Wednesday, July 18, 2012
Spending drops 11 percent overall
NEW YORK -- Spending by teams in baseball's amateur draft dropped by 11 percent in the first year of restrictions imposed by the new labor contract.
Teams allocated $207.8 million to draft picks, down from $233.6 million last year though still the second-highest annual total, according to figures compiled by Major League Baseball. The decline in the first round was even more pronounced, a 17 percent fall from $89.5 million to $74.3 million this year.
Just 10 teams exceeded their signing bonus pool, incurring a total luxury tax of $1.6 million. But no team reached the second level of the tax, which would cause a club to forfeit its next first-round draft pick.
Under the latest labor deal, two aims were to slow spending on prospects through the draft and to get picks to sign sooner.
"We think that the system performed well in its initial year," said Rob Manfred, MLB's executive vice president of economics and league affairs. "It accomplished the goal, in our view, which was to allow the weakest teams with the best opportunities to get the best talent."
Teams pick in the reverse order of their record the previous year. Baseball's new labor deal assigned each club a bonus pool -- the sum of the recommended draft bonuses for a team's selections in the first 10 rounds.
The decline in spending was the first since a fall from $158.9 million in 2006 to $154.5 million the following year.
"It is hard to draw conclusions about these new provisions based on only one year's experience," union head Michael Weiner said. "Is that a function of the players available in this year's draft? Is that a function of something else? I think with one year, it's hard to say."
Going into the draft, many club scouts said the top talent available was not as good as it was in 2011.
"The general perception was we would be down this year because of the perception in the quality of the draft," Manfred said.
Showing how teams managed their money, the Chicago White Sox and Detroit each spent the exact amount of their respective bonus pools. Toronto spent exactly 5 percent more than its pool -- a total of $9.27 million that led to a tax of $330,900. Under the escalating penalties, if the Blue Jays had spent one additional dollar, they would have lost their next first-round pick.
Will any team spend into the second level of penalties?
"That's an example of needing more than one year's experience," Weiner said.
Stanford pitcher Mark Appel was the chief casualty. Projected by some to be the top pick, he was taken by Pittsburgh with the eighth selection and declined a $4.8 million offer. Appel will stay at Stanford for his senior year and be eligible for next year's draft.
"Clubs that wanted to pick the players they wanted couldn't," said Appel's adviser, Scott Boras, a frequent critic of the new rules. "Because of the system, they could not spend what was needed to sign the best player. They had to make alternate choices. That's not what the draft was designed to do."
He cited Baltimore (fourth overall pick), Kansas City (fifth) and the Chicago Cubs (sixth) as teams that decided to pass on players because of the new restrictions. He also said the system caused a shift in spending habits on amateur players.
In the year ending July 1, teams committed $76.9 million in bonuses on players from the Dominican Republic and Venezuela, according to MLB, up from $57.5 million the previous year. Spending on Cubans rose from $27 million to $109 million -- because of four sought-after players.
Under the signing year that started July 2, each team is limited to $3.2 million on international signings -- not including any bonus of $7,500 or less. A management-union committee is studying whether to have an international draft for 2014 or later.
Both management and the union agree that the changes achieved a goal of getting more players in a professional environment faster: 73.6 percent of drafted players signed, up from 63.5 percent last year. Among the first 10 rounds, the percentage rose to 97.6 percent from 91.5 percent.
As part of the new labor contract, the deadline to sign was moved up to July 13 this year from Aug. 15. Fewer players waited until the last day to reach an agreement, with deadline-day deals dropping to 10 from 70.