Fixing the MLB Amateur Draft

For the average fan, the MLB first-year player draft isn’t a big deal. The NFL and NBA have turned their drafts into major events, but that just isn’t a realistic possibility for baseball. Occasionally, there is a premiere player like a Bryce Harper or a Stephen Strasburg who has built enough of a reputation as an amateur to generate some name-recognition, but most of the players being picked are unfamiliar to all but a few experts and the vast majority of these players will not play in the majors for several seasons. Some might even wait five years before their shot at the show comes. That doesn’t make for much of a media event as far as most people are concerned.

Though it may not capture the imagination of your run-of-the-mill sports fan, one can argue that the draft has never been more important to teams than it is right now. With more money entering the game through gaudy television deals, teams locking up players before they hit the free market and strict limits on draft spending, teams have more to invest in amateurs than they can even possibly spend and more incentives to make the most of the money they are allowed to lay out. The new CBA rules have combined with a larger trend of emphasizing player development to create a perfect storm around the draft, resulting in some perverse incentives for teams. The Red Sox have used the draft-compensation rules to their advantage in ways the CBA probably never intended and the Astros and Cubs have shunned improvements to their major league rosters to stock up on talent when draft day comes. If the draft is more important than ever, it is also more problematic as well. Flaws in how teams are awarded draft picks are rippling through front offices to the major league playing fields and affecting pennant races. This needs to change.

MLB baseball may never be able to turn the amateur draft into a national event, but it can make some adjustments in the way the draft is run to address its biggest issues and make the overall product of baseball better. Scott Boras has given his thoughts on fixing the draft. Rany Jazayerli has even called for the end of the draft, but I know what the world is really thinking: how would Matt fix this problem. Well, your wait is over. Here is my plan-

De-incentivize losing

The Astros will have the first overall pick again in 2014 on the heels of their third straight 100-loss season. These three 100-loss seasons in a row would be unfortunate they weren't part of a strategy. Landing the first pick multiple times was instrumental in building the Rays and Nationals and it probably won’t be too much longer before the Astros ride that same model from the cellar to perennial contenders.

This is the main function of the current draft order. It gives the worst teams a chance to turn things around through an infusion of talent and that is something that a draft should do. Unfortunately, simply having teams pick in order from worst to first also heavily incentives losing. Now that the draft features very firm slot spending rules, the extra money that comes with higher picks doubles the benefits that come with tanking the season. To make sure that draft order still helps rebuild the worst clubs without encouraging teams to phone in the season, I think a more complicated way of determining draft order is called for. I don’t believe the incentive issues reach all the way to the players and managers- those individuals aren’t losing on purpose- they have too many incentives to perform regardless of the organizations interest. What I am trying to prevent is the strategic limitation of talent that has general managers artificially suppressing payroll, shunning reasonably priced talent and keeping their top prospects in the minors longer than they deserve to get a high pick and the draft money that comes with it.

With 10 teams making the playoffs every season under the current Wild Card play-in system, there are already increased incentives for teams in the middle to push for the next level, so keeping the last 15 picks in reverse order with the standings doesn’t pose much of a problem. The first 15 picks require some creativity, however.

To at least partially eliminate the incentives for losing without completely taking away the draft’s role in rebuilding, I think the five worst teams in baseball should get the top five picks, but the order should be determined by the total wins in each team’s division. The team that finishes with one of the five worst records in the game that comes from the division with the most total wins picks first. The team from the next strongest division picks second. When two teams in the same division each rank in the bottom five, the team with the worst record picks first. For the 2014 draft this system would order the first five picks: Cubs, White Sox, Twins, Marlins, Phillies, Astros. Houston was 11 wins worst than the Marlins, baseball's second worst team, but Miami now picks one spot ahead of them because that 11-win difference left the otherwise strong AL West four wins behind the much weaker NL East last season. Taking the first-pick prize away from the worst team and assigning it this way has two benefits: it encourages teams to build slightly better bad teams since being too bad could cost you a higher pick and it gives more help to teams beaten down by a tough division.

With the best and worst teams taken care of, we can take a more radical approach to the middle 10. This idea is exceedingly simple. We flip the script. Picks 6-15 go by wins. The more games you win the higher you pick with division strength as the tie breaker. This will give even a mediocre team’s GM a reason to think twice about selling off too much at the trade deadline or the waiver-trade deadline. Most seasons, there isn’t much of a chance that a team hovering in the bottom of the contender’s bracket would sell off to pick up the sixth or seventh pick either, because the teams on that bubble are typically close enough to the playoffs that ditching players with an eye on a draft pick will be too costly in terms of public perception and fan reaction. Best of all, this twist awards teams for being in the middle of the pack. Not every team can be a contender every season, but setting the draft order this way leaves little advantage to building a team that simply cannot hope to win.

