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MLB Draft 2013: The value of compensation draft selections

Major League Baseball has instituted new competitive balance draft picks. How much are these picks worth?


[Editor's Note: Hello there, Beyond the Box Score readers. This tremendous piece of work is the doing of Jack and Jeff Freedman, who have been good enough to share this piece with BtBS. Jeff is also going to be joining us as a contributor. We hope you enjoy it, as part of our coverage of the 2013 MLB First-Year Player Draft!]

This year, for the first time as part of the new Collective Bargaining Agreement, Major League Baseball has created Competitive Balance draft picks. Six have been awarded after each of the first two rounds, twelve in all, with the unique characteristic that unlike every other draft selection these can be traded. And already that has happened, twice, both times involving the Miami Marlins. But what are these draft picks actually worth?

The MLB draft is not like that of the other major sports. In the NFL players drafted often start immediately and many of them make immediate and significant contributions as rookies. To this end, ex-Cowboys Coach Jimmy Johnson has created the well-known NFL Draft Pick Compensation Guide, which assesses a number value for each pick, making trading these picks easy. While no chart exists in the NBA, the success level of the top tier NBA draftees, along with some sleeper picks lower down in the first round and an occasional second rounder (there being only two rounds in the NBA Draft) has well been established. Picks are traded all the time. In the NHL top picks often contribute right away as well.

But that seldom is the case in baseball. There is no equivalent of a Johnson Table that has been created to assign a value to a MLB Draft pick – perhaps because since they couldn’t be traded there was no need. But now that is no longer the case, for the 12 Compensation picks that are currently awarded, and possibly for other draft picks in the future as well.

What complicates assigning a value to MLB draft picks is the fact that no matter how high a player is drafted, time in the minor leagues is standard operating procedure. Even the most successful of recent picks, Stephen Strasburg, Bryce Harper and Mike Trout spent time in the minors. Furthermore, the success rate of high draft picks in the MLB Draft is much harder to predict. By its very nature, the selections in the MLB Draft tend to be based as much on projection as previous production. There is a much greater risk factor. Take for example, the drafts from 2008 and 2007, four and five years ago, which allows for enough time to assess the first round selections.

For the 2007 Draft 15, or half, have appeared in more than a handful of major league games, with the most outstanding contributions coming from the No. 7 selection, Clayton Kershaw (Cy Young Award winner), No 10 selection, Tim Lincecum (two-time Cy Young Award winner) and No. 3 selection, Evan Longoria. The Kansas City Royals, who picked first, would doubtlessly not take Luke Hochevar in that slot again. The other half of this draft is littered with such picks as No. 9 Bill Rowell (Orioles), No. 12 Kasey Kiker (Rangers), No. 26 Bryan Morris (Dodgers) and No. 27 Jason Place (Red Sox).

For the 2008 Draft only 6 have yet to reach the majors, but one of those is the No. 1 pick Tim Beckham (Rays), along with No. 6 Kyle Skipworth (Marlins), No.15 Ethan Martin (Dodgers - now Phillies), No. 22 Reese Havens (Mets), No. 23 Allen Dykstra (Padres), No. 24 Anthony Hewitt (Phillies) and No. 27 Carlos Gutierrez (Marlins). So far the top performer by a landslide has been No. 5 Buster Posey (Giants), with no other selection even close.

Since all of these new Competitive Draft Compensation Picks are being awarded after the first round (and half after the second round), their speculative value talent wise is borne out by the above. But these picks do have value in another way, thanks to their dollar value and their overall contribution to the team’s draft pool dollar allotment. In fact, this may be their only value. So what, as best as can be determined, is this value?

These new Competitive Picks added fall at the end of the first round (which this year will be 31 picks, the Pirates getting an extra pick for not signing Mark Appel), and after the Compensation picks, which can be estimated to number five since under the new CBA trading for a rental veterans no longer has future draft picks attached, making these picks number approximately 37-42. For the 2012 Draft, the following players were taken with these picks, shown with the pool dollars allocated for their signing:

Pick # Name Team Pool $
37 Pat Light Red Sox $1,394,300
38 Mitch Haniger Brewers $1,359,100
39 Joey Gallo Rangers $1,324,800
40 Shane Watson Phillies $1,291,300
41 Lance McCullers Jr. Astros $1,258,700
42 Luke Bard Twins $1,227,000
AVERAGE $1,309,200

Of course some of these players signed for over slot money.

