Replacing the draft with an auction

Mike Stobe

Could changes to the current draft system make things a little more interesting?

One of the leading responses to Masahiro Tanaka's big seven year, $155 million deal was that it was a whole lot of money for someone who had never thrown an MLB pitch. Half of that criticism makes sense: We don't know if changing throwing schedules or run environments will cause a big shift in our perception of Tanaka's ability. But the other half of the criticism, the fact that Tanaka is an unknown, misses the mark. We have all kinds of information about Tanaka. We have years of data about his performance in Japan and we have tons of scouting reports. Tanaka is, essentially, a very advanced prospect and prospects are clearly valuable given how reluctant teams are to trade them or even indirectly surrender via free agent compensation.

Now I'm not the only one to make this comparison and that's not the contribution I intend to make here. But the Tanaka situation is instructive of one possible extreme. He's a star pitcher in a league somewhere between AAA and MLB, and every team in the league just had a chance to bid on him with no restrictions. And he got a huge deal. What if we made the MLB draft a little more like this?

The plan I'm about to propose is unlikely to take hold because the draft is, in large part, a mechanism to keep wages down. It's also about competitive balance, but it's certainly not mostly about competitive balance. The owners wouldn't be super thrilled about this idea, but it's not so radical that the idea is totally without merit.

Currently, the draft order is determined by the previous season's standings set in reverse order, with the various competitive balance picks, compensation picks, and the like scattered throughout the first couple of rounds. Teams are limited in how much they can pay each pick and how much they can spent overall. They can't trade picks. You know the rules.

What if we shifted the draft into an auction? Teams would be limited to certain overall bonus allotment, let's call it $50 million, but it would likely be lower at first. The draft would then proceed in two stages; the auction and the draft. Players would be nominated and then each team would submit anonymous bids up to the total remaining amount of their bonus allotment. So when Carlos Rodon is nominated in June, every team could presumably bid $50 million, or any other number they choose. If two or more teams tie for the top bid, the team with the worse record during the previous year would win the auction. If one team alone had the highest bid, they would pay something like the second highest bid plus 10%. If only one team bid on a player, they would pay the player 90% of the bid.

Teams would be allowed to pay out the bonuses over a designated period of years depending on the size, and then every player would be on minor league deals. The auction round would continue until all 30 teams had exhausted their bonus allotment and then teams would proceed into a standard draft without meaningful bonuses until every team had 50 total selections or passed, just like under the current rules.

This system would lead to a couple of key changes in outcomes. First, really great players would be able to earn more than a couple million dollars at the start of their careers. We just watched Tanaka make $155 million before ever playing a game in American professional baseball. He's certainly at the high end, but Darvish cost over $100 million total. Yasiel Puig, Yoenis Cespedes, and Aroldis Chapman all made big money as well. If you opened Rodon up to the highest bidder in June, he'd make a lot more than the $8 million his slot will be worth. It's hard to say for sure, but he'd easily be up over $30 million; maybe it'd be higher. If he really is an ace in waiting, the difference between his potential value and his expected salaries through the first six seasons would be a pretty big number.

This system would also scale back some of the competitive balance implications of the current draft, but there is an interesting offsetting factor that this system would generate. Let's say the Yankees and Dodgers and other big market teams emptied their allotments to grab the top five picks. That might seem like a big problem, but it would actually allow teams like the Rays, Royals, Brewers, and A's to get multiple players early in the process. They would grab less elite talent, but much more talent in the 50-100 range than they could have had before when they would have to wait to make a pick every thirty players.

Every team is allowed to spend the same amount, so as long as we don't set the allotment too high, lower market teams won't take too much of a hit. Teams will have to pick between grabbing the very best players, or loading up on multiple players who are a step below.

Right now, it's pretty safe to say that the current system is harmful to elite amateur players from the United States. Bryce Harper, Stephen Strasburg, Byron Buxton, and others could easily have made more in an open market and this would give them a chance to improve their position. The only leverage a player has under the current system is to go to college or to go back for their senior season, and those options aren't always effective or fair. The league likes the system because it keeps wages low, but a change would allow owners to choose how they allocate their resources. Even in the worst case scenario in which every team maxes out on the first twenty or thirty players, the teams who lose those auctions would get to grab up tons and tons of second and third round talent.

This would certainly be a more interesting process -- it would be better for the players, and it would give teams more control over how they allocate their draft resources. Right now, they are tied to their total bonus allotment and limits at each slot. This would allow them to take an overall chunk of cash and spend it on however many players they'd like.

Change isn't something the league is great at, but in a world in which people watch the NFL Draft like it's the Berlin Wall coming down, adding a little more intrigue to the MLB system could be a winning strategy for the game. If you want more eyes on the draft, you have to do something to make the first couple of rounds interesting, and allowing teams to bid on players just might be that strategy. We saw how high teams would bid on a super-prospect with Tanaka, wouldn't it be great it see it happen with others, live, on television?

. . .

All statistics courtesy of FanGraphs.

Neil Weinberg is the Associate Managing Editor at Beyond The Box Score, contributor to Gammons Daily, and can also be found writing enthusiastically about the Detroit Tigers at New English D. You can follow and interact with him on Twitter at @NeilWeinberg44.

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