Restructure the Compensation Pick System

The compensation-pick system is another element of the draft that is meant to help teams at a financial disadvantage, but in two years under current system, it is already apparent that it strongly favors the richest teams. Rather than reverting back to antiqued system of Elias rankings or eliminating the qualifying offer, which has benefits for players and teams alike, I think the solution is to protect more picks. Any team in the top 15 draft spots gets a protected first and second-round pick. This should encourage more teams to pursue players given a qualifying offer, which is good news for the players and for teams who are looking to rebuild. Teams that lose a player to a team with a protected pick still get a first round compensation pick, but that pick is simply added to the compensation round and the team loses picks starting at the third round.

I also think the game would be well served if a portion of the compensation round went to awarding a pick to the teams with the weakest farm systems. MLB could use their own experts to rank the farm systems, but I would prefer to see a system which uses an independent agency (like Baseball America or Baseball Prospectus) or a panel of experts to rank the farm systems. This agency or panel picks the five lowest-ranked farm systems and they each receive a compensation pick before the picks awarded to team’s losing qualifying-offer players. To prevent teams that draft poorly, struggle to develop talent or simply trade top prospects away with abandon from appearing in this spot too often, any team that ranks in the bottom-five two seasons in a row becomes ineligible in the third season.

Allow for More Flexible Spending

The draft spending slots are a godsend for MLB owners. With salaries rising at the major league level, they offer cost-control in an area that was also beginning to get quite expensive before the new CBA. They aren't great for amateur players or for teams that might lose out on draft pick due to signability issues, but the owner's aren't about to give in to Scott Boras and his ilk and relent on this key element of the new CBA any time soon. They should recognize that the lack some flexibility in spending isn't the best thing for them or for the game, however. Teams should have some ability to go after the players their scouts and baseball ops people love. Each draft is unique and teams shouldn't have to value them exactly the same. There are some simply ways to open up spending without sacrificing the cost-control the owners crave.

The slot prices stay the way they are, but teams are allowed to spend up to 50 percent over-slot two times in any draft. Since the draft slots at the top of the draft are separated by around 25 percent this gives the number-two pick the power to top the slotted amount for the first pick and the three-pick can also come close to matching the top pick*. As the picks proceed and the differences become smaller, this opens up some more free-market bidding and gives teams a shot at wooing a player they want even if they don't have the slot money it might take to sign them. Players can find the better deals to bring them into pro ball instead of holding out for another season. If a team goes over-slot, they can then take that amount out of the next year’s total allotment. If they do this two year’s in a row, they may not borrow against the third year and must work with the limited allotment remaining. This allows for more flexible spending but gives teams the same level of cost-control they now enjoy, spread over a three-year period. With this change in place, teams can incorporate their assessments of the strength of each draft and the needs of their farm system into their draft planning in a more dynamic way and the most desirable amateur players get a more open market for their services.

*I have used the 2013 draft slots to reach these percentages and they may vary from year to year.

These changes aren't as bombastic as Boras' or Jazayerli's but they are probably more realistic. They will not make the MLB draft must-see TV or push it to the front of fan’s minds, but they will help improve the game in a few small, but important ways. Without the guarantee of a sweet draft pick slot, GMs will have more incentive to build up their clubs even when seriously contending is still years away. That will mean fewer truly bad teams in the future, making pennant races even tighter. This system should help the free agent market in general and with the extra protected picks, it should also ease the blow of the qualifying offer for mid-market players like Kyle Lohse, Ervin Santana and Michael Bourn. With more reasons to win and more protected picks, teams will be less willing to ship away talent midseason and the tighter market should produce bigger returns for those players who are made available. This could mean duller trade deadlines for those of us who cover the game, but the average fan will likely rejoice at the prospect of fewer midseason farewells. Teams will also have greater flexibility in their draft spending without the burden of greater overall spending.

This plan may not be perfect and it will probably have some unforeseen consequences as well. However, there are benefits here for fans, players, teams, owners and agents. It isn’t easy to alter the game in a way that benefits almost everyone involved with it. I think this system would do just that.