Pop Quiz: What do Andrew Wiggins of the Minnesota Timberwolves (2014), Andrew Luck of the Indianapolis Colts (2012), and Connor McDavid of the Edmonton Oilers (2015) have in common? Answer: They are all recent household names that were chosen with the first overall pick in their respective draft class. Yet, unlike the National Basketball Association (NBA), the National Football League (NFL), and the National Hockey League (NHL), much less attention is paid to the first-year player draft by fans in the Major League Baseball. Correspondingly, not withstanding exceptions such as Stephen Strasburg and Bryce Harper of the Washington Nationals, there is also considerably less hype associated with the first overall selection in the Rule 4 draft on the whole. As America’s Pastime, how is it possible that the grand old game’s annual amateur drafts consistently fall behind the other three North American major professional sports when it comes to media exposure? Why is it that interests among fans on the top pick of MLB drafts pale in comparison to that of the NBA, NFL, and the NHL?

Several explanations have been presented by analysts, including the fact that:

1. the majority of potential top draftees, typically comprised of high school and college student athletes, were “unknowns” to the lay public because high school and college baseball are nowhere near as popular as college football, college basketball, and college/junior hockey;
2. high MLB selections would almost certainly be assigned to minor league-affiliated ballclubs (either Rookie or Class A) in order to refine their skill sets whereas top draft picks in the NHL, NBA, and NFL have a good chance of starring in their leagues right away in their draft year; and
3. the overwhelming majority of prospects taken in the first-year player draft, including numerous first-round picks, would end up never appearing in a single MLB game whereas significantly more drafted players in the NHL, NBA, and NFL, including some of those who are late-round selections, would reach their destiny in due course. Although these assumptions all have merits to various degree, I construe that the dual trends are the direct result of the more volatile nature of the first-year player draft (relatively speaking in comparison to the NBA Draft, the NFL Draft, and the NHL Entry Draft), which makes the process more difficult to yield a “can’t-miss” generational player when compared to the other three North American major professional sports.

All-Stars:

Dating back to the first Rule 4 Draft in 1965, there has been a total of fifty-one first overall selections. To this date, this short list has produced twenty-three All-Stars:

1. Rick Monday, drafted by the Kansas City Athletics in 1965;
2. Jeff Burroughs, chosen by the Washington Senators in 1969;
3. Floyd Bannister, selected by the Houston Astros in 1976;
4. Harold Baines, picked by the Chicago White Sox in 1977;
5. Bob Horner, drafted by the Atlanta Braves in 1978;
6. Darryl Strawberry, chosen by the New York Mets in 1980;
7. Mike Moore, selected by the Seattle Mariners in 1981;
8. Shawon Dunston, picked by the Chicago Cubs in 1982;
9. B.J. Surhoff, drafted by the Milwaukee Brewers in 1985;
10. Ken Griffey, Jr., chosen by the Seattle Mariners in 1987;
11. Andy Benes, selected by the San Diego Padres in 1988;
12. Chipper Jones, picked by the Atlanta Braves in 1990;
13. Phil Nevin, drafted by the Houston Astros in 1992;
14. Alex Rodriguez, chosen by the Seattle Mariners in 1993;
15. Darin Erstad, selected by the California Angels in 1995;
16. Josh Hamilton, picked by the Tampa Bay Devil Rays in 1999;
17. Adrian Gonzalez, drafted by the Florida Marlins in 2000;
18. Joe Mauer, chosen by the Minnesota Twins in 2001;
19. Justin Upton, selected by the Arizona Diamondbacks in 2005;
20. David Price, picked by the Tampa Bay Rays in 2007;
21. Stephen Strasburg, drafted by the Washington Nationals in 2009;
22. Bryce Harper, chosen by the Washington Nationals in 2010; and
23. Gerrit Cole, selected by the Pittsburgh Pirates in 2011.

By all accounts, the results are quite encouraging as the chance of landing a player who would go on to be named an All-Star at least once in their MLB career is a generous 45.10% (23/51).

Rookie of the Year Award Winners:

While All-Star selections are the benchmark of elite players, one question that we need to ask is how many of these players can actually make an immediate impact to their respective ballclubs? Historically, we should look to past American League and National League Rookie of the Year Award winners to answer this question seeing that the Rookie of the Year Award is the highest form of recognition to new players who are making contributions to their teams straight away in very meaningful ways.

Of the aforementioned fifty-one first overall picks, twenty-three of whom were named All-Stars at some point in their MLB career, only three of them were winners of the Rookie of the Year Award:

1. Horner, the National League winner in 1978;
2. Strawberry, the National League winner in 1983; and
3. Harper, the National League winner in 2012.

Sadly, this means that the probability of choosing an eventual Rookie of the Year Award winner with the first overall selection is only 6% (3/51). Although this phenomenon could be purely circumstantial, it is noteworthy that no first overall pick (as of 2015) have ever been named as the winner of the American League Rookie of the Year Award!

