Who will be hurt by the new CBA's Signing Bonus Pools?
by kcemigre on Dec 1, 2011 12:36 AM EST
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PrintThe Signing Bonus Pool system contained in MLB's new CBA has been much discussed since its announcement last Tuesday. In particular, there has been some hand-wringing around here over the possibility that the new CBA will stifle the Royals' ability to stockpile minor league prospects by offering over-slot bonuses in the early rounds of the draft. The Royals and Pirates have been widely cited as the two teams most likely to be affected by the new rules, largely because the Royals and Pirates have be widely credited as the most aggresive teams in offering over-slot signing bonuses. The logic of that last point, however, is based mostly on the raw dollar-figures offered to draftees. But the Royals and Pirates have been cellar-dwelling for quite a while now, meaning they consistently hold some very early picks in the draft. If draft position is taken into account, are the Royals and Pirates really that aggressive with over-slot bonuses?
In order to answer that question, I decided to apply the Signing Bonus Pool retroactively so see who would have been "over-slot" in the last five drafts (i.e. 2007-2011) under the new system. This required a little bit of conjecture, since the actual slot amounts for the 2012 draft have not been made public. Some details have been reported, however, and I've based my numbers on the available tidbits. First, we know that the effective "slot" for every pick after the tenth round is $100,000 because that detail is in the published summary of the CBA itself. We also know, via Jon Heyman, the amounts allocated for the first through sixth, as well as the thirtieth pick. For present purposes, it is sufficient to note that the first pick will be assigned a bonus of $7.2M and the thirtieth will be allowed $1.6M. Finally, we know that clubs spent a total of $228 million in bonuses last year, and Jim Callis reports that the total pool for all teams in the new CBA is expected to be in that neighborhood. (If all of these details are true, BTW, the Signing Bonus Pool will actually be quite generous compared to the slot recommendations that have come out of the Commissioner's Office for the last several years.)
In order to predict the actual "slot values," we just need a rational allocation that starts out at $7.2M, drops to $1.6M around the thirtieth pick, and levels off at $100,000 somewhere around the 300th pick (i.e. the end of the tenth round) and produces a total of bonuses in the neighborhood of $200M. The following formula produces an exponential curve that fits the bill pretty nicely:
bonus_slot_allocation = ($8,600,000 * overall_draft_rank ^-0.305) - $1,400,000
Once you have that in place, you can calculate the individual slot values and add up the individual slots to determine a team's Signing Bonus Pool. We also know the draft order from each of the last five drafts, as well as what each team actually spent in bonuses over the last five years. (These numbers, however, do not include money allocated to big league contracts... more on that later). It would be fun to do this exercise for each year individually, but I didn't find actual signing bonus numbers for individual years. As a result, I'm going to analyze the five years from 2007-2011 as a block using the Baseball America numbers linked above.
Combining all of this information, I calculate that, under 2012 rules, the Rays would have had the highest total Signing Bonus Pool over the last five years, at $55,156,000. (Remember how they seemed to have every pick in the draft last year? Those picks add up). At the other end of the spectrum are the Yankees, who spent a good chunk of the last half-decade giving up their early picks by signing everyone else's Class-A Free Agents. As a result, the 2012 CBA rules would have limited the Yankees to spending a mere $24,598,400 in bonuses on draftees over the same timeframe. Everyone else falls somewhere in between those two poles (the Royals "cap" for the last five years would have been $41,655,700).
Comparing these numbers to the actual amounts paid out by each team in signing bonuses reveals that only 7 of MLB's 30 teams actually exceeded their total Signing Bonus Pool for the past five years. Here are those seven teams sorted in descending order of the percentage by which they exceeded their signing bonus allotment.
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Calculated Five-Year Bonus Pool
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Actual Bonuses (2007-2011)
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Amount "Over"
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Overage Percentage
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Yankees
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$24,598,400
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$33,699,000
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$9,100,600
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37.0%
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$36,165,800
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$44,097,250
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$7,931,450
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21.9%
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$28,200,600
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$31,269,200
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$3,068,600
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10.9%
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Royals
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$41,655,700
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$45,204,900
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$3,549,200
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8.5%
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$30,635,000
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$33,179,300
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$2,544,300
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8.3%
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$38,474,600
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$41,219,700
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$2,745,100
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7.1%
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Pirates
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$48,712,100
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$52,057,400
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$3,345,300
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6.9% |
As you can see, the Yankees (not the Royals or Pirates) topped the list by spending a staggering 37% more than they would have been allocated. If they "overspend" that much in any future year, the overage will be taxed at 100%, and they have to give up their first round pick in each of the next two drafts. The Red Sox, at an also quite impressive 21.9% over, would be in the same boat.
You probably already know this, but it is still worth pointing out that, from 2007 to 2011, those were the two biggest-revenue teams in the game (Yankees: $320.8M, Sox: $258M).
The Tigers came in third, spending 10.9% over the pool amount. That would result in a 100% tax in their overage and the loss of both a first round and second round pick in a subsequent draft. The four remaining teams (including the Royals and Pirates) fall in the 5-10% range that would result in a 75% tax and the loss of one draft pick. And the Royals are actually the highest ranked "low-revenue" team on this list.
Obviously, teams are likely to alter their behavior once the new rules are applied, but looking at how those rules would have applied retroactively suggests that the currently-popular narrative that the Royals and Pirates are MLB’s signing bonus "big-spenders" might not be quite accurate. Both teams do make the list of "over-spenders," but neither is the most aggressive on the list. And, in fact, high-revenue franchises claimed the top three spots.
Finally, it should be noted that Major League contracts given to draftees (which are forbidden in the new CBA) are not accounted for in this data. That's a bit of a tricky issue, since ML contracts can be structured in different ways, and it gets dicey trying to account for the value of things like team options, etc. For intance, the Yankees gave Andrew Brackman (30th overall, 2007) a $3.35M signing bonus, but also gave him $4.5M guaranteed in a ML contract that also had options that could have taken the deal up to a total of $13M if they hadn't granted him free agency this offseason. As a result, I decided for the sake of simplicity to leave ML contracts out of this post. It should be noted, however, that if I had done so (and regardless of the method I used to value those contracts), the Nationals would surely have made this list with numbers similar to the Yanks and Sox. (However you slice it, the MLB portions of the deals for Harper and Strasburg total in excess of $10M). The Tigers' numbers would also jump into that same range because of the contract given to Porcello. The Rays and Mariners have also given out some significant ML contracts (Price, Ackley, Hultzen), but neither of those teams would have made this list, even if those amounts were included in the calculation.
We'll have to see how the new CBA plays out, of course. I have no doubt that Scott Boras is combing the terms of the agreement for loopholes at this very moment. But I also think it's a dramatic over-simplification to say that these new rules will hurt only small-market or low-revenue teams. The CBA also includes some new features that will benefit those teams. The overage tax, if collected, will go to low-revenue teams and the "Competitive Balance Lottery" will distribute some extra picks to low-revenue and small-market teams (and, perhaps more imporantly, it looks to me like those extra picks will have a significant effect on the Signing Bonus Pool itself, since picks in the 30-50 range will have to have a slot allocation in the $1M range). And, the dual points of the whole Signing Bonus Pool system are to lower the cost of signing bonuses overall while encouraging the teams with the highest picks to actually draft (and sign) the best available talent.
As I commented in the first thread on this topic, there are a lot of moving parts to understand in the CBA. Running these numbers helped me pin one of those parts down long enough to get a good look at it.
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I have nothing of substance to contribute, but
good work. Nice read.
Rec'd
Good post.
The fact that the big market teams also spend overslot money has been missed by many (including me), because people just look at the raw $. Obviously a team like us or the Pirates who have routinely picked near the top of the draft have spent more raw money than the Yankees, but it is interesting to see that they have still gone above slot more than any other team.
"Trying is the first step to sucking" -Jimmy Chance
I have wondered
whether an unintended result will be to skew the draft towards college players over time. A few 2 sport guys deciding to go to college since they can’t use that as contract leverage will cause teams to shy away from them with high picks.
