Implications of an international draft could be disastrous


The Chicago Cubs planned on building this baseball academy in the Dominican Republic. Now, they may have a reason not to. (Jose Mella Febles and Associates)

It seems Major League Baseball will stop at nothing to save a buck, even if it means doing long-term damage to their product. In an interview with Baseball America, Commissioner Bud Selig stated that he viewed subjecting international players to a draft process as a clear part of the sport’s future, going so far as to call the change “inevitable.” The damage this sort of shortsightedness will do to the game won’t be felt for the next five years. Rather, it is a long-run issue that essentially tells talented international athletes they should go play soccer or basketball. These statements from Selig present a topical opportunity to discuss the issues that recent changes to the amateur-talent acquisition process have had and will have on the most important aspect of baseball: the product on the field.

Serious changes were made to the domestic draft process when the new Collective Bargaining Agreement was finalized this offseason, allotting each team an annual “spending pool,” or cap, for the Rule 4 Amateur Draft. If teams exceed this spending cap, they are penalized. Capping spending on amateur talent means less money will be spent in the draft. Less money to spend in the draft means it’s harder to make these kids “Godfather offers” to keep them from going to college. Now, more prospects will be accepting scholarships to play NCAA ball where they can get hurt, get worn out by coaches who act primarily in their own self interests, learn bad habits, or choose to play basketball or football somewhere along the way. It behooves these MLB teams to start developing players as early as possible, and the new CBA goes great lengths to prevent that from happening. Under these new rules, Bubba Starling and Carl Crawford might have been under center at Nebraska and Matt Kemp might be at a team shoot-around right now.

While the changes in the draft further limit the earning power of these players, the fact is the draft in and of itself destroys earning power and is an egregious violation of anti-trust law. Not only are players forced to work at a salary well below what they’d earn if their services were available on the open market, but they’re told where to work as well.

Imagine walking the stage at your college graduation at Pepperdine. You grew up in Maine but went to school in California. You love it in Malibu and never want to leave. You grab your diploma and your school’s president tells you, “Congratulations, youngin. You’ve just been selected to work at an accounting firm in Minnesota.” These violations are circumvented by the collective bargaining process. You can violate anti-trust as long as your labor force says it’s okay. Unfortunately for amateur players, they have no voice at the bargaining table. If a high school or college player wanted to buck the system and bring a suit against the process, it would make for an interesting case, but he’d better be willing to sacrifice his career for it.

Similar collusion against the earning power of international free agents is starting to occur. The last CBA sets forth a similar spending pool that caps the amount of funds a team can spend on international free agents. Fortunately for Latin American players, they have a say in what team they choose to sign with. Also, if teams so choose, they can spend the entirety of their pool on one player instead of spreading it out like they would in the draft. It’s a system more likely to hurt second-tier LA prospects than the top guys.

But now Selig wants his draft. To impose the draft on international players has even more dire consequences related to losing talent. Not only do players now have disincentive to pursue baseball because it may not be as immediately lucrative as other athletic avenues, but teams have no reason to spend money developing talent either. Right now, lots of teams have baseball academies all over Latin America. These academies often provide education on and off the diamond to kids who would otherwise be forced to fend for themselves. Charitable to a degree, but the teams benefit, as well. They have a presence in communities rife with talent. Club employees develop relationships and notoriety with the most talented of prospects. This rapport may help convince a prospect to sign with your club.

With a draft in place, what reason do franchises have to continue to develop talent in these countries? A player you spend years cultivating is snatched away in the draft before you even have a chance to pick him. Other teams now reap the fruits of your labor. The international draft will make players and teams apathetic about their previously mutually beneficial relationship.

The results of this process can already be seen in Puerto Rico. Previously a baseball prospect hotbed, Puerto Rico is now a wasteland in comparison. The country that once yielded eight All-Stars in 1997 alone, only had 20 players on MLB rosters for opening day 2011. What casued this deterioration? In 1990, Puerto Rico became subject to the draft. The New York Times ran a piece about it in January. Check it out here.

People like to watch great baseball players, and there will be less of them to watch if Bud Selig gets his way and implements an international draft. Hopefully he retires before implementing such insipid reform because his owner cronies have been nothing but yes-men during his reign.