National Baseball Hall of Fame:

On the other side of the spectrum, an equally interesting question is how many of the fifty-one previous first overall selections can make a long-lasting contribution to the ballclub(s) that he has played for over his MLB career. Here, we ought to look to the National Baseball Hall of Fame and Museum as being inducted into Cooperstown is the ultimate form of acknowledgment for a player in terms of honouring his sustained excellence and longevity in the big league.

Among the aforesaid fifty-one first overall selections, only one of them was ultimately enshrined into the Hall of Fame: Griffey, Jr. In other words, the odds of choosing an eventual Hall-of-Famer with the first overall pick is a minuscule 2% (1/51). That said, I gather that adjustments are needed as including first overall selections who are still active players into the computation would distort the outcomes. If we were to leave out these seventeen players who are still playing in MLB—(1) Rodriguez; (2) Hamilton; (3) Gonzalez; (4) Mauer;(5) Delmon Young, picked by the Tampa Bay Devil Rays in 2003; (6) Matt Bush, drafted by the San Diego Padres in 2004; (7) Upton; (8) Luke Hochevar, chosen by the Kansas City Royals in 2006; (9) Price; (10) Tim Beckham, selected by the Tampa Bay Rays in 2008; (11) Strasburg; (12) Harper; (13) Cole; (14) Carlos Correa, picked by the Houston Astros in 2012; (15) Mark Appel, drafted by the Houston Astros in 2013; (16) Brady Aiken, chosen by the Houston Astros in 2014 but did not sign; and (17) Dansby Swanson, selected by the Arizona Diamondbacks in 2015; out of the formula, then the possibility of being able to reap a future Hall-of-Famer utilizing the first overall pick would increase to an ever so slightly better 3% (1/34).

Cross-Sports Comparisons:

While the short-term outlook of getting an impact player who can pay immediate dividend in the form of a Rookie of the Year winner is bleak to say the least at 6%, the good news is that there is close to a coin flip (fifty-fifty) chance of drafting an All-Star player with the first overall selection of a first-year player draft at 45%. However, when it comes to the long-term outlook, the likelihood of obtaining a future Hall-of-Famer is highly improbable at 2% pre-adjusted and 3% post-adjusted.

For comparison’s sake, if we look to the left tail of the MLB and NHL distribution curves, the chance of an MLB ballclub landing a Rookie of the Year winner with the first overall pick in a Rule 4 Draft, at 6%, is a sizable 13% less (or more than three times worse) than an NHL team finding a Calder Memorial Trophy winner in an Entry Draft at 19%. Likewise, the probability of an MLB ballclub being able to draft an eventual Hall-of-Famer with the first overall selection of a first-year player draft, at 2% before adjustment and 3% after adjustment, is a considerable 11% (or nearly seven times worse) and 16% (or more than five-and-a-half times worse) less than an NHL team unearthing a Future Hall-of-Famer in an Entry Draft at 13% prior to adjustments and 19% after adjustments. Accordingly, the results seem to back up my hypothesis that the Rule 4 Draft is inherently more unpredictable when contrasted to the NBA Draft, the NFL Draft, and the NHL Entry Draft, which in turn renders the procedure of uncovering a “can’t-miss” generational player harder compared to the other three North American major professional sports.

Final Words:

Even though the likelihood of picking a player who fails to have at least a short stint in MLB is remarkably low at 4% (2/51), as only two players who were taken first overall in the first-year player draft failed to play a single MLB game — (1) Steve Chilcott, picked by the New York Mets in 1966 and (2) Brien Taylor, drafted by the New York Yankees in 1991 — the reality, much like the NHL, is that the likelihood of being able to discover that “can’t-miss” diamond in the rough appears to be an imperfect science regardless of how we break down the fifty-one first overall picks in past Rule 4 Drafts. Now do you want to choose heads or tails?

N.B. A more condensed version of this article was originally published on Obiter Dicta, 89(13), 20 and 23.

Last week Miles Wray examined an emerging spending pattern of the New York Yankees, suggesting that the club’s approach to free agent spending varies, depending possibly on how many dollars had recently come off their books: They appear to spend each offseason either signing seemingly every premium free agent available (2008-9, 2013-4) or they limit themselves to the bargain bin, focusing on late-offseason signings, reclamation projects, and trades.

While this description is certainly accurate, at least since 2008-9 when this pattern began to emerge, there’s little discussion of why a team would choose to invest in free agency this way.  Presumably, teams like the Yankees, the Dodgers, or the Red Sox, which are capable of fielding significantly higher payrolls than any other team in the league, would prefer to do the opposite: Selecting from a much more limited subset of free agents would limit the advantage gained over other teams.  It’s also not inconceivable that a team with as much money as the Yankees might have concerns that they’d be driving up the entire market, increasing their own cost of acquiring talent.  This approach also has very real impacts on team age and roster flexibility as an entire free agent crop begins to enter their decline years together.

Moreover, the Yankees may very well not be the only team taking this approach.  An argument can be made that the Boston Red Sox are following a similar strategy, albeit at a pace accelerated by their shorter duration contracts they signed in the 2012-3 offseason and their salary-dump trade with the Dodgers four months earlier.  The team signed both Hanley Ramirez and Pablo Sandoval, arguably the two top hitters available in free agency, only a year after they signed precisely one free agent, Mike Napoli, who was their own.