The second group of Compensation Picks will be at the end of the Second Round (again 31 picks long, with the Mets receiving a pick for not signing Teddy Stankiewicz). Perhaps four more Compensation Picks will be added, making these picks numbers 76-81. And for the 2012 Draft, the following players were taken with these picks, shown with the pool dollars allocated for their signing:

Pick # Name Team Pool $
76 Chris Beck White Sox $670,000
77 Dyan Cozens Phillies $659,800
78 Tanner Rahier Reds $649,700
79 Mitch Brown Indians $639,700
80 Tony Renda Nationals $630,000
81 Chase DeJong Blue Jays $620,300
AVERAGE $644,917

Average Difference between Round 1 and Round 2: $644,283

Historically, picking 37-42 and 76-81 has been hit and miss, with the emphasis on the miss. In a study of eight drafts, 2002-2009, the hits are pretty obvious: Giancarlo Stanton, Curtis Granderson, Gio Gonzalez, Adam Jones, Clay Buchholz, Houston Street, Chris Perez and Freddie Freeman. And some have made meaningful contributions, such as Joba Chamberlain, Shaun Marcum and Lance Lynn. Young players such as Tyler Skaggs and Patrick Corbin, both drafted by the Angels and traded to the Diamondbacks are just beginning their Major League careers, as are Zack Cozart, Jordy Mercer and DJ LeMahieu. But the misses far outnumber these players. Of the 96 players below, only 11 have had real moments of excellence, just over 10.5%. Even adding in five more, the odds are only 15.3%.

It is not hard to draw the conclusion, therefore, that a team might be better served by allocating the money higher up in the draft, rather than have the opportunity to draft an extra player.

Here’s an extensive table of the players taken in these spots over the past ten years. A strikeout denotes that the player did not sign. Bold denotes the players who have made significant impact in the majors, or who still project to do so.

2002 2003
37 Steve Obenchain (KC) Adam Jones (Seattle)
38 Matt Clanton (Cubs) James Houser (Detroit
39 Mark Teahen (KC) Tony Gwynn Jr (Milwaukee)
40 Mark Schramek (Cin) Jay Sbora (Detroit)
41 Michah Schilling (Cle) Daniel Moore (SD)
42 Blair Johnson (Pitt) Shane Costa (KC)
76 Val Jamewski (Balt) John Hudgins (Tex)
77 Larry Broadway (Montreal) Aaron Marsden (Col)
78 Dave Jensen (KC) Ryan Garko (Cle)
79 Eric Thomas (Mil) Jake Stevens (Atl)
80 Curtis Granderson (Det) Shaun Marcum (Tor)
81 Ben Crockett (Col) Willy Jo Ronda (Cin)
2004 2005
37 Jon Poterson (NY Y) Trevor Bell (Angels)
38 Gio Gonzalez (White Sox) Eil Iorg (Hou)
39 Jay Rainville (Minn) Hank Sanchez (Minn)
40 Huston Street (KC) Luke Hochevar (Dodgers)
41 Jeff Marquez (NY Y) Beau Jones (Atl)
42 Brett Smith (NY Y) Clay Buchholz (Bos)
76 Josh Wahpepah (Mil) Nick Hundley (SD)
77 Scott Lewis (Cle) Jeff Lyman (Atl)
78 Craig Tatum (Cin) Nick Webber (ST L)
79 Jeff Fiorentino (Balt) Brett Hayes (Miami)
80 Steven Register (Col) Drew Thompson (Minn)
81 Michael Schlact (Tex) Jason Neighborgall (Az)
2006 2007
37 Adrian Cardenas (Phi) Travis d’Arnaud (Phi)
38 Cory Rasmus (Atl) Brett Cecil (Tor)
39 David Huff (Cle) James Adkins (Dodgers)
40 Kris Johnson (Bos) Kellen Kulbacki (SD)
41 Joba Chamberlain (NY Y) Sean Doolittle (Oak)
42 Chris Perez (ST L) Eddie Kunz (NY M)
76 Mark Hamilton (ST L) Giancarlo Stanton (Mia)
77 Blake Wood (KC) Scott Moviel (NY M)
78 Keith Weiser (Col) Freddie Freeman (Atl)
79 Nick Fuller (Tampa) Zack Cozart (Cin)
80 Shelby Ford (Pitt) Matt West (Tex)
81 Tony Butler (Sea) Eric Sogard (SD)
2008 2009
37 Conor Gillaspie (SF) James Paxton (Tor)
38 Jordan Lyles (Hou) Josh Phegley (W Sox)
39 Lance Lynn (St L) Kentrail Davis (Mil)
40 Brett DuVall (Atl) Tyler Skaggs (Angels)
41 Ryan Flaherty (Cubs) Chris Owings (Az)
42 Jeff Decker (Co) Garrett Richards (Angels)
76 Trey Haley (Cle) J.R. Murphy (NYY)
77 Derrik Gibson (Bos) Aex Wilson (Bos)
78 Jake Jefferies (Tam) Kenny Diekroeger (Tam)
79 Jordy Mercer (Pitt) D.J. Lemahieu (Cubs)
80 Tyler Sample (KC) Pat Corbin (Angles)
81 L.J. Hoes (Balt) Trever Holden (Wash)

