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Economics of Baseball: The Rays' draft picks

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The Rays' recent exploit of the free agent draft pick compensation system has been well documented. All in all they added 10 additional draft picks within the first 75 overall selections by offering their free agents arbitration and seeing them decline and sign elsewhere. Credit Andrew Friedman for exploiting something that might not be around to exploit much longer, but what exactly are all of these draft picks worth?

Answering this question should be a lot harder than it actually is. But it's fairly easy thanks to some heavy lifting done by Victor Wang (summarized by Sky here). Wang looked at each draft pick and figured the amount of surplus value they provide based on signing bonus, WAR produced in their first six years, and salary.

Looking at the 2011 draft order the Rays added the number 24, 31, 38, 41, 42, 52, 56, 59, 60, and 75 overall picks via free agent compensation. The value of the draft pick tiers from Sky's article:

16th-30th Surplus Value: $5.2M (late first round)

31st-45th Surplus Value: $2.6M (supplemental)

46th-60th Surplus Value: $0.8M (early second round)

So, the Rays added one 16th-30th, four 31st-45th, four 46th-60th, and the 75th overall. Add them up and you get around $19 million. Or, roughly the equivalent of adding 4 wins to your team. Or, roughly the equivalent of having Victor Martinez under a 1-year contract for league minimum.

This draft pick collection is historically significant. Jim Callis provided this tidbit yesterday: "Rays' 12 picks in the first two rounds break the record of 10, set by the 1990 Expos."* Andrew Friedman is venturing into uncharted territory. Because of the circumstances, I think it's worth studying. So I will be turning the Rays' first 12 picks in the 2011 rule 4 draft into a long-term tracking project.

*They previously owned the #32 overall pick as their first rounder and what became the #89 overall pick as their second rounder.

What do I hope to learn? I don't know, yet. As I mentioned this many early picks is unprecedented, and more than anything I want to see how Friedman pays it. Will he diversify or go heavy on one type of payer? Will he stick to the slot recommendations to get everyone signed or pick his spots to spend? It's going to be interesting, to say the least.

It's also going to be interesting to see how the group pans out, and I'll be watching to see how much surplus value their first twelve picks provide over the first six years of their MLB careers. If all together they generate more than 4.0 WAR beyond signing bonus costs (plus league minimum), it will have been a more efficient draft than we would have expected.