9 Comments

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  1. i agree but how bout this.  They just expand the draft to Uganda and Africa and maybe Netherlands not Venezuela and Dominican Republic

  2. Kevin posted this article to Facebook, where it has sparked much commenting between him, another friend, and myself.  But it seems silly to have that conversation here where you, the author, can read and engage, too.  It’s an interesting topic and you stake a strong position on it, which is why it’s sparked such discussion.  -Charlie
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    I know it’s fashionable to worship the “free market” these days (not that such a thing exists, but that’s another point), but this is problematic grounds for a critique of a possible international draft. Calling the draft an “egregious violation of anti-trust law” is laughable. The AL/NL combo-league has had de facto anti-trust exemption since 1915, and the exemption was affirmed by the Supreme Court in 1922. In short, MLB has been outside of anti-trust law for over 90 years. Holding MLB to the same expectations as accounting firms is silly.

    The Commish’s job is a very difficult one, often faced with no-win propositions because what is good for MLB overall is sometimes at odds with what is best for individual franchises. Compound with that a strong labor union that forcefully advocates for what is in the best interests of the players, and things become even more difficult. (Similarly, the players association has its own struggles with what is best for superstar players, what is best for the MLB’ers, what is best for players in the minors, and what is best for players yet to come.)

    The distribution of young talent is one piece of the larger puzzle of growing the success and profitability of MLB. The entire game is damaged when the high budget teams use their resources to gobble up a disproportionate amount of young talent. The sport is more healthy when the teams in Pittsburgh and Kansas City start the season with a shot at the playoffs and occasionally actually get there. When multiple franchises can go over a decade without a serious run at making the playoffs (even in the Wild Card era), there is a structural problem with the game. The moderate and small budget teams would like to have equal access to that talent at low to moderate costs. The high budget teams want to be able to apply their financial advantages to young talent acquisition. Big-time amateur players and their agents/shady-advisors would prefer that teams be allowed to spend freely on huge bonuses, but the vast majority of young talent is probably best served by a draft and bonus slotting system. And then you have the current pro players whose positions are split on this – they’d prefer the franchises save money to spend on free agents, but also see where big bonuses to young talent modestly pushes all salaries up over time. 

    So how to negotiate through all these positions? It seems Bud has lead MLB to a soft cap for the current draft and the imminent expansion to an international draft. Putting a soft cap on the current draft and expanding the draft to cover international talent is a way to more equitably distribute talent throughout MLB, giving a greater relative edge to how well an organization scouts and develops players as opposed to the wealth of its local market. Maybe there are better mechanism to do this, but I can’t readily think of any. This  approach also seems completely reasonable to me, as apparently it does to both owners and players since they signed off the new CBA. 
    There is a real concern about making sure the overall pool of young players seriously pursuing baseball remains highly talented and continues to grow. What happened in Puerto Rico is not completely attributable to the institution of the draft there. As we know, adolescents and their families make decisions based on many social factors, not just money. I mean, if young athletes are really chasing dollars, why not play soccer where European and South American teams lavish cash on kid as young as 9 or 10?  The pertinent issue put forth by the Puerto Rico experience is how can MLB expand a supportive youth baseball infrastructure internationally once individual franchises lose incentive to support that?  Why doesn’t MLB take over the Dominican academies? The costs is deducted from inter/national media deals and merchandising, and the academies are run by veteran MLB guys as well as provide education, room, and board. Hell, expand these to other countries, too – Haiti, Venezuela (if allowed), Mexico, and so on. If one academy in PR can produce 70 draftees and some potential first rounders, then success on a larger scale seems very possible.Finally, if we follow the author’s logic, we’re on the road back to the pre-draft era. From 1922, when the Supreme Court affirmed MLB’s anti-trust status, to 1964, the year before the first draft the Yankees won 20 World Series. Do we really want to go back to the days when the Yanks used their financial advantages to bludgeon everyone else?

    1. Again, I’m flattered that something I’ve written has propagated any discourse at all so thanks for reading.  The 1922 case granted MLB Anti-Trust exemption because the court decided baseball wasn’t involved in “interstate commerce.”  In fact, Justice Oliver Holmes didn’t think baseball was a business at all, it’s a game.  Holmes’ decision is ridiculous because baseball is clearly involved in interstate commerce, it clearly is a business and if you read Holmes’ post case explanation it sounds like a wishy-washy, “I sure love baseball and sure don’t want it to change” manifesto more than an actual legal decision.  Holmes was totally cool with things like the reserve clause.  Baseball IS in violation of anti-trust laws with several aspects of their operation.  As I state in the article, the Anti-trust violations can be legitimized through Collective Bargaining, which first began in 1968.  Since MLB has permission from the player’s union, they can do these things.

