The Competitive Advantage of Valuing the Draft and Prospects Is Dwindling

I've made this point and voiced this concern before, but I think it's worth repeating here on Draft Signing Night: the competitive advantage to going all-in with the draft and player development and valuing young talent is much much smaller than it once was.

Premises:

  1. Other than teams at the very peak of the success cycle, and usually only about half of them, nobody is willing to trade prospects, real prospects, very often. We see this at the deadline and at the winter meetings. Unless we're talking about elite talent, elite talent with money coming back, impact prospects just aren't traded for veteran players anymore. The kinds of deals that were fairly common in the 1980s and 1990s just don't happen much anymore. You can get prospects in bulk or you can get money or you can keep your guy. That's the new paradigm.
  2. 90% of the industry really values the draft now and the media/fan/old ownership backlash to "bonus baby" contracts & payouts is just about dead. This is entirely an internet driven phenomenon, not unlike the new obsession, 365 days a year, with major college recruiting. We know about these guys so much more than we did in 1995 and so do the most influential media members in each market. There will always be teams that end up going cheap at random times for random reasons, but the new industry trend is to go big in the draft. It's been like this since at least the middle of the 2000s, and with the Moneyball approach to drafting out of favor and even the Astros spending big now, it looks destined to continue.
  3. Baseball's unique salary structure has reinforced premises #1 & #2, and continues to do so. Those six years of service-time controlled salaries generate huge value for teams, as they usually coincide with a player's most productive seasons.

Thus, we have the situation developing today, where the newest school and oldest school teams are doing the same thing. The two biggest cultural divides of the 1990s and early 2000s are basically non-existent now. (Save for extreme teams.) The biggest impact that statistical analysis has had on the on the game hasn't come in game strategy or roster construction, which are still pretty plainly messed up. Rather, over the last decade, player contracts have gotten smarter and smarter (from the team perspective). The middle-class FA market has collapsed, as the concept of freely available talent and replacement level has become mainstream. The smartest place, when you break down the economics, whether you be Boston (big market, new school) or Minnesota (pseudo-small market, old school) is to generate cheap players and assets in the minor leagues. Those teams may end up viewing different 22 year olds as assets, but it's more or less the same model. It sounds crazy now, but in the early post-FA period, not everyone was buying into this. There were always a number of clubs who pretty clearly (no matter what they said) didn't make the minor leagues a priority.

I believe that the consequences of what I have laid out above, for the Royals, are pretty dire. This may sound like a criticism, but in part, it is simply a tragic circumstance. When I hear the Royals talk about their "process" I get the sense that they believe (or are trying to make us believe) that what they're doing is something novel and unique in the industry. Increasingly, it is not. Increasingly, it is what everyone is doing. The Yankees, the Red Sox, the freakin' Astros (who spent heavily this draft) everyone. When the Twins went all-in with minor league player development in the late 1990s, it really was relatively unique. Franchises like the Orioles and the Cubs and Texas and on and on were still trying to win with FA spending. I can't think of a team that has done something like that in years and years. Who was the last team that signed four or five big FAs over a few years to try to build something? Teams just don't do that anymore.

Now, the Royals are doing the only thing they can do, only now, so are teams that can also win in other ways.

 

The Royals pretty clearly want to be the Twins, but the Twins aren't the Twins much anymore. Minnesota has nearly a $100 million dollar payroll this season, and with Joe Mauer and Justin Morneau making over $35 million between the two of them per season in upcoming years, they're going to have to keep spending money. Minnesota plays in a larger, wealthier market than the Royals, and they increasingly look like your classic mid-market team. Much like, in the end, the industry caught up to what the A's were doing and killed their initial model, to an extent the Twins are a victim of their own success. The new reality, for truly low-salary clubs, may be a short window of contention, like those enjoyed by Cleveland and Milwaukee this decade. (Cleveland, it should be noted, was built on the Bartolo Colon trade, which brought back a package that would be unheard of today. Truly one of the last old-school idiotic trades of the era.) Milwaukee, was, in reality, never really good. They were more mediocre+NL. Not hatin' but that's the reality. Cleveland however, was good enough to win the World Series in 2007. That roster had a number of guys who needed to get paid, and they ended up paying Hafner and Sizemore, while Sabathia and Lee, essentially, walked.

Of course, we have the more ambitious dream of being "the next Rays." However, we don't really know what that even means just yet. Right now, the Rays haven't really accomplished more than the mid-00s Indians did. They did more, but not much more. Admittedly, if you drop the Rays in the AL Central, you'd have a five year dynasty, but there's a flip side to that. Being in the AL East forced the Rays to build their model in precisely that manner. Getting to 85 wins and hoping to catch some breaks (i.e. what 2/3rds of the NL habitually does along with the AL Central) wasn't going to be good enough. Finally, even if we grant that OMG the Rays are awesome, we still don't know that they'll make the playoffs this year or what will happen in 2011 and beyond.

When I think about the future of the Royals, for the Royals to have a successful decade in the teens (multiple playoff appearances, multiple years in contention) here's what they need to do:

  • Build the best farm system in baseball over multiple years. A farm system so good that it keeps graduating players, yet stays in the Top 5. This is by it's very nature difficult, but will get more difficult for the reasons outlined above.
  • Eventually, ownership will have to commit to being a mid-revenue team in terms of payroll. This will require the fans to endure ticket price increases and a healthier attendance. It might happen, it might not.
  • The front office will have to choose the correct players to pay, which will require both intelligence and luck.
  • When the Royals get to the mid-revenue stage, the FO will have to sign the right pieces rather than the wrong ones. A truism, yes, but it needs to be said.
  • And, if the goal is really a long period of success, then the Royals will have to aggressively address their position, both with regards to moving up and moving down. They can't "go for it" as a core 83 win club and fail. Similarly, when one wave of prospects begins to fade and leave the organization as FAs, they may have to aggressively tear down that club a year early rather than a year late. The tight trade market makes that decision harder, but it also, weirdly, creates a new market opportunity. Right now, the Royals probably want to hold on to Zack Greinke for a 2012 run, which is probably a mistake. The aggressive move would be to punt on 2012 and try to be a 95 win team in 2014.

Can the Royals do all these things? I don't think so. That's not an anti-Moore statement. To date, in the post-FA, post-idiocy era, NO small-market front office has been able to build a consistent winner. The A's and Rays have had the best low-salary teams, while the Twins have been good for the most seasons. Still, if the Royals can simply get to being consistently a .500 team, Dayton might deserve that parade.

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