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New Major League Baseball Draft System Enters Its Second Year

New Major League Baseball Draft System Enters Its Second Year

Tonight's MLB draft gives new bonus structure a second at-bat.

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Thursday, June 6, 2013 - 20:15

Chris Gorski, Editor

The 2013 Major League Baseball draft begins tonight. As with most sports drafts, the drama centers on the choice of players. But baseball's draft adds several layers of mathematical and analytical complexity missing in most other sports drafts. Two of these are the severe consequences teams face for exceeding recommended signing bonuses, and the leverage held by players such as high school seniors and college underclassmen. 

The 2012 draft introduced a new bonus system, and MLB will use it again in 2013.  This system limits the signing bonuses teams can offer to the players they draft. Each team has a bonus pool based on the value of each pick they've been assigned, so different teams have widely different amounts to spend, from less than $3 million to nearly $12 million, Baseball America reports. Those bonuses can be exceeded, but if teams spend more, the MLB taxes the excess spending, and above a certain level they can take away future draft picks.

In prior drafts, teams could offer large bonuses to high school players, far more than what players chosen in the same round received, and, in a manner of speaking, overpay those players so that they would immediately become professional baseball players and not go to college. An AP story discusses one "poster child" for the decline of this effect of the new draft structure.

Last year, Stanford pitcher Mark Appel, widely considered to be 2012’s top prospect, was not chosen first. Instead, the Houston Astros chose well-regarded high school shortstop Carlos Correa, who was willing to sign for $4.8 million, far less than the money allotted to the Astros for the choice. The Astros banked the rest of the money allotted for the pick and used it to draft and sign better players than they might otherwise have been able to afford. Earlier this week, ESPN.com writer Keith Law thought the team would use a similar strategy again and pick a player many teams would choose only with the fifth pick or later, third baseman Colin Moran of North Carolina. SBNation explains the rationale in more detail. With his final pre-draft prediction, Law believes the Astros will take Appel with tonight's first pick.

The Astros were not the only team to get creative with their picks last year. Some teams chose players that they knew would sign for $1,000, far less than the $100,000 or more that the MLB suggested for the pick, and used the remainder on other players, as discussed in an AP story from last year.

The teams aren't the only ones with something to lose in the draft. But the most notable player to play hardball in the 2012 draft was Appel, who may have made the right choice when he decided not to sign. Many teams considered Appel the best available player in the 2012 draft, as described in an ESPN.com story. But he chose not to accept the almost $4 million offer the Pittsburgh Pirates made to him. He stands to make much more this year if chosen with one of the top few picks.

The draft brings a bit of game theory together with a bit of gut feeling to create plenty of fun for baseball fans. 

Drafts in general are interesting problems in economics and operations research. For teams to place themselves in the best positions, they need to evaluate the players accurately and predict how other teams will draft.

The first point is obvious, though incredibly difficult in practice. Teams will often choose 17- and 18-year-olds in a sport where performance usually peaks at around the age of 27. Figuring out how those players will mature can't be easy.

The second point is important because, as any fantasy sports veteran knows, you shouldn't always pick the best player available. The pitcher you choose now might be so much better than the pitcher you could choose in the next round that it's worth waiting until your next pick to choose an outfielder.

The draft will be shown live on the MLB Network, and you can follow it online at MLB.com, on June 6-8.

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Author Bio & Story Archive

Chris Gorski

Chris Gorski is an Editor for Inside Science and runs the Sports beat. Follow him on twitter at @c_gorski.