FanPost

Breaking the Draft Bonus Pool Machine


I posted the same article, to an extent on Vivaelbirdos, but thought it would be appropriate to update and post it here as well. I would like to say a few words first, addressing issues people had in the comments. First of all, I don't believe the Cardinals would be the best/most likely team to use the system I suggest. I simply used them for this exercise. Second, I realize this is something a team would have to budget for, because not many teams drop $25+ million at the drop of a hat. Finally, this is supposed to be a fun exercise, but also something I do believe a team could be successful with. Thanks for reading.

Under the current draft rules, a team may go 5% over their bonus pool allotment, with just a 75% tax applied to any amount they go over that allotment. If a team exceeds its pool by more than 5% but less than 10% must pay a 75% tax on the amount of the overage AND loses a first round draft pick. Any team that exceeds its pool by more than 10% but less than 15% must pay a 100% tax on the amount of the overage AND loses a first round draft pick AND loses a second round draft pick. Any team that exceeds its pool by more than 15% must pay a 100% tax on the amount of the overage AND lose two first round draft picks.

Since this new bonus pool system was implemented in 2012, a team has yet to exceed its bonus pool by 5%, and therefore enter into "loss of draft pick" territory. What I would like to examine in this post is the cost benefit of a team throwing caution to the wind and going all-in on one particular draft. I think what we will discover is the loss of two first round picks and the 100% penalty would be well worth it if the team handled it correctly.

I am going to have to make a lot of assumptions in explaining how a team could maximize value in going 15%+ over slot and losing two first-round draft picks. The first assumption is that the commissioner's office wouldn't crack down and disallow a team's actions by going 100% or more over slot. I don't think they would, as the current rules have been collectively bargained.

The next big assumption I am going to make is estimating what bonuses certain players would signability concerns would lure them away from their college commitments. As an avid reader of all the major draft publications, I'll use a lot of conjecture, but hopefully be as realistic as possible in estimating bonus numbers.

The last assumption I need to make clear is that I'm not differentiating between good drafts and bad drafts in this piece. The 2013 class is widely considered lackluster, but I don't want to dwell on that for the purpose of this exercise, even if it would be highly relevant as to whether a team would use my system on a particular year.

So, with all that out of the way, here is my system. Draft the best player available that will sign for no more than 50% above the recommended slot for their talent level. For example, Kyle Serrano was ranked by BA as the 35th best player in the class, but was viewed by many as signable for mid-first round money. The MLB slot recommendation for the 35th pick is $1,587,700, so 50% above his talent level slot would be $2.35 million. This would pay him similarly to the slot recommendation for the 15th overall pick in the draft. Due to his signability concerns, Serrano didn't get picked until day 3 of the draft and almost certainly will not sign.

Using the above system, I would like to do a quick mock of who the Cardinals could have picked in the first ten rounds, the estimated bonuses needed, and the final overall cost including the 100% tax and loss of draft picks. Within my system, I think it would be smart to draft more polished high-floor college players first, because most of those are going to be gone after the first 3-5 rounds, then move onto the high school signability concern players. I put the estimated signing bonus in parentheses. Here goes it:

Round #1 (pick 19): Marco Gonzalez, LHP, Gonzaga ($1,850,000)

I'm sticking with the Cards actually pick here. High floor college guy, and also a lefty. Also, I know his actual bonus.

Round #1 (Pick 28): Sean Manaea, LHP, Indiana State ($2,400,000)

This is well above slot for Manaea, but still may not be quite what he was looking for. With his injury concerns, I think he takes it though. Cardinals get an even higher upside, but much higher risk college lefty here. Ranked 18th on BA's top 500.

Round #2 (Pick 57): Jonathan Denney, C, Oklahoma H.S. ($850,000)

Denney was ranked #25 on BA's top 500, and inexplicably slid to the third round. The number above is about what he actually signed for, and is viewed universally as a great value.

Round #3 (Pick #93): Michael O'Neill, OF, Michigan ($500,000)

Not only is O'Neill getting picked to keep him out of the Yankees grasp where they picked him at #103, but he is a great value for the price at this pick. He is ranked #79 on BA's top 500.

Round #4 (Pick #125): Trey Masek, RHP, Texas Tech ($1,100,000)


I think Masek, BA's 49th ranked prospect, signs at or under slot here. I am pushing a few higher ranked H.S. guys lower on my board to grab Masek. They will be available later because nobody else is adopting the same strategy as us.

