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Sunday, June 20, 2010
Why can't MLB Teams trade draft picks?

Jimmy Golen of the Associated Press considers that question. Here are a few excerpts from Jimmy's article:

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Unlike their counterparts in other major pro sports, baseball teams cannot trade draft picks or even trade players for a year after they were drafted, like the Charlotte Hornets did shortly after picking Bryant or the Colts did with Elway. The rule is supposed to keep struggling teams from frittering away their ticket out of the cellar, but concerns that it might be hurting those it's designed to help have many asking whether it's time to finally lift the ban.

* * *

But while football, basketball and hockey teams can package players and picks to land a coveted star, move up in the draft order or even compensate another team for poaching its coach, baseball limits the market to current players and prospects so losing teams can't sell off their future along with their present.

* * *

"There are a lot of positives that could come from it, and then there's some potential danger that I know traditionally Major League Baseball has been worried about. It could hurt (teams) in the long run, because they'd be tempted to help themselves now, or they wouldn't want to spend the money on the draft picks so they trade them. It's a balancing act." [quoting Red Sox GM Theo Epstein]

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This topic regularly comes up on sports law panels that delve into baseball, and it did when Jimmy moderated a baseball and law panel at Harvard Law School earlier this year.

While I understand MLB's collective interest in seeing that weaker teams rebuild through the draft, it seems odd that MLB, of all leagues, would take a protective view of weaker teams when it has neither a salary cap nor a salary floor, has a wide distribution of teams' payrolls (according to CBS Sports, this season the Yankees have a $206 million payroll while the Pirates have a $36 million payroll; in the NFL, in comparison, the Raiders have a $152 million payroll while the Chiefs have an $84 million payroll according to Altius -- though note Rick Karcher's research showing that salary disparities are not necessarily meaningful for MLB teams' on-field performance), and because there is no slotting of salaries for MLB draft picks, some prospective and very talented draft picks' salary demands are too high for small market teams, so those players drop in the draft to big market, successful teams like the Yankees, Red Sox, and a few others which can meet those players' salary demands. In addition, if MLB truly wanted weaker teams to rebuild, why wouldn't it (with assent from the MLBPA) institute a global draft instead of letting non U.S./non-Canadian players become eligible to sign with any team as unrestricted free agents at age 16?

Although the current MLB-MLBPA CBA won't expire until December 11, 2011, and although there are probably more significant issues on the table than the trading of draft picks, perhaps the topic will come up when negotiations heat up in the months ahead. I suspect some MLB teams will push for a rookie wage scale similar to that used in the NBA Draft, where drafted players' salaries are slotted based on where in the draft a player is selected, though a rookie wage scale would probably be opposed vehemently by influential agents (e.g., Scott Boras) who tend to represent top MLB draft picks. Agents, of course, aren't members of a bargaining unit to a CBA, but they nevertheless tend to influence players' views. Still, whether there is the same passion for letting teams trade draft picks remains to be seen.


MIke, one good reason can be found in the research on the NFL by Thaler & Massey which suggests that clubs irrationally overprice high draft picks (ie they give up too much to get a high 1st round pick). Maybe MLB are smart in limiting the scope of the 'irrational exuberance of traders'.

Anonymous Rob Macdonald -- 7/11/2010 8:09 PM  

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