"Trying is the first step to sucking" -Jimmy Chance
IMO, more high school players will go to college if they aren't drafted in the first round.
I think the draft will be weaker in talent in the next 2-3 drafts. After that, the overall talent will return to normal. The positive being that teams should get a more accurate read on the draftee’s abilities as they have 2-4 years of higher level experience. This should help all MLB teams. This might actually help the Royals maintain the talent in their system even if they are picking later in the first round (or last in the first round!).
Good post. Do you know how the Japanese players factor in?
Is the posting fee separate from the Pool? I would assume so.
I believe those are just free agent contracts at that point.
The new CBA does have new limitations on international signings, but it is my understanding that players from the Japanese leagues are not covered by those provisions, which apply only to “International Amateur Players.”
I'm not sure this works
It appears you are using the 2012 slot amounts retroactively for a period when the actual slot amounts were much less. For example, in 2007, the Rays went nearly $2 million over the $3.6 million slot to sign Price with the first pick, and the Royals went nearly $1 million over the $3.1 million slot to sign Moustakas with the second pick. The Rays, however, would have been $1.6 million under based on the 2012 slot number of $7.2 million, and the Royals would have been under by a similar number.
I think for this to work, you have to use the actual historical slot amounts.
The old slot recommendations have nothing to do with anything...
Why would I use the old slot recommendations when we know that’s not what the new CBA uses? That was a completely different “system.” (Those quotation marks are necessitated by the fact that it wasn’t really much of a system at all, since what we’re talking about are completely arbitrary numbers that were unenforceable in any event).
I suspect that many people actually don’t appreciate how different these new rules are from the old slot recommendations. A lot of the initial reaction seemed to be based on the assumption that teams who were exceeding the old slot recommendations will somehow be exceeding the new bonus pool rules. That simply isn’t true.
You correctly note that Price and Moustakas would not be “over-slot” deals in this new system (although the Rays couldn’t have given Price the ML contract if these rules had been in place). Further, it doesn’t even really matter if a single signing is “over-slot” since the penalties only apply to your aggregate signing bonus total for the first ten rounds. The old slot recommendations also tended to fluctuate in an apparently random fashion from one year to the next, sometimes rising, sometimes falling. And the reality is that the teams were basically ignoring them anyway, since there was no enforcement.
I just don’t think those arbitrary slot recommendations have any bearing on anything, to be honest.
They are certainly critical to the question "If draft position is taken into account, are the Royals and Pirates really that aggressive with over-slot bonuses?"
You are trying to make a conclusion about team’s over slot spending over the last five years and instead of using the historical slots, which would give you the actual amounts that each team paid over slot, you are retroactively applying a slot number that did not exist then. You are saying that the Royals and Pirates really did not pay much over slot in 2007 to 2011 because in 2012, that slot numbers would be much higher.
If you want to answer the question of whether the Royals and Pirates really were aggressive with over-slot bonuses from 2007 to 2011, you need to compare what they actually paid with the actual slot amount.
In 2007, the Royals went nearly a million over slot with Moustakas alone. In 2008, the Royals went about $3 million over slot for Hosmer. Those two players alone make a huge swing. Your “over slot” number for the Royals is at least $4 million too low.
Retroactively using the 2012 slot figure also skews the results as to the teams like the Pirates and Royals that picked higher in the draft than teams like the Yankees who always picked lower (and in the Yankees’ case sometimes had no first round pick). The actual slot figure for the first pick in the 2007 draft was $3.6 million, while the 2012 slot for that pick is apparently $7.2 million — a net $3.6 million difference. In 2007, the slot amount for the 30th pick was $945,000, while the slot for the same pick in 2012 is apparently $1.6 million — a net difference of only $655,000. The application of the 2012 slot numbers to the high picks creates a huge difference when compared to the relatively small difference for the lower picks.
(And that does not even address the problem of assuming that the player would have signed for the same number in 2007 if the slot amount was the much higher 2012 slot amount. If the 2007 slot amount for the first pick was $7.2 million and not $3.6 million, do you really think the Rays could have signed Price for $1.6 million under slot?).
To answer the question of how aggressively did teams spend over slot between 2007 and 2011, you have to compare the actual signing bonuses against the actual historical slots amounts.
You are saying that the Royals and Pirates really did not pay much over slot in 2007 to 2011 because in 2012, that slot numbers would be much higher.
But in the context of the study, wouldn’t that be true of ALL teams, and not just the Royals and Pirates? So, to the extent it’s skewed, it should be skewed for all teams, right? Especially to the extent that teams like the Yankees have usually been drafting much lower in the first round, while the Royals and Pirates were almost always in the top 5 or so?
Retroactively using the 2012 slot figure also skews the results as to the teams like the Pirates and Royals that picked higher in the draft than teams like the Yankees who always picked lower
But if the Yankees were always drafting lower, wouldn’t that tend to prove the point further (i.e. that big market teams were already overspending and outspending lower market teams)? If the previous, suggested slot amounts were lower, and the Yankees were drafting lower (with necessarily lower recommended slots), then wouldn’t the fact that they paid so much more than other teams be even more evidence of overspending? It seems to me that if the Yankees and Red Sox were generally drafting much lower than small market teams, and were naturally given lower slot recommendations for their picks, but still overspent the 2012 hard slot budget by the extent shown, then it just means they would have ended up overspending the past recommended slots by even more if they had had the higher first round picks held by the Royals and Pirates of the world.
Or am I completely offbase?
by Sweep_the_Leg on Dec 1, 2011 4:36 PM EST up reply actions
If the previous, suggested slot amounts were lower, and the Yankees were drafting lower (with necessarily lower recommended slots), then wouldn’t the fact that they paid so much more than other teams be even more evidence of overspending?
Exactly.
To take Gopher’s example of the 2007 draft…
The Rays got Price with the 1st pick and paid him a $5.6M signing bonus despite a slot recommendation of $3.6M (so, they went 55.6% over-slot).
The Yankees took Brackman with the 30th pick and paid him a $3.35M signing bonus despite a slot recommendation of $945,000 (so, they went 254% over-slot).
Now, both of those players also got MLB contracts, so it’s kind of a complex case (particularly given the way that Brackman’s contract was structured). But the point remains. For a team that never has high picks, the Yankees have been very aggressive in draft spending.
Also, as long as we're being anecdotal...
…I think most people probably have a tendency to underestimate how many picks the Yankees didn’t have over the last several years.
Consider 2009, in which they forfeited their first-round pick by signing Mark Teixeira, forfeited their second-round pick by signing CC Sabathia, and forfeited their third-round pick by signing AJ Burnett.
Wow, I hadn't even considered that
But the Royals will still be crippled by this monstrosity! Outrage!
by Sweep_the_Leg on Dec 1, 2011 4:57 PM EST up reply actions
The 2012 slot numbers do not skew evenly
But in the context of the study, wouldn’t that be true of ALL teams, and not just the Royals and Pirates? So, to the extent it’s skewed, it should be skewed for all teams, right?
No, it is not skewed equally, and the greatest impact occurs for the teams that picked early in the draft. For example, based on what actually happened, in 2007 the Rays’ actual slot number for pick No. 1 was $3.6 million, and the Yankees’ actual slot number for pick No. 30 was $945,000. The Rays actually signed Price for $5.6 million, while the Yankees actually signed Brackman for $3.3 million. In reality, the Rays went over-slot by $2 million, while the Yankees went over-slot by $2.355 million. The Yankees went over-slot by more than the Rays, but just by a little bit — a net difference of $355,000. Both teams aggressively went over slot to get their player.
But if you retroactively used the 2012 slot, the results change dramatically. Using the now doubled $7.2 million 2012 slot, the Rays have suddenly gone $1.6 million under-slot. The 2012 slot for the Yankees’ pick, however, only went up by $655,000 to $1.6 million, so the Yankees are still $1.7 million over-slot. By arbitrarily using the 2012 slot figures instead of the actual 2007 slot figures, the net difference is now that Yankees have “spent” $3.3 million more than the Rays — not $355,000. So now the narrative is that only the Yankees went aggressively over-slot, while the Rays are cheap bastards, even though it is divorced from the reality that both the Rays and Yankees went well above slot and that the difference was only $355,000.
