Monday, February 20, 2012

Understanding that Draft Pool

Acccording to Baseball America the Twins will have more to spend than any other team in next year's draft. Under the new collective bargaining agreement each team is assigned a budget to sign its choices in the first 10 rounds. The budget is adjusted for each team based on how many choices they have and where they pick. The Twins have the second choice in each round and three compensation choices for losing Kubel and Cuddyer. That gives them a total budget of $12,368,200. According to the story, last year they spent $5,902,300 on their bonuses to their choices in the first ten rounds.

While the Baseball America story focuses on the aggregate budget, that aggregate number is determined by adding up the bonuses for each slot. In the past, major league baseball has suggested a bonus level for each position in the top of the draft. But teams were free to sign players for whatever they chose. Some teams went way over this "slot" bonus for players they thought were worth more.

I believe the Twins did that two years ago with Kyle Gibson. Gibson has dropped in the draft because of an injury. By the time they signed him, the Twins were satisfied the injury wasn't an issue and they were willing to pay as if he had been drafted higher.

The new budget process sets stiff penalties for exceeding the aggregate budget. These include both monetary penalties and loss of high draft choices. Its unlikely many teams will decide to take the penalties.

Another aspect of the budget is that if a team fails to sign a player in a particular slot, they lose that part of their budget. So in order to stay under budget while paying a player over the slotted amount, you need to sign some other player for less than slot by the same amount. For instance, the Twins could draft a player who will agree to take less than slot with their first round choice and then use the money saved to pay extra for players taken as supplemental picks. Or vice versa. They could take players in later rounds they expect to be cheap to sign and use that money to sign players they took earlier.

Budget strategy decisions are something new for everyone and it will be interesting to see how they play out with different teams. My predictions: Terry Ryan and the Twins mostly will stick close to the slot bonuses and Billy Beane will try to show he's smarter than anyone else by trying to game the system.

As I pointed out in an earlier post, watch the 11th round when the budget disappears. There may be some pretty good players available in the 11th round who dropped because of signability issues. With the budget off, teams will be free to offer them as much money as they want.

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