So what does a team gain by going on spending sprees followed by (relative) austerity?  I submit they pursue this approach to gain one thing: draft picks.

Consider for the moment what happens in the case where the Yankees are not following this feast/famine strategy in free agency, and instead they sign a premium free agent each year.  In 2009-10 they might’ve signed Matt Holliday or Jason Bay.  2010-1, Carl Crawford or Jason Werth.  In 2011-2, Fielder/Pujols/Reyes.  In 2012-3 Upton/Hamilton/Bourne/Grienke.  All were free agents tied to compensation, meaning in addition to the dollar-cost of signing that player, the signing team also forfeited a draft pick.  (It’s probably also worth noting how godawful most of those signings look today, but that’s the nature of free agency – The last couple of years are almost always ugly.)  The mechanics of where those picks go have changed since the 2012-3 offseason but the cost to the signing team remains the same: A first round draft pick, or a later round pick if the first round pick is already spoken for.

Instead of signing those players, over that span the New York Yankees signed only a single draft-pick-compensation free agent, Rafael Soriano, 2010-11, and it was over the objections of Brian Cashman.  They kept their first-round draft picks in 2010, 2012, and 2013, and picked up a few compensation picks from departing free agents like Nick Swisher, Javier Vázquez and Soriano.

As Miles points out, however, the Yankees simply can’t stockpile picks and rebuild like a normal team.  This restraint is made possible by lavish spending in the 2008-9 offseason, where the Yankees signed pretty much everybody and then went out and won the World Series.  Signing Teixeira, Sabathia, and Burnett means the Yankees not only forfeited their first round draft pick, but their second and third round draft picks as well.

When viewed in the whole, however, this doesn’t appear to be that bad of a deal for the Yankees.  By moving their spending forward into the 2008-9 offseason instead of spreading it out over four years, they essentially traded their second and third round draft picks in 2009 for first-round draft picks in 2010, 2012, and 2013.  They repeated this approach 2013-4, signing Brian McCann, Jacoby Ellsbury, and Carlos Beltran, and while the early returns from those transactions are not promising, it should be noted that the McCann and Ellsbury deals, at least, were considered sound at the time they were signed.  Beltran?  Not so much.  With the last free agent with draft pick compensation attached off the board, they’re keeping their 2015 first round pick as well.

At a time when the aging curve for older players have suddenly become unforgiving, the value of young players is certainly up, and the Yankees appear to be maximizing their chances of acquiring young talent in the draft by minimizing the draft pick cost of signing free agents.  This approach is remarkably similar to their strategy in the international market, where they’ve determined the best way to acquire talent is not to stick to a limited bonus pool each year, but to sign ten or eleven of the top thirty international free agents, (and possibly one more.)  This approach costs them a great deal of money in luxury tax and international bonus pool “overage” tax, but may make sense given how much surplus value an above-average, cost-controlled young player generates.  Now, if only they could do something with all those draft picks…

The Cubs and Red Sox are doing interesting things for their ambitions. Boston overhauled their young and unpredictable club with two of the top free agents on the board while the Cubs’ rotation makeover coincides with a slew of young offensive talent already in place. Neither team is yet finished as the outcomes of Scherzer, Shields and whatever we’re calling San Diego still loom toward the New Year. Regardless, their intent for 2015 and beyond is the same: win.

But these two teams are interesting for another reason. It’s not often that clubs expected to contend in one year also happen to have top 10-selections of that year’s amateur draft, but that’s exactly what will happen this coming June. The former club of Epstein and Hoyer will select 7^th overall. Their current club will select 9^th and if all goes according to plan, each club’s 2016 selections figure to fall well out of protection.

But rising from this is a fascinating opportunity. It’s a very rare opportunity requiring the unique but exact convergence of factors surrounding these two teams, swinging the cost/benefit ratio to an extreme. The Red Sox intend to be at the top of the standings this season and based on what they’ve done, chances are good that they will. The Cubs are not far behind and as opined by Dave Cameron may be just a leap or two from the same goal. Whatever happens, each of the next two seasons project to be followed by two of the strongest free agent classes in history. 2015 should include Justin Upton, Jordan Zimmermann, Jason Heyward and more. The 2016 elite is likely to be headlined by Stephen Strasburg. There is going to be a hefty number of qualifying offers and little reason to care.

Focusing upon the next two years is important. The current collective bargaining agreement is in effect until December 1^st, 2016, specifying the rules that govern draft bonus allotments and the penalties for their violation. Summarized below:

–        0-5% overage: 75% tax on the overage

–        5-10%: 75% tax on the overage and loss of 1^st round pick in subsequent draft

–        10-15%: 100% tax on the overage and loss of 1^st and 2^nd round picks in subsequent draft

–        15% or higher: 100% tax on the overage and loss of 1^st round picks in subsequent two drafts

o   Note: If a team lacks the selection subject to penalty due to a prior penalty levied from draft overages, the team will be penalized in the next draft in which said selection is conveyed.

To date, no team has spent beyond the 5% threshold and thus no team has been penalized a selection.