Round #5 (Pick #155): Bobby Wahl, RHP, Ole Miss ($1,750,000)

Bobby Wahl was said to want first round money in order to leave Ole Miss, and his BA ranking leaves him right outside the first round, presumably causing his fall to Oakland at #161. In my version be give BA's 36th ranked prospect first round money, and swipe him just before Oakland.

Round #6 (Pick #185): Rowdy Tellez, 1B, California H.S. ($1,200,000)

I think Tellez signs for around slot if picked in the first two rounds in the draft. His #48 ranking in BA would put him a little under the $1.2 million bonus I slot him at, but hey, we're not being chintzy here.

Round #7 (Pick #215): Ryan Boldt, OF, Minnesota H.S. ($1,450,000)

An injury this year hurt Boldt's stock some, but so did his perceived desire for first-round money. I'm giving BA's 58th ranked prospect a supplemental round bonus and think he chooses MLB over Nebraska.

Round #8 (Pick #245): Jake Brentz, LHP, Missouri H.S. ($1,000,000)

Jake Brentz, the 8th ranked prospect on BA's top 500, is a great value at pick #245, and is more than likely to sign with his hometown team for 50% over his ranking.

Round #9 (Pick #275): Connor Jones, RHP, Virginia H.S. ($2,450,000)

I think Connor Jones demands every bit of that 50% overage I'm allowing for each pick to get up to that mid-first round type money. Jones was ranked 34th on BA's top 500.

Round #10 (Pick #305): Kyle Serrano, RHP, Tennessee H.S. ($2,350,000)

Serrano, ranked immediately after Jones on BA's list, also gets his mid-first round bonus mentioned above, and the Cardinals get the 35th ranked player in the draft

So, there's my first ten rounds. I took some liberties obviously, such as letting Jones and Serrano fall, because no one was going to pop them until much later once they got past the second round. This is also not a terribly unrealistic cardinals draft. We got four college pitchers in our first eleven picks. Two lefties and two righties, all with pretty high floors, and some with very high ceilings. We got three lefties total, which we clearly focused on this draft. We got high upside H.S. arms, a good college outfielder with probability, and several high upside H.S. position players. The Denney pick fills a clear position of need in our system.

So what did we miss out on? Middle infielders. The Cardinals clearly made it a point of focus to load up on H.S. middle infielders in the first ten rounds, picking three, and we got none here. But, most experts agree BPA is the way to go anyway.

Let's take a look at the cost if all our picks sign around my estimated bonuses. The total cost is $17,750,000 in bonuses. When entering this exercise I thought it would be much higher, but this number still destroys our $6,900,000 bonus cap, coming very close to tripling it. With the 100% tax on every dollar over $6.9 million, we would end up spending a total of $27,500,000, which is a fat, fat sum to spend in one year on the draft.

But let's put that number in perspective. This number is roughly what the Angels will be paying Albert Pujols per year starting in 2017. This number is roughly half of what the Boston Red Sox posted ($51.1 million) just to negotiate a contract with Daisuke Matsuzaka. This number is $5 Million less than what the Brewers, a bad team with a very poor farm system will pay Kyle Lohse over the course of his three-year contract.

On top of the bonus costs, we would also lose our next two first round draft picks. In the current system is this really that big of a deal? I don't think so, particularly if a team did this on an every other year basis or something of the sort. With so many first round talents falling due to the non-capitalistic traits of the draft, there is opportunity for a team to completely break the system by drafting this way.

So what would it take for this to happen? An extremely ballsy GM/Scouting Director combo with a lot of influence within the organization. The Scouting Director would need to have a decent track record of turning prospects into pros to give the GM enough confidence in him to justify spending that much money on the draft to the team owner, president, etc. This is a business, and everyone would need to feel the benefits outweigh the enormous costs.

The clear benefit here is the influx of 11 BA top 100 draftees into an already great farm system (that is over 10% of the top 100, just to us!). With the high-upside nature of most of these guys, it looks like we'd be hard-pressed NOT to come away with an all-star level big leaguer or two and several other solid big league contributors, cost controlled for six years. I think this works out, and the benefits are several years off, as to not put the GM under immediate fire for employing this strategy.

I would love to hear some feedback on any factors I may be failing to consider. One item I didn't mention is that the bonus number of $28.45 million above does not include picks from rounds 11-40, which would probably add a few more million. Also, I think if a team employed this strategy they should pick BPA, as long as signable, through round 15 or so, just to maximize going over slot. If you're gonna go 15%+ over slot, you might as well go all out.

Thanks for reading and any feedback.

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