The slots were a joke. They have nothing to do with anything. The bonus pool allotments have real teeth, so they are in the neighborhood of realistic bonuses. The slots meant nothing, so they were glorified owner’s pipedreams published merely for bargaining leverage.
If you want to argue about what the bonus pool would have been a few years ago, you argue that this post should account for inflation or whatever mark (league revenue?) the bonus pools are tied to. But the old slotting system has no place in this analysis.
by kcdc1 on Dec 3, 2011 5:10 PM EST up reply actions 2 recs
Yeah
if you wanted to know which teams went over-slot the most from 2007-2011, and thus would be hurt the most by the new rules that effectively eliminate that practice, the last thing you would want to do is
accurately calculate how much those teams actually went above their assigned slots each year.
You’re confusing the current system of “bonus pools” with the old system of “suggested slotting”. The two don’t have anything to do with one another. If you want to figure out who would be hurt most by the new rules, you should find a way to estimate what the bonus pools would have been in previous years. The old slots are nowhere close.
They are effectively the same thing just with a different euphemism and consequence
Slotting under the old and new systems are the same except (1) there are now formal penalties for exceeding the assigned slot amounts (tax, loss of draft picks), whereas in the past the commissioner’s office could only informally pressure teams into complying with the assigned slot amounts and (2) the amounts assigned per slot increased pursuant to an agreement between the players and owners.
Even though there were no formal penalties previously, the slots clearly influenced signing amounts. Most teams still generally followed slotting by usually signing players at or slightly above (10-15%) the recommended slots and only occasionally going well above slot. There were several exceptions — both big market and small market teams — that regularly went above slot (but not necessarily on every pick). Because the penalties under the the new rules are so draconian, they have effectively eliminated the abililty of teams to go over slot, which hurts the teams that had previously used overslotting the most as a strategy. The correct way to figure out which teams went over-slot the most from 2007-2011 is to add up how much each team spent above their assigned slots during that period.
For the record:
Even though there were no formal penalties previously, the slots clearly influenced signing amounts.
I’m not sure how “clear” this supposed influence was. I don’t have time to go collecting the data right now, but I strongly suspect there wasn’t much correlation between total “recommended slot allocation” in any given year and total signing bonuses given out in that same year. For instance, the recommended slots sometimes decreased from one year to the next. I’m willing to bet that overall signing bonus spending didn’t track downward along with the recommendations. I bet actual spending just continued along as if Selig’s recommendations didn’t matter.
Go look at the signings and compare them with the slot recommendations for each year
It becomes quickly apparent that majority of signings were at or slightly above (10-15%) the recommended slots, especially after the first round, and most teams only occasionally went well above slot. For example, here is the first round from 2007:
1 David Price $5,600,000 bonus/$3,600,000 slot
2 Mike Moustakas $4,000,000/$3,150,000
3 Josh Vitters $3,200,000/$2,700,000
4 Daniel Moskos $2,475,000/$2,475,000
5 Matt Wieters $6,000,000/$2,250,000
6 Ross Detwiler $2,150,000/ $2,160,000
7 Matt LaPorta $2,000,000/$2,070,000
8 Casey Weathers $1,800,000/ $1,980,000
9 Jarrod Parker $2,100,000/$1,890,000
10 Madison Bumgarner $2,000,000/$1,800,000
11 Phillippe Aumont $1,900,000/$1,710,000
12 Matt Dominguez $1,800,000/$1,620,000
13 Beau Mills $1,575,000/ $1,575,000
14 Jason Heyward $1,700,000/$1,530,000
15 Devin Mesoraco $1,400,000/$1,485,000
16 Kevin Ahrens $1,440,000/$1,440,000
17 Blake Beavan $1,500,000/$1,417,500
18 Pete Kozma $1,395,000 /$1,395,000
19 Joe Savery $1,372,500/$1,372,500
20 Chris Withrow $1,350,000/$1,350,000
21 J.P. Arencibia $1,327,500/$1,327,500
22 Tim Alderson $1,290,000/$1,282,500
23 Nick Schmidt $1,260,000/$1,260,000
24 Michael Main $1,237,500/$1,237,500
25 Aaron Poreda $1,200,000/ $1,215,000
26 Justin Simmons $1,192,500/$1,192,500
27 Rick Porcello $3,580,000/$1,170,000
28 Ben Revere $750,000/$1,080,000
29 Wendell Fairley $1,000,000/$990,000
30 Andrew Brackman $3,300,000/$945,000
Why is the slot recommendation for the fifth pick higher than for the fourth pick? Something definitely looks wrong there.
Also, I was talking about the year-to-year correlation, not anything within a single year, so you aren’t addressing the same topic that I was. For instance, the total slot recommendations in this draft (i.e. 2007) were lower than the total recommendations for the 2006 draft, because 2007 was the first year of a new CBA, and Selig though he could push bonuses down that year.
As it turns out, Selig was wrong. Overall bonuses in 2007 were actually higher than in 2006. Obviously, we are talking about an inadequate sample size here, but as far as those two years go, there was an inverse correlation between total slot and total spending.
All this, according to Callis. We’re both just using anecdotes, though, really. If we wanted an actual answer to the question, it would make a lot more sense to study this systematically. In any event, I stand by the assertion in my last comment:
I strongly suspect there wasn’t much correlation between total "recommended slot allocation" in any given year and total signing bonuses given out in that same year.
D'oh.
Forget what I said about the fourth and fifth pick. Apparently, I’m not very good at reading down a column.
Now go look at each round of each draft
I used the 2007 first round to illustrate that the slots influenced the signings, which was the point to which you had responded. If you look at other rounds of this draft or the other drafts, you still see that a majority of the signings were at or slightly above (10-15%) the slots. For example, in the 2009 first round, of the 31 picks that signed, 20 were either below, at, or only slightly above their slot recommendation.
If the point is to find out which particular teams will be hurt the most by the
To determine which teams went over slot the most between 2007 and 2011, the accurate way to do it is to add up each team’s signings and the each slotting recommendation. I would hold off on making conclustions until you actually look at the data.
Now go look at each round of each draft
That’s kind of what I already did. And it is also what I am suggesting you need to do.
When I did this analysis, I used the first ten rounds of the last five drafts. It took me a few hours to do that, and I thought the results were interesting, so I typed it up as a FanPost.
You seem to think that it would have been better to use a different methodology and a different data set. I disagree for reasons that we have already beaten to death. Also, I don’t happen to have the data set you want to use. But, if you think that doing it your way would be meaningful and/or interesting, why don’t you just do it, so that we can all see what you are talking about?
In fact, when you first suggested this last week, I even offered to do the the math for you if you could track down the numbers. I don’t have those numbers, and tracking them down on-line would take more time that I think it’s worth—mainly because I don’t think the analysis you propose would reveal anything of relevance to the new CBA or anything else particularly interesting. (And, again, we’ve already beaten this to death).
But if you remain convinced that looking at spending relative to slot recommendations would not be a complete waste of time, why don’t you just do it? Or, if you want to take advantage of the fact that I’ve already done most of the work, just find the data and I’ll be happy to plug it into my spreadsheets for you.
I appreciate the work
and I know it is hard to hear that there was a problem with your methodology after doing all that work.
Do you not think it is a problem that the Rays actually paid Price $2 million above slot and the Royals actually paid Moustakas $900,000 above slot, but your methodology actually characterizes the Rays as paying Price $1.6 million under-slot and the Royals as paying Moustakas $1.2 million under-slot? Do you really not see the problem that creates?
If you are trying to figure out which teams went above the slot the most between 2007 and 2011, why is the best method not to figure out how much each team went above slot by adding up the actual signings and the actual slots and then comparing the two numbers?