But then no team has been in this particular position before, a situation perhaps too unlikely to have been considered during CBA negotiations. Under the rules above, teams are pressured either to adhere to slot value or to strategize by shifting their allotments in favor of two or three top talents. The Cubs and Red Sox will have no such limitations this June. They can spend with complete and utter impunity.

Part of how this is possible is due to the language of the CBA and the impending sequence of events. A theoretical chronology:

1)     The 2015 draft begins

2)     Boston or Chicago picks who it wants and spends as much as it wants

3)     Boston or Chicago receives the maximum penalty, including tax and forfeiture of 2016 and 2017 1^st-round selections

4)     2015 free agent class – Either team signing a QO free agent forfeits its next highest 2016 selection (2^nd round)

5)     2016 free agent class – Either team signing a QO free agent forfeits its next highest 2017 selection (2^nd round)

6)     Draft Penalty completed

Why would they do this? Because of who they are and because there is every incentive for doing so. Consider the maximum penalty – forfeiture of 2016 and 2017 first round picks – only for these two clubs, it’s entirely probable that none of these picks project to exist. Notice I said project, which is a critical distinction, because at the time of the 2015 draft their 2016-17 selections are officially still in place.

Implying, what if they can be sacrificed? The Cubs and Red Sox each operate at the highest levels of revenue and at their current win-curve trajectory are virtually guaranteed to be major players on the free agent market in each of the next two years. As a demonstration, both have already signed major targets this off-season. It’s easy then to imagine either team having to relinquish their top selections anyway, except either club can decide that in June as opposed to November. Given enough information by then, they’d have to ask themselves: What do they have to lose?

Lets assume each team performs toward the fringe of the playoffs and we assign them the 23^rd selection in 2016 and 2017. In Boston’s case we could argue this will be even lower, or a few spots higher for the Cubs if you think they aren’t quite playoff ready, but as a middle ground the 23^rd selection is a good place to start. Keep in mind by June, enough games will have been played to know this with some certainty. Let’s also assume that the first-round selections in each year will be lost to FA compensation. This isn’t an exact process since picks will be added or removed to a varying degree, but using 2014’s values will give us a rough estimate going from one year to the next:

*Boston forfeits 2^nd round selection (Hanley Ramirez)

In addition to forgoing the top 30 prospects, dwindling bonus pools severely damage teams’ ability to pay for any talent at all. By employing this strategy, Boston and Chicago can essentially punt drafts in which they might have expected to extract little value in the first place. In exchange, they take full reign to obtain as much talent as they wish in the coming draft – and the talent will be there. Even as restrictions pressure draftees to sign close to slot nevertheless talent falls due to signability, particularly when coming from high school. In the scenario above, a team is looking at one 7-figure talent, maybe two if slots can be shifted. Compare that to what they might obtain with 40 limit free selections.

Just as important, where these teams select has a significant influence on realistic return. Where top ten selections can result in impact talents, selecting early in each round is an opportunity to grab a falling talent well before other teams consider themselves able. Within current strategies, teams have to be cautious of the round in which they decide to risk on higher prospects as the ability to pay is tied directly to their selections in other rounds. But if money is no object, the Cubs and Red Sox can simply pick whomever they want whenever they want, in which case having the higher position becomes a huge advantage.

This isn’t foolproof. It would have to be a “calculated risk” decided upon almost the day-of. For one thing, it’s impossible to predict exactly what a free agent class will have to offer. If several projected free agents instead sign extensions, it becomes more difficult to justify devaluing your top selection. By June, teams should have a better sense of the picture ahead but it won’t be crystal clear. These teams will have to be reasonably confident not only that targets will exist, but that they’ll have a reasonable desire to sign them.

For another thing, at a certain point the cost in payable tax becomes a bit unwieldy. Perhaps the key then isn’t to sign as many top prospects as possible but rather enough to make up for impending losses in the two subsequent drafts. Because their pools are relatively large both teams will be partly insulated, but past that you’re paying double what you normally would per prospect. That requires confidence that the talent available is worth the additional costs, something not often expressed by teams prior to the current CBA.

That’s an argument to be made however, simply because the successful development of a few can exponentially result in surplus value. Should you prefer a direct measure of dollars, studies such as this one routinely demonstrate the windfalls in appropriately identifying and obtaining draft talent regardless of where they’re picked. In today’s league with today’s prices, that’s as tempting an idea as ever and if you wonder whether teams still place premiums on potential, look no further than the international market. Furthermore, the value of a prospect is predicated not on “Will he produce major-league value?” but rather “Can he?” The extractable value of potential in trades should be evident as I write this.

But the third and perhaps the most critical obstacle is the league itself and whether it takes the power to reject bonus agreements. This is suggested in the CBA document linked above, where the “uniform player contract” specifies required-approval by the Office of the Commissioner. Whether this suggests the Office would actually exercise its right of refusal isn’t clear. The only precedent as far as I know is MLB’s refusal to allow a $6M bonus to Matt Purke, a unique situation in which MLB had control of the Rangers’ finances. Particularly controversial deals have drawn little more than ire. Strict stipulation of penalties in the current CBA implies a team’s right to accept said penalties should it choose to do so. For the Commissioner to explicitly prevent a team from exercising this right is bordering on breach and may be actionable or subject to a grievance by the club or by the MLBPA. This is where the issue gets a little messy and comes down to debates beyond the scope of this article.

