Saturday, November 9, 2013

Parity: Show Me the Money...

Parity, schmarity. In the past few seasons, MLB has done all it can to tighten the rules so that small revenue clubs like the Bucs and their brethern have to scuffle even more to keep the pipeline flowing.

The Pirates broke the camel's back in the draft by overslotting Josh Bell. The Pirates picked Bell in the second round (61st overall) of the 2011 draft, although the high schooler told the clubs he wouldn't sign because he had a rock solid commitment to Texas. But the FO was pesistent, took its best shot, and Bell and the Pirates agreed to a contract with a $5M signing bonus shortly before the deadline, the highest bonus ever paid for a player drafted in the second round. In fact, the Pirates gave out a record $17M in signing bonuses to that class, or the equivalent of what you'd pay for one elite FA pitcher.

The grumbling brought about a cap on the amount spent on Top 10 picks, with the amount slotted for a player lost if he didn't sign. So the days of the overslot are gone, a Pittsburgh ploy that landed guys like OF Robbie Grossman (6th round -2008, flipped to the Astros as part of the Wandy Rodriguez deal), RHP Tyler Glasnow (5th round 2011 - $600K), RHP Clay Holmes (9th round 2011 - $1.2M) plus some hefty early round candy spread out to upper tier selections (Gerritt Cole; $8M as first overall in 2011) and generous payments to mid-round HS players.

It bit them in 2012 when RHP Mark Appel fell in their laps, but the Bucs were limited in their ability to negotiate with him by the newly imposed cap system. The offer he reportedly rejected from the Astros that year was equivalent to to Pittsburgh's entire draft pool.

There is a flip side to this; the larger market teams, with the support of the MLBPA, felt like revenues should be spent on major league payrolls, not the draft, which is an argument that led to caps in the NBA and NFL. Another is that if teams like the Pirates continued to be aggressive players in the overslot game, the big boys would eventually join in the fun and elbow them out.

An added benefit to the clubs that can afford offers is a chance to really rub the small market teams noses into it. Because New York and Boston can afford to extend qualifying offers, if they're rejected, the Yankees will have five fraft picks before the Pirates have two; the Red Sox will have four.

Another thing to watch is whether any traction is gained on adding Latino players to the draft. They've already capped the amount that can be spent on those FAs. The Pirates seemed to have worked around that in the early going - time will tell - but would lose a fruitful alternate player source, one that's supplied them with Starling Marte and guys like Gregory Polanco, Alen Hanson and Luis Heredia if the international players are added to the draft pool.

The free agent qualifying system has always been a thorn to the smaller revenue clubs, but some managed a work-around by dealing for top players at the deadline and then offering them the qualifier at the end, secure in the knowledge that they were looking for greener pastures after the season. That loophole was removed; now only players that spent a full season with a club can receive an offer.

The offer is based on the average of the top 125 contracts; it was $13.3M in 2012 and $14.1M this season.  So it's a bit pricy, although probably fair for the players involved, although for a guy like Kyle Lohse, not always. If the player accepts, he gets a year at the offered salary; if he turns it down, the team that loses him gets a sandwich pick and the team that signs him loses its highest pick (the top ten picks are protected, and of course there's no draft shuffle if he signs with his old team.)

This is a great improvement over the old Elias based "A & B free agent" system that led some players to a tacit agreement that they wouldn't be given an offer; most guys in this position are coming off good years and are looking for multi-year contracts, and a first round pick on top of a juicy agreement was often a deal killer. Most smaller revenue teams have countered by locking up their star players as well as they can with early deals through arbitration and the opening season or two of free agency to keep them off the market and in the home unis for a couple of extra seasons.

There are only two drawbacks. One is due to the inequality of revenues; Boston and the Yankees both gave out three qualifying offers, while teams with payrolls like the Pirates would be suicidal to tie up $42M in three players. Still, that's a market inequity, and that will always be in play.

On the other of the coin is the loss of the draft pick for signing a top gun, which takes development teams like Pittsburgh out of the hunt for elite FA, even if the financial resources are available. That could be fixed quite simply. Continue to give the team that loses a player their sandwich pick as compensation, but don't penalize the team that signed him. That should open up the marketplace to some added competition.

The Pirate model that was used by Neal Huntington to rebuild the system has eroded in the past couple of seasons; the way of all major sports now is to funnel money to the players with resumes, not the rookies. That's especially true of baseball, whose draftees take years to develop. And revenue roadblocks will continue; the Pirates and teams of their ilk with never be able to afford the posting fee for Japanese players, the crazy money for Cuban players, signing their veteran stars or the elite FA crop.

So that's the challenge ahead for Pittsburgh, Oakland, Tampa and the gang. The road is going to get rockier in the years ahead; the MLB is closing the ways the small revenue teams used to game the system. So unless some truer form of revenue sharing, especially of media rights, or a hard team salary cap is somewhere near the horizon, they'll have to continue to adapt develop new player acquisition strategies  to keep up with the big boys.

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