MLB Draft 2013: The value of compensation draft selections

[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:

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:

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.