I won’t hesitate to call this what it is: a gambit. Strategies like this enliven the game and introduce an element of danger that can either pay off or egg face. Regardless, it highlights yet another flaw to the system in place. In one sense, this strategy is a novel way of playing within the rules, which is at the very heart of high competition. In another sense, it goes against sportsmanship in that this strategy is available only to teams who can realistically devalue their top selections, i.e. teams operating with enough capital to consistently invest at the top of the open market.

But rules are rules. The Cubs and Red Sox have the chance to align their playoff ambitions with a prospect bonanza not yet seen. They’ll have their pick among the elite and after that, should the dominoes fall along the way, they can – and should – take full advantage.

Jonathan Aicardi is a researcher with UCSF in the study of glioblastoma and the proprietor of Another Mariners Blog! Because apparently the world needed another one.

On September 30, Royals 2014 1^st Round Draft Pick Brandon Finnegan was brought into the AL Wild Card Game against the Oakland A’s just under 4 months after being drafted out of Texas Christian University. Manager Ned Yost had little choice but to take a leap of faith with the rookie Finnegan, having used pitchers like Kelvin Herrera, Wade Davis, and Greg Holland already. Finnegan pitched very well, allowing 2 baserunners in 2.1 innings and striking out 3 Oakland batters. He was removed with a runner on base and was charged a run when the runner scored, but otherwise had a great outing.

I found it ironic and puzzling that the only team to utilize this approach of drafting a college pitcher, rushing him up the farm system, and giving him a shot at the postseason was the team that already had the likes of Herrera, Davis and Holland. After all, it seems like every playoff team could use some help out of the bullpen. When compared to other positions, predicting a relief pitcher’s success in the big leagues really doesn’t seem too hard either.

In 2014, 12 relievers pitched more than 60 innings with an FIP under 2.50. Aside from the sinker-oriented Steve Cishek and Pat Neshek, all of them averaged at least 92.5 mph on their fastballs. Everyone except Cishek generated swinging strikes at least 11% of the time, almost 2% more than the 9.4% league average. Simply put, pitchers with high velocity are safe bets when it comes to building a bullpen.

I can understand why a team might be stingy with its first-round draft pick. The first rounder is supposed to be the future of the franchise, the one who fans envision 25 years older, making his Hall of Fame induction speech. But looking at the 93 2^nd round draft picks from 2006-2008 (an arbitrary time period which I felt gave players sufficient time to reach the big leagues), it is clear that players selected this late in the draft are no sure thing.

48 picks have yet to make their major league debut, and another 21 have career WAR’s equal to or less than 0*. There are exceptions like Giancarlo Stanton, Jordan Zimmermann and Freddie Freeman, but the data looks even worse after the 15^th pick of the second round. Of the 48 picks in the 16-32 slots, only 8 players have career WAR’s greater than 0*. 29 have yet to make their MLB debut.

Since 2011, 10 relievers have posted FIP’s under 2.50 with at least 100 innings pitched. Of those drafted in the American amateur draft, only Sean Doolittle was picked before the 3^rd round. He was drafted in the first round as a first baseman. While overpaying for an elite reliever can be appealing for teams like the Angels or Tigers, both teams in win-now mode, a possible fall back option is taking a chance on the best reliever available in the draft with the second-round pick. Chances are, that pitcher will still be on the board.

Of course, there are major-league relievers who can throw hard but still do not succeed at the big-league level. Also, stats like average fastball velocity and swinging strike rates might not be available for college players. The prior is virtually impossible without Pitch F/X. If this is the case, GMs can consider reverting to the eye test to determine how hard a pitcher throws and what his command and movement look like. Generally accepted measures of command such as K-BB% can be derived from box scores.

For traditional fans who still value the human element of baseball, there are ways to gauge an NCAA pitcher’s ability to pitch in the spotlight. Stats like opposing batting average with runners on base and inherited runners stranded can be determined by simply looking at play-by-play recaps. Both measure a pitcher’s ability to perform under pressure, even if only in a limited sample size. I do not know what kinds of information are given to baseball operations teams, but I would be surprised if a college pitcher’s WPA in high-leverage situations was available.

If I was Tigers GM Dave Dombrowski or Angels GM Jerry Dipoto circa July, I would make the trade for Joakim Soria or Huston Street without hesitation. Both teams, one could argue, were a bullpen arm away from being World Series favorites. But for teams who don’t have the resources Detroit and Los Angeles have or don’t want to give up too many prospects, the best mid season bullpen pickup might not have even thrown his first professional pitch yet.

*I had to use rWAR, not fWAR in the interest of time. Baseball Reference has the draft results with career WAR readily available. Of course, data not from FanGraphs was taken from baseball-reference.com.