Do you not think it is a problem that…
No, I do not think it is a problem, for all of the reasons that we have already hashed out in this thread. But, maybe a visual representation would help, so, with the obvious small-sample-size caveat…
On the following chart, the black dots represent the actual signing bonuses given out to the first 30 picks in the 2007 draft (using the numbers you posted above). The thin black line is an Excel-generated trendline (i.e. the curvilinear regression that produces the best R-squared value). The red line represents the recommended slot values from 2007 (again, using the numbers you posted above). To create the blue line, I took the formula that I derived from the 2012 CBA numbers (i.e. the formula described in my original post) and I adjusted it for five years’ worth of inflation assuming a rate of 5% per annum.
Here’s the chart:
As you can see, the blue line tracks the actual data (as represented either by the dots or by the black line) a little better than the red line does. In other words, the inflation-adjusted 2012 CBA allocations do a better job of predicting actual bonus spending in 2007 than the 2007 slot recommendations did.
This does not surprise me. As I have repeatedly said here, the slot recommendations were quite random. I suspect that the allocations in the new CBA, unlike the slot recommendations we have seen in the past, have actually been calculated to correspond to the market forces at work. That’s just a theory, though.
And, unsurprisingly, that graph makes it clear that the old slots were far lower than actual bonuses for the top picks, but more realistic after the first 5 or so picks (except for the guys that fell due to bonus demands).
So an analysis that compares bonuses to the old slots will find that teams that had top 5 picks greatly overspent their recommended slots—which exactly what Callis found.
Of course, this is a product of the old slotting system being unrealistic at the top of the draft and NOT of the high-drafting teams being unusually aggressive with bonuses. If you look at the blue line, it’s clear that the teams that were unusually aggressive with bonuses were the Orioles, the Tigers and the Yankees. The bonuses for the top 3 picks, while well above their “slots” were within permissible behavior under the new CBA.
The question presented was which teams are hurt by the new rules
not whether the actual slot number or new slot number more closely followed actual spending.
This illustrates the problem of using the 2012 slotting numbers. In reality, every dot above the red line was a pick that signed above slot. These were the teams that went over slot that year in that round. By using the 2012 slot numbers, only Wieters, Porcello, and Brackman are considered above slot, which skews the data, especially in the case of the Rays and the Royals.
No one is going to rerun the 2007 through 2011 drafts using the new slotting — that does not provide any helpful information.
But we can figure out which teams actually went over-slot in those years and by how much. And because we know those teams cannot do that anymore under the new rules, we can identify those teams as the ones who will be hurt the most under the new rules.
Honest question
Do you really not see the problem with using the old slots as a benchmark?
What is the question you want answered?
If you want to know which particular teams are hurt by the new rules that essentially eliminate the practice of spending over-slot, you need to know which teams went overslot the most between 2007 and 2011. The only way to know which teams went over-slot and by how much is to use the slots in place at the time.
Trying to help explain
I think using the terms “slot” for both the old and new system is confusing you. I think things would be clearer if you call the old system “slots” and the new system “bonus pools”.
Here’s how your comment would read:
If you want to know which particular teams are hurt by the new rules that prohibit spending beyond the allotted bonus pool, you need to know which teams spent beyond their recommended slots between 2007 and 2011.
Does that make sense? The bonus pools are different figures that derived from a different formula than the slots, so why would looking at the slots tell us anything important about the effects of the bonus pools?
Just use the terms “slots” and “bonus pools” for the separate systems, and I think it becomes much easier to see the issue clearly.
Doing the same thing with your comment earlier:
You know what each team’s behavior under the new rules is going to be — each team will not pay beyond its bonus pool. You know what each team’s prior behavior regarding paying beyond its recommended slot was by comparing how much they spent to sign players versus the then existing slots. For teams that previously spent well above their recommended slot, the new rules are a big change because they will not spend beyond their allotted bonus pools.
Do you see the logical jump that you’re making there? You’re conflating the slot and bonus pool systems, but the two systems are not equivalent. A level of spending that was beyond slot may not exceed the bonus pool.
by kcdc1 on Dec 5, 2011 6:06 PM EST up reply actions 1 recs
"It's Not a Doll, It's an Action Figure!"
Applying the 2012 slotting numbers (or “bonus pool” numbers if you prefer) to the 2007-2011 signings does not tell us anything about which teams would have went overslot in 2012 or beyond if the new hard slotting numbers (my apologies, I mean “bonus pool” numbers) were not enacted. We know teams in 2012 and beyond will not go over slot anymore because of the penalties.
Seeing which teams actually went above slot in 2007-2011 tells us which teams historically used this strategy. We know in 2012 and beyond that they cannot continue to use this strategy. Their behaviors thus will have changed the most under the new rules.
Seriously, just try it
If you stick terms that clearly separate the new and old systems, it’s easy to see the hole in your argument.
In this comment, you’re conflating the strategy of spending over slot with the strategy of spending beyond the allotted bonus pool.
Seeing which teams actually went above slot in 2007-2011 tells us which teams spent over their slot recommendations. We know in 2012 and beyond that these teams cannot spend beyond their allotted bonus pools. The teams that spent beyond their recommended slots behaviors thus will have changed the most under the new rules.
The last sentence doesn’t follow. Strategies that involved spending beyond the old recommended slots are still permitted under the new bonus pool rules because the bonus pools are much higher than the old slots, particularly at the top of the draft.
yeah, no one is saying use the 2007 slot numbers for 2012
The only real way to evaluate which 2007 signings went over-slot that year is to use the 2007 slots. The only real way to evaluate which 2008 signings went over-slot that year is to use the 2008 slots. And so on. Once you do that for all five years, you know which particular teams went above slot the most for those five years.
Which tells you nothing useful about what the new CBA will change
Finding out which teams spent more than their recommended slots gives you an idea which teams would go over slot in the coming years if the rules didn’t change.
Finding out which teams spent more than the bonus pool calculation would have allowed in recent years gives you an idea which teams will be forced to reign in spending with the new rules.
The first tells you something
These are teams that went above slot in previous years and gives you an idea of which teams would continue to go over slot if the penalties (which effectively make them a hard cap) had not been put in place for 2012.
The second does not really help because you have to make the faulty assumption that spending would not have changed in years 2007 to 2011 even if higher slot amounts (or “bonus pool” amounts) had been in place (but with no penalties). Most players have ended up signing at or slightly above (10-15%) their applicable slots, so you cannot extricate the prior signings from the conditions that existed at the time when they signed by ignoring the then existing slot numbers. In other words, to answer a question posed earlier, it is not reasonable to assume that if the slot number for the first pick in 2007 was $7.2 million (the 2012 slot number) and not $3.6 million (the actual 2007 slot number), David Price would have actually signed for $5.6 million, which would have been $1.6 million under slot. That is the problem with trying to take future standards and retroactively apply them to decisions that have already been made based on a different set of then existing standards.
by Gopherballs on Dec 5, 2011 8:42 PM EST up reply actions 1 recs
Yeah, your argument makes no sense and you’re still insisting on using language that attempts to conceal the fact that you’re conflating the new system and the old system. Maybe you know what’s going on and you’re just baiting me. Or maybe you’re unwilling to consider the truth on the issue. Either way, I’m giving up.
Right back at you, sport
Applying the 2012 slots to past events does not work. It is like saying that someone made a good deal when they bought a new car in 2007 for $25,0000 even though they paid $5,000 over the 2007 model’s MSRP because the MSRP for the 2012 model is now $30,000.
What you are saying is that the new rules will not hurt the Rays in the future by applying 2012 standards to a 2007 signing. Specifically, you are saying the new rules will not hurt the Rays because the Rays signed Price for $5.6 million in 2007 (when the slot was only $3.6 million), but if the Rays had made this pick in 2012, the slot (ahem, “bonus pool”) number would have been $7.2 million. That makes no sense.
In reality, the Rays went $2 million over-slot for the Price pick in 2007, but using the 2012 slot number inaccurately treats this event as if the Rays went $1.6 million under-slot. That just does not work.
by Gopherballs on Dec 6, 2011 12:59 PM EST up reply actions 3 recs
Specifically, you are saying the new rules will not hurt the Rays because the Rays signed Price for $5.6 million in 2007 (when the slot was only $3.6 million), but if the Rays had made this pick in 2012, the slot (ahem, "bonus pool") number would have been $7.2 million.
