the designated amount per semester or quarter stated in the participant's contract.

There is no reimbursement for room and board if the participant lives at home while attending school.

Also of note: "The Plan does not cover trade, vocational or graduate schools."

But considering how little-known this scholarship provision is, it's not hard to think that it could be easily increased. Let players get as much as the full tuition at a private university reimbursed.  The off-campus living expenses, which were raised to $35/day as of the Fall 2011 semester, could be raised further, perhaps to $50/day (or more if they live somewhere like NYC, DC or SF).  You could put in a provision for a new laptop at the beginning of the first and third year.  But most significantly, teams could extend their compensation under the program to include graduate, trade or professional school (though they might specifically exclude them now because the Cubs paid for Scott Boras to go to law school, ruining the system for everyone). 

Employer-sponsored health insurance became popular during World War 2, when tax rates were very high and non-monetary compensation that was worth more to employees would cost employers less.  Similarly, it is entirely predictable that compensation not counted by the MLB tax limits would increase.  That's not to say that there aren't still those who prefer to go the route of being a student athlete, but I wouldn't be surprised if by the end of the next decade minor league scholarships become substantially more popular.

International Players

There's the potential that some teams may move to international signings more, and while this looks like a legitimate place for growth in signing players, there's more risk in knowing how well the players will project as major leaguers. The new cap will be $2.9m for international amateur signings next year, nearly 10 times what the Dodgers spent last year, though significantly less for other teams, will probably protect the Rule IV draft as the primary source of talent in MLB.  Additionally, players will have to register with the MLB Scouting Bureau, which may make scouting international players easier.  It's quite possible that this will lead to more international players in MLB, but these players will probably come more from Central and South America than Asia, where Selig really wants to see MLB expand.  Still, there's some room here to see how this plays out.

In the long term, this will matter only for teams that have substantially high costs from their scholarship programs, as international players may be less likely to negotiate for this in their first minor league contract.  I don't see the scholarship programs becoming a prohibitive cost, since they can be controlled by contract.

Conclusion

It's usually not a bad idea to assume that people who are predicting doom and gloom are exaggerating the negatives.  I think ultimately the most important changes to the draft are in limiting compensation for signing free agents, which will benefit current players and prevent teams from dominating the draft like the Rays this year or the A's in the Moneyball draft, and this will help a lot of middle of the road teams that are ready to improve.

I don't think there will be that big a net impact in how the draft works.  The biggest net result is that teams will spend more on non-monetary forms of compensation for draft picks in the long term and will be more likely to sign aging veterans in the short term.  I don't see this as a move that will pull players away from MLB - it offers the best salaries and longest careers at the major league level in a league with no salary cap and easily more room for revenue growth than the NFL or NBA.

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