The annual MLB Draft is an exciting time for baseball. Dozens of high school and college players convince fans that they have the potential to be future All-Stars, and teams make selections to stock their farm systems with talent to win in the future. But obviously, not every pick can be savvy, and the majority of these selections turn out to be regrettable. The best a team can do is make rational choices to put themselves in a position to succeed. I decided to take a look at the draft classes in the 1990s to see if teams were making these rational decisions. I chose this decade because it’s the most recent one that is almost exclusively filled with players who have finished their careers.

In the 1990s, there was a fairly even distribution of pitchers and hitters selected with early draft picks. Since roster makeup isn’t skewed much in favor of either group, this seems to make sense. Teams are just as eager to get elite pitching as they are to acquire top-tier hitters. This year, 6 of baseball’s 12 highest paid players are pitchers, 6 are hitters.

It’s not surprising that during the ’90s, 45 of the 100 Top 10 picks were pitchers. In hindsight, this seems like it was probably the result of some pretty big mistakes. There are certainly some successful examples. In 1999, Josh Beckett was selected 2nd overall, Barry Zito was 9th, and Ben Sheets was picked 10th. The hope that a pick can turn into a future ace is enough to tempt any GM to take a pitcher. But that usually didn’t go well.

I gathered the career WAR for every draft pick, and here is the expected output for each Top 10 selection.

This does not paint a pretty picture for teams who decided to go with pitchers. No matter where on the chart you look, picking a hitter gives a team a better expected outcome than a pitcher, and it’s not particularly close. The average hitter taken in the Top 10 achieved a career WAR of 16.0. The average pitcher reached 7.0. That’s a big gap, and the disparity was made on a large scale.

Here’s a year-by-year average for draft picks at each position:

1999 was an excellent year for pitchers, as I already mentioned. In fact, it was the best year for pitchers. But if you add it to the list of years for hitters, it would rank 6th out of 11.

Clearly, picking hitters seems like the preferable strategy of the ’90s. But teams opted not to do so roughly half the time.

Similar to what position someone plays, there’s another core attribute about a player outside of his scouting reports: whether or not he went to college. College players will be more developed and will have less room to grow. High school picks are considered riskier with higher upside. The data seem to support that. Unlike the difference between hitters and pitchers, the age of a draft pick had a more nuanced effect.

High school players taken at the top (of the top) of the first round are more promising than college players. This is because elite players like A-Rod, Chipper Jones, and Josh Hamilton don’t often slip under the radar when they’re 17 or 18. But what’s interesting is when you make your way to the bottom of the Top 10, college players have a better expected career WAR. I don’t want to make too many guesses why, because honestly I’m not sure. But it’s a very noticeable trend. No matter the reason, it’s clear that teams should be more eager to draft high schoolers with picks 1-5, and college players with picks 6-10. But look at the frequency of high school draft picks by selection.

Teams do the exact opposite of what they should. The earlier in the draft, the more likely a college player is to be selected. 32.5% of Top-4 picks are drafted out of high school, while 68.3% of picks 5-10 are.

To a strong extent, this analysis is not fair to these teams. I’m looking at these numbers in 2014, and it’s easy to go back in time and point out what mistakes teams made in drafts. But these aren’t scouting report mistakes, isolated misjudgments, or bad luck decisions. Teams in the 1990s made consistent poor strategic decisions on a large scale in the draft that were often indefensible.

Last week I looked at the 2014 free agent class and how some of the big contracts of the offseason stacked up against our idea of fair market value. Afterwards, I tried to use this model to predict contracts for Ubaldo Jimenez and Ervin Santana, but came across the problem of factoring in the draft pick compensation, which I left out of my initial article simply because of its complexity. Draft pick value is highly variable, and it gets more difficult to assign costs when a team surrenders multiple draft picks. Regardless, I wanted to take a closer look  because of the impact it will have on the top remaining free agents.

Let’s assume that each team places a dollar value on their first unprotected draft pick ($X). In a vacuum, if a team evaluates a player’s performance as being worth a certain amount of money ($Y) over Z number of years without any draft pick compensation, then they should only be willing to pay $(X-Y) if they will be forced to surrender a draft pick. For example, if the Orioles think that Ubaldo Jimenez would be worth $60M over 4 years, but value their first round pick at $10M, then they should only be willing to pay him $50M for those same four years. Of course this isn’t really fair to the player, but those are the rules.

So, how much do teams value their draft picks at? There’s no way to know for sure, but some research has already been done on the matter. Andrew Ball at Beyond the Box Score explored this question last summer, assigning a dollar value to certain tiers of draft picks. For our purposes, the important ones are the 8-15 draft picks (worth an average of $15.2M of net value) and 16-30 (worth $7.17M). This sounds like it’s in the right ballpark, but seemed a little bit low to me. Sky Andrecheck calculated average WAR by draft pick back in 2009, and found that the 10th overall pick was worth an average of 6.2 WAR, while the 30th pick was worth 3.6 WAR, numbers slightly higher than the more recent study. We also have to account for the fact that a team will pay around 30-35% of a player’s market value while under team control, and that they have to pay an average of $2M to sign a player drafted in the mid-to-late first round.