Incorporate an inflation adjustment to the new formula—don’t use a separate formula that happened to produce $3.6M. Because $3.6M isn’t anywhere close to what the bonus pool would have been.
Bah. I keep getting baited into this. I’d given up on you understanding, but now it appears that more people seem to share your confusion.
In reality, the Rays went $2 million over-slot for the Price pick in 2007, but using the 2012 slot number inaccurately treats this event as if the Rays went $1.6 million under-slot.
Stop using the same language for the new and old systems. Just stop. It’s obviously a deliberate attempt to conceal the hole in your argument.
Using honest and language, the Rays went $2M over-slot in 2007, but this would have likely been under what their allotted bonus pool would have been. You see how there’s no contradiction there if you use clear wording?
by kcdc1 on Dec 6, 2011 4:27 PM EST up reply actions 1 recs
Notice that the recommended slots at the bottom of the draft are within 50% of what the new slots for those picks will be, but at the top of the draft, they’re less than half of the new figures. This, in a nutshell, is why using the old slots as the benchmark doesn’t make sense. Doing so will systematically make high-drafting teams look like they’re getting screwed by the new rules.
Also note that, considering just these 30 picks...
…the teams who went “over-slot” by the largest percentage are still not the Royals or Pirates, and instead, they’re the Yankees and Tigers (Boston didn’t have a first round pick that year). Of course, this is meaningless, given the sample size, but here’s how the 2007 first-round high-spenders stack up, ranked by percentage over 2007’s recommended slots:
Yanks: 249%
Tigers: 206%
Orioles: 167%
Rays: 56%
Royals: 27%
Cubs: 19%
If it weren’t for the sample-size issue, this data would actually support my original conclusion…
For the teams that pick early
where they make up the ground is in the subsequent rounds, like when the Royals signed Myers for $2,000,000 in a ~$475,000 slot.
Like I said...
…it’s a meaninglessly small sample.
If you want to draw real conclusions, you should probably start from a bigger base of information than these thirty picks—like I did in the original post. By debating this based solely upon the first round of the 2007 draft, we are currently talking about a data-set that represents less than 2% of the data I used to compile the original post.
it was being used as an illustration
but go look at the other rounds of that draft and the other drafts during the time frame and you see the same basic thing.
the "illustration" has a sample size problem
…go look at the other rounds of that draft and the other drafts during the time frame…
This is the data that I don’t have. How do you suggest I “go look at” it?
Also, why do you keep suggesting that I should go out and find the information necessary to prove your point?
Do you want an objective answer to the question you are posing
or are you only interested if it supports your existing narrative that only big market teams will be hurt by the new slotting rules?
My “point” is that the method that you used had some pretty serious problems that skewed the results, particularly for teams that selected early in drafts, which in turn undermined your conclusion. I suggested a way you could fix those problems by using the then existing slotting numbers. I believe Baseball America has the information available behind its pay wall. While I do not know what the actual results would be, they would accurately reflect how teams actually behaved in regards to slotting. I would wait to draw my conclusions until seeing those results.
the amounts assigned per slot increased pursuant to an agreement between the players and owners.
This is what matters. There’s a new formula in place. The old formula was unrealistic (too low) at the top of the draft, so the teams that drafted high went way over slot every year. I don’t know why you want to try to figure out how the new formula will affect teams by measuring how much teams went over the slots produced by the old formula. They’re different numbers. It makes no sense.
It would make sense to figure out what the slots would have been by the new formula.
Good grief
We already know how the new slotting system will affect teams — no one is going to pay over slot anymore. Before this year, there were certain teams that conistently employed the strategy of spending well above their slot recommendations to get better talent. Those teams cannot do that anymore, so they are obviously hurt by the new rules.
Alright, I guess you’re not gonna give up this idea of using the old slots as the benchmark.
If you want to figure out the new rules will change team behavior, you need to figure out how teams’ past behavior compares to the new rules. So you should figure out what slots would have been had the new rules applied, and compare teams behavior relative to those estimated slots.
But you’ve committed yourself to the illogical position that using the old slots which were based on a different formula than what will be now be implemented is a more appropriate comparison. It’d clearly be better to do an apples to apples comparison, but you’re not budging.
Okay.
If you want to figure out the new rules will change team behavior, you need to figure out how teams’ past behavior compares to the new rules.
You know what each team’s behavior under the new rules is going to be — each team will not pay overslot. You know what each team’s prior behavior regarding overslotting was by comparing how much they spent to sign players versus the then existing slots. For teams that previously spent well above slot, the new rules are a big change because they no longer do that. Their behavior will have changed. For teams that previously did not spend much above slot, the new rules are not a big change because their behavior will stay pretty much the same.
This is so frustrating. Maybe a hypothetical example will help.
Let’s say:
2011 (old rules):
-Team A drafts #1 with a “recommended slot” of $4M and signs their pick for $7M.
-Team B drafts #30 with a “recommended slot” of $1M and signs their pick for $1.7M.
2012 (new rules):
-Team A again drafts #1 with a “bonus pool” of $7.2M and signs their pick for $7M.
-Team B again drafts #30 with a “bonus pool” of $1.6M and signs their pick for $1.7M.
By your proposed benchmark of the old slots, we’d find that in 2011, Team A exceeded their slot by 75% while team B exceeded their slot by only 70%, so we’d conclude that the new rules would punish Team A’s behavior more than Team B’s behavior.
But in fact, we observe that the new bonus pool figures are different from the old slot figures, and Team A’s bonus behavior is not punished at all by the new system while Team B will pay the luxury tax and is close to having to sacrifice future picks.
This is why we can’t use the old slots to estimate the impact of the new bonus pools. The numbers are different, and they produce different results.
Fake examples do not really help
You are making the assumption that teams in the past would have made the exact same signings regardless of the slotting amounts at the time.
And you also making the erroneous assumpttion that Team A in 2011 is the same Team A in 2012. 2011 Team A could go over slot to sign the player it really wanted. Wherever it picks in the 2012 draft, it cannot go over slot to get the player of its choice — it is stuck choosing among players who will agree to the slot number. The new rule hurts that team because it can longer use the strategy of paying more than slot to get preferred talent.
We have a record of which teams did this and by how much from 2007-2011.
…account for inflation or whatever mark (league revenue?) the bonus pools are tied to.
I think you have the right benchmark. The official CBA summary says the pool amounts will be adjusted relative to “the rate of growth of industry revenue.” I could pretty easily do that calculation, but first I will have to figure out what that rate was over the last five years. If I have any spare time this week, I’ll probably try to do that…
I think you misunderstand what I was trying to do.
Teams are likely to adjust their approach now that there are actual rules governing signing bonuses. The old slot recommendations didn’t seem to have much affect on anything. The new rules actually have teeth, and teams will have to change their behavior or suffer the consequences.
So, wanted to know Which teams will have to make the biggest adjustments. The answer I come up with is that it will be the Yankees, Red Sox and Tigers (and, although my data doesn’t show it, probably the Nationals, too).
You can’t answer that question by looking at team behavior relative to the old slot recommendations because the old slot recommendations bore no relationship to reality. The teams knew they weren’t enforceable. The agents knew they weren’t enforceable. The players knew they weren’t enforceable. And, frankly, I expect all parties involved pretty much ignored them.
Of nearly equal importance, those recommendations were arbitrary. Some years they went up, some years they went down, and it never seemed to have much affect on the real-world market. In other words, there was no significant correlation between Bud Selig’s wishes and what actual participants in the signing bonus market were doing.
Now, we could do the analysis that you’re talking about (and, as I suggested, Jim Callis has probably already done that to death), but that wouldn’t answer the central question I’m asking. I want to know how much MLB teams are going to have to adjust their behavior in order to comply with the new rules (and, more specifically, which teams and by how much). In order to answer that question, I had to compare the teams’ past behavior to the new rules.
So, that’s what I did.
