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Billionaires fleece teenagers; Mariners lose protected draft pick

Why are the Mariners subject to losing their first round pick if they sign a free agent? Glad you asked.

Joe Nicholson-USA TODAY Sports

Last week, Meg covered why it made sense for the Mariners to lose baseball games. It's a good, succinct explanation of the complicated and arbitrary mechanics that govern the first year player draft, and if you're unfamiliar with the rules, that's a good place to start. It's relevant to the Mariners, as the club finished "ahead" of the White Sox in the standings on a technicality, and will now draft eleventh next year. The upshot is that the M's no longer have a protected pick and, unlike the White Sox and the nine teams drafting before Chicago, will have to forfeit their first round pick if they sign a premier free agent.

Once you've digested the rules we can talk about how stupid this process is. Ignoring the attachment we feel to the Mariners for a moment, let's take an airplane view of the system and its merits from a baseball perspective. We'll start with a brief detour to the 1960's.

In the early 1960's, amateur talent acquisition was much different and much simpler than it is now. Teams scouted players and if they liked what they saw they negotiated contracts with them, or more commonly, their fathers. Even without the internet or Keith Law, baseball teams were pretty good at determining who the best amateur players in the country were, and they routinely entered into bidding wars with each other. Many a great baseball story starts with a scout riding a horse into the boondocks to sign a farm boy with a big arm, only to find that New York's scout had a faster horse and had reached town to raise the bidding ten minutes earlier.

Rich, white businessmen being what they are, the league's owners soon grew tired of paying market rate while competing with each other for amateur talent. They imposed a few measures to disincentivize large bonuses to amateur players, most notably the "bonus baby rule" requiring teams to put players who signed for $4,000 or more directly onto their major league roster. This didn't deter spending, but it did harm player development, and so the rich, white businessmen in charge of baseball retreated to the drawing board. In 1965, they came up with the solution that still exists today: the draft.

The rhetoric behind the draft has always been strong: by giving the worst team the first pick and working backwards to the defending world champion, the league isn't lying when it says that (one of) the intention(s) behind the draft is introducing an element of competitive balance. But baseball wasn't and isn't that big on competitive balance. The real boon was that the draft essentially became an extension of the reserve clause, binding player to team before he could even sign a professional contract. The draft eliminated bidding wars and helped ownership cut costs on amateur talent.

While the draft severely maimed players' negotiating power, there was still nothing capping the bonus or contract demands players had once they were drafted. Players could still publicly name their expected bonus before the draft and threaten to return to school or join an independent league if the team drafting them didn't match their stated price.

Consequently, teams wanting to limit bonus payments avoided drafting expensive players, effectively funneling talent to clubs with fewer qualms about amateur spending. Middling prospects with modest bonus demands were drafted first overall while premier talents often fell down the draft board. This is why you can review a list of No. 1 draft picks and see names like Bryan Bullington and Matt Bush: they were huge overdrafts from penny wise and pound foolish clubs who didn't want to spend on unproven talent.

By 2011, the system was clearly broken. The draft wasn't efficiently helping bad teams restock their farm systems and top players were signing ever-larger bonuses and, occasionally, major league contracts that pushed their acquisition costs even higher. Prior to the 2012 season, the owners and the players approved a new collective bargaining agreement, which had several ramifications for the draft. The new rules altered baseball's landscape, with three clauses bearing particular importance:

  • The new agreement limited the amount of money teams could spend in the draft without incurring significant penalties.
  • The agreement established that the amount of money a team could spend in the draft would be tied to their position in the previous season's standings, with a prescribed dollar amount allotted for each selection in the first ten rounds.
  • The agreement established a rule by which teams would forfeit a draft pick, and the draft money allotted to that pick's value, if they signed a marquee free agent (again, for more detail on the specific mechanics of the qualifying offer, read Meg's piece).

Announcing the new rules, baseball employed rhetoric suggesting that the new measures were implemented to address competitive balance by ensuring that teams were properly incentivized to take the best player available. For all sorts of reasons only tangentially related to where we're going, it hasn't worked that well, particularly after the first round. The rules have, however, done what they were always intended to do: cap spending on amateur talent. They've also lowered free agent costs, as teams subject to losing a pick pass on paying full market value for free agents who have declined a qualifying offer.

Why are owners so interested in limiting amateur spending? The answer is often packaged in bullshit, and if you wipe enough manure off the explanation, you can read something about a desire to redistribute money from unproven prospects to established players. This explanation often plays surprisingly well with casual fans, who can be misled into thinking that a $500,000 investment is more than a drop in the ocean of cash flowing through Major League Baseball. The real reason comes back to the old axiom of 'why pay someone two dollars when I can legislate rules requiring me to pay only one?'

It is in this desire to save money that the Mariners find their already muddied situation blackened further. With an aging core and a poor farm system, the 2016 M's are neither clear contenders nor positioned well for a rebuild. New GM Jerry Dipoto wants to build the club to win now, and if rumors are true, he has plenty of money to spend. But that money will probably cost the Mariners a badly needed opportunity to add impact talent to their system, and possibly their second round pick as well, if they sign two players who declined a qualifying offer this offseason. It would be a harsh punishment for a team that hasn't been to the playoffs since 2001, one with only three winning seasons in the last 12 years.

Seen through the history of the draft and the prism of limiting spending on amateur talent, it becomes clear that the league willingly induced a considerable amount of gimmickry into the game to save a few bucks through the draft and free agency. Mediocre teams have an incentive to lose games for more draft pool money. Fans, with the best longterm interests of their club at heart, root for losses instead of wins. A team with a middling payroll and the longest postseason drought in the league is subject to forfeiting their first rounder in the name of competitive balance.

Don't buy it. For baseball, the Mariners situation is not a bug, but rather a feature of the new system. If the Mariners lose their first rounder, it will have nothing to do with leveling the playing field and everything to do with billionaires conspiring to cheat players out of their market value.