      As far as the draft improving competitive balance, it does not.  Rodney Fort’s Sports Economics series did studies on the changes in competitive balance before and after the draft was instituted in all sports.  There was no change.  Talent eventually finds a way to whoever is going to pay it the most money and teams like the Yankees are always going to pay more for talent.

      This is why it is actually beneficial for small market teams if there’s no draft cap, no international spending cap and no international draft.  The small market team’s dollar goes farther in acquiring amateur talent than it does in free agency.  You draft Gerrit Cole #1 and take advantage of the system, then spend $5 million on Josh Bell a few rounds later.  The only reason you got Josh Bell is because you were willing to pay him, but when Josh Bell gets to the big leagues he’s going to make you way more than you spent on him at the draft.  It’s something the Rays have learned and was the small market team’s best avenue for competing.  

      Your idea for MLB as a whole to have academies in LA countries is terrific.  

      1. You might write another post about whether or not MLB should maintain anti-trust exemption and what it might look like without it.  Would be interesting.  But for the topic here, such speculation is besides the point.

        Which Randy Fort piece are you referring to?  All I can find is a book chapter about competitive balance in North American pro sports leagues.  There he shows that the draft has no impact in theory; the point is not bolstered by empirical research that tries to break out the particular contribution of drafts to the overall effort at creating and maintaining competitive balance.  

        To the last point, low budget teams’ success in recent years is most likely leading to overall changes in franchise spending habits.  This past year, roughly $236m was spent on bonuses and salary guarantees in the draft.  At the moment, it’s a mixed bag in term of who is high-spending (KC, the Red Sox, Tampa, and the Cubs were among the teams breaking $10m), but we are seeing the high budget teams increasingly invest in the draft.  The Red Sox have broken their draft spending record 3 of the last 4 years.  They have just as much value to gain from pre-arbitration players as every other team and they are starting to direct their estimable resources into that area.  

        Put another way…a decade ago, Billy Beane was a genius by innovating player evaluation and analysis leading to surprising success on the field.  But the rest of the league studied the approach and learned from it; high budget teams put their resources into it and use that to beat up on the A’s each year.  Right now, it’s Andrew Friedman’s time to be a genius, but here come the Yanks and the Sox and the Cubs right on his heels…

        1. Yeah this is a great point.  The larger market teams were getting smart and throwing their weight around in the draft, too.  It’ll be interesting to see where GMs can get creative with the new CBA.  Surely there are loopholes to exploit somewhere.

          Oh and the Fort piece isn’t online.  I actually have the second edition of his text book. The content on the draft is primarily on pages 188-190

  3. I definitely see the argument against this in terms of developing players in the hopes of bringing them up to your club, its kinda like shoveling out a parking space just to see another car park in it.  But I think there is a difference in regional argument here.  For example, baseball in America is losing its popularity to basketball and football for the reasons you’ve stated: its more lucrative and has  more star potential right off the bat. Baseball will never have a Cam Newton or LeBron James.  But in other countries there isn’t the equal popularity of FOUR competing major sports, so you have to imagine these players are going to play baseball anyway.  As such, I really think that THE MLB as a whole can benefit from this by 1. allowing these players to get drafted by small market teams like KC (who will inevitably have to forfeit their contracts to big markets down the road anyway, but that is another issue) thus increasing competitive parity across the MLB (ideally) and 2. using institutions like MLB International to develop these training facilities instead of individual ballclubs.  I can say from experience it is something that is being done in The Netherlands right now.  Granted its hurting the game abroad by appealing only to a small group of already talented players, but the game here and the League overall is reaping the benefits.

    1. Kevin, thanks for reading and commenting.  I did think about the “no other alternatives” situation in regards to Latin America. I think even if it holds (soccer still looms) then at the very least the lack of professional instruction at the academies will mean players are less polished when they sign and the lack of classroom instruction means a harsher adaptation to our culture.

      As far as the draft creating more parity, it really does not.  If anything it was beneficial for small market teams to outspend goliaths by a few million to acquire amateur talent and reap marginal revenue benefits in the tens of millions later.  Return on investment for amateurs is much higher.  Smart smaller market teams like the Rays, Jays and seemingly now the Pirates understand this.  Those teams should be incensed at the new caps on amateur spending.

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