If you want to figure out how much teams were spending above the old slot recommendations, be my guest (but I’d recommend searching for some old Callis articles first). I’m not sure why you want to know the answer to that question, but I will predict that some combination of the Yankees, Red Sox and Tigers will still come out on top in terms of percentage over slot, but the overall “overage” numbers for all MLB teams will be higher.
by kcemigre on Dec 1, 2011 4:37 PM EST up reply actions 1 recs
First, I think you are vastly underestimating how much teams generally adhered to the slots
For example, in 2007, only six of thirty teams went above slot in the first round by more than $200,000 or 10% (and some even went under-slot). Teams going over-slot by more than a marginal amount was still the exception than the rule.
Second, I think you are asking a different question in this comment (the change of behavior) than the question you posed in the actual post (“If draft position is taken into account, are the Royals and Pirates really that aggressive with over-slot bonuses?”).
Third, if the point is to look at change of behavior, I think you have to look at see what the actual previous behavior was (some teams spent well above slot, some did not) and then compare that with what will happen under the new rules (most likely no teams will spend above slot). According to Jim Callis, last year three of the top teams that spent above slot were the Pirates at $10.4 million above slot ($16.5 million total spent less $6.1 million total slot allotment), the Nationals at $8.6 million above slot, and the Royals at $6.8 million above slot. Under the new rules, those teams can no longer do that. Is that not a significant change in behavior?
I think you are asking a different question in this comment (the change of behavior) than the question you posed in the actual post ("If draft position is taken into account, are the Royals and Pirates really that aggressive with over-slot bonuses?").
No, the question I posed in the post is in the title: Who will be hurt by the new CBA’s Signing Bonus Pools?
And, to be clear, if you base your assessment on raw-dollar-figures-over-slot, the Pirates and Royals are, indeed, the biggest high-spenders in the draft regardless of which “slotting” system you use. But, if you compare those dollar figures to the allocations permitted by the new rules (or the old recommendations, for that matter, if you want to imagine an enforcement mechanism that would have made such a comparison meaningful), you will find that the Yankees, the Red Sox and the Tigers actually exceeded their “allotment” or “slot” by a much higher percentage than either of those teams.
Since the percentage by which you exceed the bonus pool is what will matter (and not the raw dollar figures) in 2012, the Yankees, Red Sox and Tigers are going to have to change their past behavior if they don’t want to get hit with the new CBA’s draconian punishments. Teams like the Royals and Pirates will also have to change their behavior some, but not by nearly as much as those other teams.
by kcemigre on Dec 1, 2011 6:06 PM EST up reply actions 2 recs
But your data does not answer that question
you will find that the Yankees, the Red Sox and the Tigers actually exceeded their "allotment" or "slot" by a much higher percentage than either of those teams.
I am not sure how you can find this until you actually compare the actual amounts spent against the actual slot amounts from 2007 to 2011.
For 2011, this was not the case. Jim Callis totaled the 2011 spending above slot for the first ten rounds and found that the top 3 three were:
1. Pirates 268% (10 signings, $16,445,700 total spent, $6,134,200 slot)
2. Royals 249% (9 signings, $11,405,000 total spent, $4,579,500 slot)
3. Nationals 242% (11 signings, $14,551,100 total spent, $6,005,100 slot)
I am not sure how you can find this until you actually compare…
Sorry, I’m not “finding” anything. I’m making a prediction. I could have been more clear.
You didn’t include data for the teams I predicted will have higher percentages that the Pirates and Royals. I assume Callis didn’t list the numbers for the Yanks, Sox and Tigers…
Look, I still don’t see the point of this, but I’d be happy to run the numbers for you if you want. I still have the spreadsheets that I used to do this stuff. The only time-consuming part would be collecting five years’ worth of slot recommendations. If you can come up with a complete list of the recommended slot for rounds one through ten for each year from 2007 through 2011, I could run the numbers and post the results in a google spreadsheet or something.
Callis listed the Top 3 by percentage, so the Yanks, Sox, and Tigers would be lower
If you want to pay to reinstate my subscription, I woud be happy to pull the rest of the list.
I do not think retroactively using the 2012 numbers gets you anywhere because by using slot numbers that did not exist at the time, you end up with skewed results like characterizing the Rays as going under-slot in 2007 when in fact they went well above slot.
Eh, whatever.
If I had the data, I’d run the numbers, but I still think the results would serve no purpose except to settle a sort of tacit wager between you and me.
I also still think I answered the question I set out to answer. I’m sorry if my description didn’t make clear what I purported to be demonstrating with this little exercise.
I think the results would answer the question you are asking
If you really want to find out which teams are hurt by the new draft rules effectively eliminating over-slotting, wouldn’t the first thing you need to know is how much and to what extent each team was previously going over-slot?
Using the 2012 numbers retroactively does not provide you that information because you are imposing a new threshhold on past events, which incorrectly characterizes some teams as paying under slot when in fact they actually paid well above slot. You are then drawing conclusions based on those incorrect characterizations.
And using the 2012 slots retroactively also requires the faulty assumption that the players would have signed for the same numbers in 2007-11 if the higher 2012 slots were in place. (You cannot assume David Price would accept a contract for $1.6 million under slot).
I appreciate the work, but the underlying data and assumptions are flawed.
…you are imposing a new threshhold on past events…
I’m not imposing a new threshold. The CBA is doing that. I just wanted to compare the only data available (i.e. the past behavior of the teams involved) to the rules by which those teams will have to comply going forward.
…the faulty assumption that the players would have signed for the same numbers in 2007-11 if the higher 2012 slots were in place…
Obviously, we’ll have to wait to see what happens, but I am not making that assumption at all. I am just analyzing the data that is available. But, you aren’t seriously suggesting that signing bonuses are actually going to increase now that there are real punishments for overspending, are you? The CBA is quite consciously designed to drive signing bonuses down, not up.
I’m not imposing a new threshold. The CBA is doing that. I just wanted to compare the only data available (i.e. the past behavior of the teams involved) to the rules by which those teams will have to comply going forward.
The new CBA is not going back in time to impose its new slotting thresholds on prior signings. That was what you were doing. Using the 2012 slotting thresholds for 2007-2011 does not give you accurate information on which teams were previously going over-slot, so it really does not help answer the question of whether the new slotting thresholds will actually hurt any particular team.
But, you aren’t seriously suggesting that signing bonuses are actually going to increase now that there are real punishments for overspending, are you?
I know you are not seriously suggesting that I am suggesting this (and it does not follow from the point being made about your faulty assumption that David Price would have signed for $1.6 million under slot in 2007 if the 2012 slot of $7.2 million was in place then), but in any case, I said in the same comment that “the new draft rules [are] effectively eliminating over-slotting.”
BTW...
…the Jim Callis piece that I mention in this post points out that the numbers being used in the new system are going to be 50% higher than the corresponding slot recommendations from last year. I think that’s a pretty clear concession that the old slot recommendations weren’t reasonable anyway. (And, let’s face it, they didn’t have to be reasonable, because they were ultimately meaningless).
Callis has done tons of analysis on the draft and draft spending in the past, so I would be surprised if he hasn’t already compiled and published tons of info on who was over-slot and when. Unfortunately, since he writes for Baseball America, that stuff is probably mostly subscriber content.
In any event, I think that kind of analysis is outdated now, since the new rules are clearly so different from the old “recommendations.”
If you really wanted to fix this...
Does the new CBA give any indication of the increase in slot from year to year? If so, you could extrapolate backward to have a better sense of what slot would have been in those years. I don’t think it’s necessary, but it would give better results (though for the amount of work, probably not that much better).
Great post, but I wonder how much including the ML contracts would change things. Were some teams crazy with giving out ML contracts left and right? What happens if you include the ML contracts as extra signing bonus money? True draft costs would be skewed, but it would give a better sense of how much the team is willing to pay for its players.
For the royals, was Crow the only ML contract during 2007-2011?
Those are both good suggestions.