Taking all of this into account, I’d estimate that the net value of an unprotected first round draft pick can range anywhere from $10-25 Million dollars. This may sound a little bit high, but with the cost of a win at $6-7M, even a player who produces only 0.5WAR per season and costs a total of $10M for those six years of team control can provide $10M of savings. Since the teams signing high-priced free agents are usually pretty good and therefore have a lower draft pick, we’re probably looking at $10-15M in most cases. (Early second round picks might be closer to $8M.)

While this is great in theory, how have the attached draft picks affected the signings so far this offseason? In the table below, I included a more standard model — $6.5M per win with 5% inflation and standard aging (from Jeff Zimmerman’s contract calculator) — along with a modified version of my previous model. I didn’t want to mess with the aging curves so I used the same as Zimmerman (-.5 WAR/year until age-32 season, -.7 WAR/year after), I bumped inflation up to 6%, and I didn’t want to push a win past $7M so instead I gave a slight boost to the players’ WAR projections (just 0.2 WAR). I think it’s fair to assume that the team with the highest bid also expects the player to perform slightly better than projected.

The first two columns show the player and their total salary (assuming no options are vested or picked up by the team). The next three columns represent the “Standard” projection, followed by my “Modified” projection. The top six players were extended qualifying offers, so the signing team had to surrender a draft pick. The bottom eight players had no such compensation attached.

Regardless of which model you use, the conclusion is the same: so far this offseason, players who have cost the signing teams a draft pick have actually made more than the models predict. Much more. On average, these six players have been overpaid by about $9 million, while players with no draft pick compensation attached have actually been underpaid by an average of $7 million. This is the complete opposite of what we would expect if teams are acting rationally when it comes to the cost of their draft picks. When forced to pay what is essentially a $10M fee, these teams not only didn’t penalize the player, but actually paid them more. This could mean one of a few things:

Teams are willing to pay a premium for “elite” talent. The six players with free agent compensation attached include the only four free agents projected to be worth at least 3 WAR in 2014, along with the two next-best available outfielders. While Dave Cameron has long espoused the idea that the cost of a win is linear and there is no “bonus” for elite players, the fact that these six players haven’t been penalized for the attached draft pick tells us that teams may be willing to pay more to land the big guns. This could have to do with elite players (and their agents) being unwilling to take a discount because of the attached draft pick and there being at least one team who will cave and give the big contract, essentially ignoring the additional cost. This brings us to the second possibility:

Teams are not acting rationally with their draft picks. No prospect is a sure thing, so it could be easy for a team to talk itself into giving up a hypothetical player who may never make the majors in order to get a stud on their roster for the upcoming season. There are a lot of other factors here, notably the fact that signing team is usually at a high-leverage spot in the win curve and doesn’t know where they will be when the draftee they are giving up would be ready to contribute. Texas, for example, has a few players locked up long term, but also has some key pieces (Darvish and Beltre) who could be gone in a few years. Positional needs also certainly play a role here, but even when a team is willing to spend big money to improve in the short term, it’s tough to argue that they couldn’t have allocated their money better by upgrading at several other positions for the same cost (as Dave Cameron argued earlier this week). The Rangers, for example, could have kept David Murphy (2 years, $12M), signed Chris Young (1/$7M) for outfield depth, improved behind the plate with Jarrod Saltalamacchia (3/$21M), and bolstered their rotation with Matt Garza (4/$50M) instead of signing Choo, saving $40M and a first-round draft pick. The last possibility is that…

Something is wrong with the model. The other difference between the six players with a draft pick attached and the remaining eight is the length of the contract (an average of 6 years vs 3.5 years). If the teams signing these contracts expect the cost of a win to increase faster than the 5-6% inflation rate we project, then the middle and later years of this contract look a little bit better, but not by much. The only way to make the draft-pick contracts look better is if the players age much more gracefully than the average player, a pretty big risk to take on a $100 Million investment. The model also doesn’t account for any impact the signings may have on ticket sales. Five of the six big contracts came from big-market teams with lucrative TV deals, and teams may be willing to pay a premium to invigorate their fanbase with the addition of an elite player that might not be accomplished by signing a few mid-tier free agents who might add the same total value to the team. While I can’t speak to the economics, we all know that at the end of the day, the most important thing for the fans is to win.

While this is an interesting phenomenon, it doesn’t help us predict the kind of contracts the remaining free agents will get. As we saw with Kyle Lohse last year, while teams may be willing to look past the loss of a draft pick for an elite player, they might not if player in question is closer to league-average. While the free agents with a draft pick attached have actually signed for significantly more than market value, I wouldn’t expect to see this trend continue this offseason. With most of the contenders’ rosters pretty much ready for the season, they’ll only sign that extra piece if the price is right, including the loss of the draft pick. When it comes to players like Nelson Cruz and Kendrys Morales who may only generate $20M of value (2-3 WAR) over the next two years, the $10+ Million valuation of a draft pick explains why the market for them has been so slow. While things worked out fine last year for all of the free agents who turned down their qualifying offer, we could see a couple players really suffer this year, which may make agents — and teams — think twice about the qualifying offer next offseason.

Successful small-market teams contend by acquiring above-average talent on two levels: (a) development, either through international free agency or the amateur draft, and (b) trades. 