Those receiving the Compensation Picks for 2013 at the end of the First Round, in order, are:
  • Royals
  • Pirates**
  • Diamondbacks
  • Orioles
  • Reds
  • Marlins*
Those receiving the Compensation Picks for 2013 at the end of the Second Round, in order, are:
*On July 23rd, the first trade involving these picks took place when the Marlins sent Anibal Sanchez and Omar Infante to the Tigers for Jacob Turner and others. The trade also included a swap of Compensation Picks, with the Tigers picking up roughly $644,917 in pool dollars, with the Marlins losing a likewise amount.

**A week later at the trade deadline, in the deal that sent Gaby Sanchez to the Pirates, Miami received back, in part, the Pirates Compensation pick, worth roughly $1,309,200. This not only offset the dollars lost in their previous transaction with the Tigers, but added a likewise amount to their draft pool for 2013.

The question to be answered is how much are these pool dollars worth? Let us examine a few scenarios:

Example A: If it were 2012 and you were the Washington Nationals, trying to squeeze out every pool dollar available to sign Lucas Giolito, then having these extra dollars would be invaluable. It helps cushion the signability factor because you have more pool dollars to draw from. (Giolito did end up signing a minute before the deadline.) Therefore, if you are a team that is willing to take a risk and draft a potential talent that has fallen below pre-draft projections, for whatever reason, these dollars may make the difference between signing a player, or not.

Example B: If it were 2012 and you were the Houston Astros, trying to stock your farm system with as much talent as possible, having these extra dollars might have enabled you to sign your 11th Round pick, Hunter Virant. Expected to be drafted in a higher round, Virant slipped to the 11th Round because the first $100,000 of his offered bonus would not count against the pool, thus offering the Astros a better chance to sign him. But in the end they could not reach an agreement and Virant his heading off to UCLA. Had the Astros has another $1,300,000 or even $600,000 a deal with Virant might have been possible. Thus a team wishing to stockpile talent benefits from having greater flexibility, especially in the 11th round (or higher).

Example C: For a team that falls into neither category, such as perhaps the New York Yankees, who have a relatively competitive farm system as well as generally being risk averse, obtaining one of these picks can also be valuable. Picking near the end of each round, the extra dollars allow them to overdraft in a way similar to the way the Astros did in taking Rio Ruiz in the 4th Round. Slotted at $360,200 he was ultimately signed for $1,800,000 or roughly the value of a Compensation Pick at the end of the first round. What the Yankees wouldn’t give for this draft flexibility.

Example D: The team that gives up the Compensation Pick completely, obviously also receiving no extra money for its total draft pool. Why would a team do this? Well, the team in question which has actually done this is the Pittsburgh Pirates. And because Pittsburgh failed to sign its No. 1 pick this year, Mark Appel, it gets an additional first round selection next year anyway. So maybe it doesn’t need the extra dollars and the extra pick – and as a luxury item it could therefore be used to obtain a player that could help the club now, Gaby Sanchez, in its push for a playoff spot (after such a long drought) while not impacting the teams’ minor league system all that much.

It’s never a bad thing to have extra money to spend, of course. On one end, in 2013, the Miami Marlins will have doubled their original Compensation Pool allotment, thus allowing them to pursue one of the strategies above. The Detroit Tigers will also have the benefit of doubling their original Compensation Pool allotment, thus allowing them also to pursue a varied draft day strategy.

And on the other, the Pittsburgh Pirates, having picked high in the draft for several years, decreased their pool amount as they seek to have their first winning (and possible playoff) season in as far back as most people can remember. And should Gaby Sanchez get a game-winning hit, the extra pool dollars they’ve surrendered will be more than offset by the glee among their fans and increased ticket and marketing revenue.

Of course all of the teams with an extra pick get an extra chance at selecting a future MLB All-Star, but as we’ve already seen from past drafts, the odds are roughly 6:1 against. However, the real value of the pick may in what it allows the selecting team to do with all of its picks and the greater freedom it provides the team in pursuing its chosen draft strategy.