A simple solution to the first problem is to apply a uniform inflation rate to the bonus pools, in order to more accurately project those numbers into the past five years. That wouldn’t be too much work, but I also don’t think the results would actually change that much.
As to the second issue, I did try to address this some in the last paragraph. I don’t have a complete list of ML contracts given to draftees in the last five years, but I did try to mention the really big ones. I think the Nationals are the only team who gave out ML deals big enough to actually move much in my overall rankings. But, to be honest, I don’t know that for sure.
One thing is for sure though
The value of being a bad team will increase, because higher draft position will be more closely correlated with the perceived talent of the prospect.
And guys have less reason to hold out now too. They don’t have any chance to make more money except to get drafted higher.
by WURoyal on Dec 1, 2011 2:42 PM EST reply actions 1 recs
Absolutely.
This is what Selig & Co. were trying to accomplish in the first place: get the best talent drafted first.
Your second point is completely valid, too, although the outcome is harder to predict, since it will be the result of the market as a whole digesting these new rules and learning to work within the system. But, signing bonuses are going to decline. And, again, that’s exactly what Selig & Co. wanted.
This is what I've been saying in all of these threads
The top picks are now more valuable because draftees won’t have an incentive to scare away the high-drafting teams in order to get to the deep-pocketed teams at the bottom of the draft. The teams at the top of the draft will get more of the best available talent, and because draftees will have less leverage (because other teams can’t offer them more), the teams will get that top talent for more reasonable prices.
Great post
I thought that the new CBA would ultimately be good for smaller market teams before I saw this. And now I’m even more confident. I hadn’t really seen anything that specifically laid out how much the top spenders were spending, and who those top spenders actually were. This would seem to confirm that not only would big market teams eventually throw their weight around in the draft to the disadvantage of small market teams—they already have been.
Now if this would just lead to a hard cap for MLB payrolls…
This isn't really a problem...for anyone
The guys that would have gone over slot after the first round will now be selected after the 10 round. There is a way around anything.
You can't go over $100,000 after Round 10
If you do, that amount counts against your draft spending cap. And if you go over your draft spending cap, then you enter the “penalty zone” (i.e. pay a luxury tax and give up one or more future picks).
by Sweep_the_Leg on Dec 1, 2011 4:38 PM EST up reply actions
Picks after the tenth round are effectively limited to a $100,000 bonus.
Any bonus higher than that counts against your signing bonus pool.
Could they go play in Japan for a year or two our of high school or college and then enter free agency?
Wouldn't that subject them to NPB rules on free agency and the posting system?
If so, I’d much rather take my chances with the new MLB CBA and draft.
by Sweep_the_Leg on Dec 1, 2011 6:43 PM EST up reply actions
Yeah, it wouldn't be "a year or two."
First, you’d have to make it to the majors in Japan. Then you’d be under team control for 8 years. Then you’d be a free agent, ready to go back to America. On the positive side, you will probably have learned a new language by then…
Before free agency, you can always request that your Japanese team post you, but unless you are a big star, the posting fee is going to drive down the contract you can negotiate with an MLB team.
There’s really no upside.
Great post
Shouldn’t really surprise anyone to see the richest teams at the top of the list, but I’m sure it will anyway.
Adjusting for revenue growth...
As promised above, I have recalculated these numbers, adjusting them over time based upon the “rate of growth of industry revenue,” as prescribed in the new CBA. In essence, this is an inflation adjustment calculated using the rate of MLB revenue growth instead of the CPI (or whatever other measure of inflation a person might use).
In order to derive the appropriate growth rate for each year, I added up team revenues for each of the last several years and used the totals to calculate the rate of revenue growth between each of the years at issue. Unfortunately, team revenues for 2011 and 2012 are not available yet, so I had to assume an industry growth rate continuing over those two years at the average rate from the preceding years. Over the five-year span at issue, BTW, MLB team revenues grew at an average rate of 3.64%.
The end result is that everybody’s Signing Bonus Pool is reduced some, particularly in the early years of this sample. This means that every team in the sample spent more relative to that number. Calculated this way, there are now 9 teams spending more than 100% of their bonus pool. When sorted by percentage over the bonus pool, however, the teams are still in the same order as my original calculation. You may note that the overage percentages of the Royals, Indians, Orioles and Pirates have all edged up closer to that of the Tigers. The Yanks and Red Sox, however, still run away with the field.
The first number in each row is the calculated Signing Bonus Pool that the team would have had to work with over the five-year span.
The second number is the actual amount spent on bonuses by that team.
The third number is the difference between those two dollar amounts, and the final column of data (in bold) represents the percentage by which each team over-spend its Signing Bonus Pool.
Yankees
$22,157,550 | $33,699,000 | $11,541,450 | 52.1%
Red Sox
$32,992,162 | $44,097,250 | $11,105,088 | 33.7%
Tigers
$25,311,876 | $31,269,200 | $5,957,324 | 23.5%
Royals
$37,469,457 | $45,204,900 | $7,735,443 | 20.6%
Indians
$27,885,735 | $33,179,300 | $5,293,565 | 19.0%
Orioles
$34,856,793 | $41,219,700 | $6,362,907 | 18.3%
Pirates
$44,172,293 | $52,057,400 | $7,885,107 | 17.9%
Cubs
$30,283,327 | $32,407,100 | $2,123,773 | 7.0%
Nationals
$47,890,898 | $51,084,600 | $3,193,702 | 6.7%
Also, as long as I have the data on hand, I may as well post the rest of the league. Because these teams spent less than their theoretical bonus pools, the last two columns represent the amount under the bonus pool, and the percentage of the bonus pool spent, respectively:
Giants
$33,619,552 | $33,162,400 | $457,152 | 98.6%
Mariners
$37,551,803 | $36,055,900 | $1,495,903 | 96.0%
Athletics
$27,715,526 | $25,210,500 | $2,505,026 | 91.0%
Reds
$31,238,333 | $27,668,850 | $3,569,483 | 88.6%
Cardinals
$30,326,596 | $26,818,200 | $3,508,396 | 88.4%
Dodgers
$27,134,180 | $23,608,050 | $3,526,130 | 87.0%
Rangers
$36,517,064 | $31,384,300 | $5,132,764 | 85.9%
Phillies
$26,567,380 | $22,802,700 | $3,764,680 | 85.8%
Mets
$29,128,568 | $24,919,300 | $4,209,268 | 85.5%
Blue Jays
$45,332,679 | $38,429,600 | $6,903,079 | 84.8%
Padres
$42,483,606 | $35,768,100 | $6,715,506 | 84.2%
Rays
$50,185,791 | $40,582,200 | $9,603,591 | 80.9%
Braves
$27,871,332 | $22,011,050 | $5,860,282 | 79.0%
Astros
$31,977,555 | $25,162,630 | $6,814,925 | 78.7%
Brewers
$37,349,913 | $29,351,500 | $7,998,413 | 78.6%
Diamondbacks
$45,415,374 | $35,261,000 | $10,154,374 | 77.6%
Rockies
$31,756,730 | $24,503,900 | $7,252,830 | 77.2%
Marlins
$28,183,160 | $21,711,050 | $6,472,110 | 77.0%
Twins
$30,698,758 | $23,603,698 | $7,095,060 | 76.9%
Angels
$32,337,916 | $22,694,400 | $9,643,516 | 70.2%
White Sox
$27,627,399 | $18,327,450 | $9,299,949 | 66.3%
August 15, 2007
Andrew Friedman: Now that we have drafted your client David Price, we would like to sign him.
Price’s Agent: Great. What is your offer?
Friedman: Selig has threatened that if we go over the $3.6 million slot recommendation, the commissioner’s office will not help our efforts to get a new stadium.
Agent: But in 2012, the new CBA will impose a slot, I mean, a bonus pool allotment of $7.2 million for the first pick in the draft, which if we reduce by 3.64% to reflect anticipated industry growth over the next five years, is only $6,937,920.
Friedman: In that case, how about $5.6 million?
Agent: Done!
Not to restart this silly argument, but...