Success in one area, and not the other, can create a small window of opportunity to win, but for a team to compete for multiple seasons it is important to find talent on both avenues.  

Many fans remember John Hart as the architect of those great Cleveland teams in the late 90’s, but few realize how fortunate he was to step into that situation. Much of the groundwork for the Indians renaissance can be traced back to former General Manager Hank Peters.

During his four-year tenure as GM, Peters drafted Manny Ramirez, Charles Nagy, Jim Thome, Brian Giles, David Bell, Chad Ogea, and Paul Byrd.  He also did well when he acquired Sandy Alomar Jr. and Carlos Baerga in a trade with San Diego for Joe Carter. 

The foundation was set for Hart to succeed.

Hart, as he should, receives a lot of the credit for those teams.  He was one of the first general managers to sign young players, not quite at their peak, to long term contracts. He acquired a borderline future Hall of Famer in Kenny Lofton for Willie Blair and Eddie Taubensee – both would become more journeyman than established player.

John Hart did a lot of things right but what he could not do was mimic Peters’ draft success. 

Hart’s tenure as General Manager lasted ten years, 1992 – 2001, and in that time he managed to draft and sign only three impact players – CC Sabathia, Sean Casey, and Richie Sexson. Both Casey and Sexson were eventually traded for spare parts.

Using WAR (Wins Above Replacement player) as a statistical guideline the top ten players drafted by Hart are:

While all those players carved out careers of varying success, only Sabathia ranks in the top 1000 players in career WAR.  Hart’s predecessor and current GM, Mark Shapiro, was not as lucky and stepped into a situation much more difficult.

 Hart’s final two drafts epitomized the team’s long standing draft failures and would eventually signal the beginning of Cleveland’s first rebuilding process in nearly a decade. 

In 2000 and 2001, the Indians owned 3 of the top 55 picks and 4 of the top 43 picks, respectively.  The only player chosen to mount any type of tangible career was Toronto long reliever/spot starter Brian Tallet.

As with Hart, the foundation for Shapiro was set – but this one signaled the beginning of a rebuilding period and the end of era. 

In November of 2001, Shapiro was promoted to General Manager of a team with high-priced, aging veterans and a farm system wrought with failure.  Shapiro sought to rebuild the organization from the ground up – in four seasons – the Hank Peters way.

He went about stocking the farm system by trading Bartolo Colon for Cliff Lee, Brandon Phillips, and Grady Sizemore.  Shapiro then drafted college phenom Jeremy Guthrie and signed him to a club record $3 million bonus.  He followed up the 2002 draft by selecting Michael Aubrey, a polished college hitter, in the first round the next season.   Shapiro set about reestablishing Cleveland baseball.

On paper, his way parallels that of Peters.  One problem: while he has had success in trading for prospects – Shin-Soo Choo, Asdrubal Cabrera, and Carlos Santana among others – his draft picks have not panned out.  Guthrie bounced between Buffalo and Cleveland, the bullpen and the rotation.  Aubrey spent more time in the chiropractor’s office then on the field and the rest of prospects failed to make a longstanding impact.

A small-market team has to have the ability to replace players as they enter arbitration years or they will never be able to consistently compete – which would explain the two winning seasons the Indians have had since 2002. 

Shapiro and assistant GM Chris Antonetti have changed draft philosophies in recent years and have begun taking players no longer consider “safe” choices, now focusing on “toolsy” players.  In the last three years the team has added much more promising prospects like Alex White, Lonnie Chisenhall, and 2010 second rounder LeVar Washington. 

Much like in 1992 and again in 2002, the front office and the team have both entered into another period of transition.  Chris Antonetti will spearhead another rebuilding effort in hopes of creating something fans have not experienced in so many years – a consistently competitive team.  It, of course, would be easier if he steps in a position much like Hank Peters created and not what John Hart left. 

Hank Peters’ time highlighted how building a successful franchise is built on strong talent development and smart trades.  His time in Cleveland is a perfect example on intermixing strong draft results and dealing higher priced veteran players for prospects.  In four years he was able to set the foundation, along with Hart’s subsequent tweaking, for the Tribe’s revival.

With the 2010 MLB Draft just around the corner, and excitement in the air, many writers have been cautioning optimistic fans.  Throughout the 1990’s, very few first rounders contributed anything meaningful in the big leagues. However, I believe times have changed, and improved scouting and statistical analysis have lead to better draft choices across the board.  To see this theory in action, we have to look no further than the stacked first round of the 2005 MLB Draft.  Only five years after the fact, 18 of the 30 draft choices have posted a positive WAR in the big leagues.  All statistics courtesy of FanGraphs and MiLB.com.

1. Justin Upton:  5.7 WAR

Drafted out of high school, Upton has already made a big impact at the Major League Level, posting a .388 wOBA for the Diamondbacks in 2009.  The team has locked him up, and he appears to be a superstar in the making.

2. Alex Gordon: 4.3 WAR

After strong showings in 2007 and 2008, Gordon has struggled in recent years, and the Royals have sent him down to AAA to learn how to play left field, where he is currently mashing minor league pitching (1.207 OPS).

Read the rest of this entry »