Sports Law Blog
All things legal relating
to the sports world...
Monday, August 16, 2010
 
The Impact of a Slotting System in the MLB Draft on Teams and Agents

Interesting note from ESPN.com's Mike Andrews, the President and Executive Editor of SoxProspects:
. . . the deadline for major league teams to lock up their remaining unsigned picks from the 2010 draft is tonight at 11:59 pm ET. Entering Monday, the Red Sox have signed sixteen of their fifty-two picks. Since 2005, Boston has signed, on average, about twenty-eight picks per season. This year, the Sox selected several players that were expected to be “tough signs” from the get go, and as such it’s expected that the team will be signing another crop of draftees before the clock strikes midnight tonight.

One other consideration is that MLB’s Basic Agreement (the CBA) expires after the 2011 season, and there have been rumblings that a mandatory draft slotting system could be put in place with a new CBA – so some big market teams may be pondering spending the cash on draftees this season and next while the getting is good. . . .

As I wrote in my piece on why MLB teams can't trade draft picks, the MLB Draft doesn't work like the NFL, NBA, or NHL drafts, where, generally speaking, the best players are drafted first.

In the case of the NBA and NHL drafts, salaries for drafted players (at least those taken in the first round) are "slotted" in their respective collective bargaining agreements. So if you're drafted 15th in the NBA Draft or the NHL Draft, your salary is largely pre-determined and can't be negotiated to a significantly different amount than the amount slotted for the 15th pick (see the NBA's CBA, Exhibit B for actual numbers). And you're better off being drafted 15th instead of 16th, because the slotting values descend from the first pick down, so the 15th pick always earns more in his contract than the 16th pick. The NFL doesn't slot salaries for draft picks, though there is a salary cap for the amount each teams can spend on all of their draft picks and a slotting system seems likely to be found in the next NFL CBA.

Baseball is different. Because there is no slotting of salaries for MLB draft picks
(though salaries for each draft slot are "recommended" by the commissioner in an non-binding way) and because there is no rookie salary cap for MLB draft picks, some very talented prospective draft picks' whose salary demands are too high for small market teams, and who have the leverage of being able to play college baseball, are not drafted by small market teams with high draft picks. Instead, they fall in the draft to big market, more successful teams like the Yankees, Red Sox, and a few others which have lower draft picks but can meet those players' salary demands. So players whose talent, absent salary demands, would make them high draft picks fall to lower selections and are financially rewarded for that happening -- and in a 50-round draft, it happens quite a bit. To illustrate, here is New Orleans.com's Ken Trahan, who reports today on the Red Sox essentially raiding LSU's baseball team through the draft:

LSU's baseball recruiting class has taken yet another major hit. Delgado Community College outfielder Lucas LeBlanc has opted to sign with the Boston Red Sox.

On a flight to Boston this morning. Just last Monday, LeBlanc turned down a signing bonus of $325,000 and he told many that he would be attending LSU. The Red Sox upped their offer and got their man, reaching an agreement over the weekend. Sources tell NewOrleans.Com/Sports that LeBlanc may have gotten close to $500,000 to sign. . . . LeBlanc was an 11th-round draft pick of the Red Sox in the Major League Baseball draft.

---

Meanwhile, Boston may continue taking a chunk out of the LSU baseball talent pool.

The Red Sox are expected to offer 'top ten' money to compensatory first round selection [and LSU rising senior] Anthony Ranaudo (38th overall pick), according to one source.

Also, Barbe Louisiana [high school] infielder Gavin Cecchini (4th round selection) will reportedly be offered mid-first round money to sign with Boston.
Players dropping for financial gain also occasionally happens in the NBA draft, where there is no slotting for players selected in the second round -- those players usually receive the league minimum, but sometimes an international player falls to the second round because it doesn't make financial sense for him to join the NBA if he is going to be subject to first round slotting when he could stay in Europe making millions. But that is uncommon and doesn't happen nearly as often as it happens in baseball.

If a slotting system is adopted in MLB effective for the 2012 draft, we could see some big spending from MLB teams in this year's and next year's drafts. This will be their swan song for using non-top draft picks to draft top players with big signing demands.

Also, beginning in 2012, the work of baseball agents (or in some cases a relative or "family friend" acting as a de facto agent) would seem poised to change.

While baseball agents presumably want their clients to get drafted as high as possible even in today's draft system, I suspect seeing a client "fall" to a team like the Yankees or Red Sox might actually be preferred over seeing that client taken earlier by the Pirates or Marlins or a similar small market team. That would change, though, in a draft where salaries are predetermined, regardless of a drafting team's resources. In that setting, the goal of the agent would clearly be to have his or her player drafted as high as possible. So agents could still play a role -- they could tell teams that unless a represented player who has remaining college eligibility is drafted in the first round (or by whatever threshold), teams would be better off drafting other players since the represented player will attend college or in some cases continue to play college baseball. The slotted money has to be good enough to turn pro.





1 Comments:

The proposed slotting system appears to have several major benefits for the game as a whole:

1) While the MLBPA appears to oppose the proposition, the slotting system would clear up large sums of money that teams would have spent on overpaid rookie prospects. This would allow current players to demand and receive more money from their respective clubs.

2) The slotting system would allow small market teams to sign top prospects. These teams have effectively been been forced to pass on first round talent because due to these players astronomical asking price. A slotting system would allow the gap in payroll to be bridged.

3) While sports agents adamantly oppose the idea, the game of baseball can do without the plethora of uncles and family friends looking to make a quick buck off these kids. With no room to negotiate, players will have little need for high paid agents until it is time to renegotiate and after several years in the league.

However, while baseball has an antitrust exemption, the idea of a slotting system seems to raise interesting questions regarding price fixing and potentially exceeding the scope of the exemption.

Dan Goldberg
https://owa.uchastings.edu/exchweb/bin/redir.asp?URL=http://hastingscomment.wordpress.com

Blogger Dan -- 10/04/2010 9:35 PM  


Post a Comment