…just to get the math right:
The 2007 allocation for the 1st overall pick, adjusted for five years at an annual rate of 3.64% would have been $6,025,198. Of course that number wouldn’t have been the important one. The more important fact would have been that the Rays would have had $9,248,261 with which to sign all of their draftees from the first ten rounds.
BTW...
…I’ve thought a little bit about how negotiations will work, and the new rules raise some interesting questions.
I think the Rays did sign most (if not all) of their other early picks that year. So, if they had been operating under the 2012 rules, they would have had a little over $9.2MM to spend on bonuses immediately after the draft. But, after they signed third-round pick Nick Barnese, with a bonus of $366k, that number would have dropped to just under $8.8MM.
Then after signing fourth-round pick David Newmann (giving him a $250k bonus), they would have had $8.6MM left in the budget. In this way, each signing reduces the overall pool. I wonder if teams might be able to use that process, where the available funds slowly disappear over the signing period to apply leverage to guys who are trying to hold out. I’m not sure that this would work, since we really haven’t seen the process in action yet, but it’s a possibility.
I’ll be really curious to see how this functions in practice.
Interesting idea
I think it’d be a bigger factor if the signing deadline were still August 15th.
Also, the bonus pools are pretty big. Unless a team drafted a Bryce Harper or managed to select multiple first-round talent level players (eg Wil Myers in the 3rd round), teams shouldn’t have problems giving draftees the bonuses they deserve. And I think teams will draft according to talent rather than signability more often, so less Wil Myers should fall to the third round now.
True.
But my suggestion (and it’s just a possibility) is that the signing deadline may become all but irrelevant. Once the available funds start to disappear, it really might not matter that the deadline is still weeks away.
And you are correct to point out that the effect would be more pronounced if you were signing guys like Wil Myers, but you don’t have to be giving out big bonuses for the small ones to start adding up. I wouldn’t be surprised if teams try to use something like this as leverage. I would certainly give it a shot if I were in their shoes. It just might work…
Or not. There really is a lot we still don’t know about how this process will work. I’m just tossing out ideas.
The continuing problem is
when the Rays and Price sit down to negotiate, either when it actually happened in 2007 or hypothetically using the 2012 rules, both sides would have know the slot/bonus pool allotment for that pick — $3.6 million in 2007 or $7.2 million under the 2012 rules (or whatever number you want to use to account for industry growth).
With the $3.6 million slot number in 2007, Price got the Rays to go $2 million over slot to get the deal done. But if Price knows MLB is alloting this pick $7.2 million under the 2012 rules, there is just no way that Price, a consensus or near consensus best talent available, would agree to a deal under the $7.2 million slot allotment.
Your analysis, however, is premised on the assumption that Price would have still signed for $5.6 million. If there were no penalties for going over slot under the 2012 rules, you cannot assume that Price would have signed below the applicable slot allotment (or even at the applicable slot, as last year’s first pick signed for $8 million, which would be nearly $1 million above that slot under the 2012 rules).
The goal of kcemigre’s study wasn’t to figure out whether the new CBA will change how teams negotaiate bonuses—that will obviously change.
His study was an attempt to figure out which teams will most have to adjust their bonus strategy. It turns out that while teams like the Royals and Pirates spent the most money, the Yankees and the Red Sox were the most aggressive with their bonuses when you account for draft position.
All of this stuff about how negotiations would have happened is irrelevant to the study. This study concerns itself only with documented past bonus behavior as it compares to what is allowed under the new rules.
The goal of kcemigre’s study wasn’t to figure out whether the new CBA will change how teams negotaiate bonuses—that will obviously change.
No one said it was. The problem with the study is that it uses 2012 standards to evaluate a signing that took place in 2007 following negotiations influenced by then existing standards. That was what my previous comment addressed.
It turns out that while teams like the Royals and Pirates spent the most money, the Yankees and the Red Sox were the most aggressive with their bonuses when you account for draft position.
The study does not answer which teams were most aggressive with their bonuses between 2007 and 2011 because it does not use the actual standards that were in place at the time, but rather imposes a new standard from that future that did not exist then. Figuring out which teams were most agressive with their bonuses between 2007 and 2011 could be figured by simply taking each team’s total signings and subtracting the total slot allotments for those signings (which were based on draft position).
As mentioned above, this is the same thing that Jim Callis of Baseball America did for 2011 when it found that the Pirates and Royals were the most aggressive by spending above slot for the first ten rounds:
1. Pirates 268% (10 signings, $16,445,700 total spent, $6,134,200 slot)
2. Royals 249% (9 signings, $11,405,000 total spent, $4,579,500 slot)
3. Nationals 242% (11 signings, $14,551,100 total spent, $6,005,100 slot).
Until we know the results for 2007 through 2010, we cannot conclude that the Yankees and Red Sox were the most aggressive. We do know that the Pirates and Royals were the most aggressive in 2011.
…negotiations influenced by then existing standards.
You keep saying that slot recommendations influenced signing bonuses without proving it. I just don’t think that so-called “influence” was statistically significant. That’s what the graph I posted in a comment above shows. Actual signing amounts have followed a pretty clear distribution, even looking only at the 2007 numbers you posted. The slot recommendations, however, did not follow that curve very well. Put simply, in the first round of the 2007 draft, there wasn’t much of a correlation between signing bonuses and the slot recommendations (despite the fact that this was the exact data you chose to support your claim that the recommendations influenced signing amounts).
In your responses since then, you have pointedly ignored the lack of any significant correlation between these two sets of data. Nonetheless, you continue to claim a causal relationship exists between those recommendations and actual activity in the market. In the absence of a correlation, however, your theory of causation is weak. That unproven theory certainly doesn’t rise to a level that causes me to question the methodology I employed in the first place.
And, making matters worse for that theory, I’ve also pointed out that the year-to-year correlation will be even worse than the correlation within the single-year data-set that you deemed relevant. We know this to be true because the slot recommendations actually decreased between 2006 and 2007, yet actual signing bonuses continued to rise, unaffected. I believe the same thing happened between 2008 and 2009.
In the end, it appears that slot recommendations represented nothing more than Bud Selig’s unrealized wishes and that those wishes ultimately had little—if any—effect on the actual market under study.
Finally, even if we were to assume that your theory is correct—that Bud’s recommendations somehow influenced signing bonuses in a significant way—you do not propose any method by which that supposed “influence” could actually be incorporated into answering the question under consideration; instead, you keep suggesting a comparison between signing bonuses and the slot recommendations.
Well, ok, that could be done (if we actually had the numbers, which of course we don’t), and has been done by others in the past. But what would that comparison tell us? It certainly wouldn’t tell us anything about the new CBA. Instead, that comparison would just tell us how much MLB teams were ignoring Bud’s unenforceable recommendations. And, as I keep pointing out, the answer to that question is probably, “a lot.”
The slot recommendations, however, did not follow that curve very well. Put simply, in the first round of the 2007 draft, there wasn’t much of a correlation between signing bonuses and the slot recommendations
Except for the approximately 18 dots (signings) actually touching the red line (the 2007 slot recommendations) and the other five that were roughly 10% above. There were 6 signings that went well above the slots (and 1 well below). All but 7 signings were at the slot recommendation or slightly above (roughly 10%). That seems to be a pretty big influence.
But what would that comparison tell us? It certainly wouldn’t tell us anything about the new CBA.
It tells us a lot. Comparing which teams spent over-slot the most in the previous 5 years tells us which teams were using this strategy the most. We know under the new CBA with its severe penalties, teams cannot go over-slot anymore. The teams that previously went over-slot the most are clearly hurt by the new rules because they can no longer use the over-slot strategy to buy extra talent.
…approximately 18 dots (signings) actually touching the red line (the 2007 slot recommendations) and the other five that were roughly 10% above…
Hey, if I made the dots big enough, they’d all touch the line. Also, if you increased all the recommendations by an even $200,000, the 9 through 14 picks would have been on the line and that stretch from 18 to 21 would have been “under-slot,” but by your reasoning it would still be a “pretty big influence.”
I guess I just don’t agree with your “statistical analysis” there. Also, mathematics doesn’t agree with you: the coefficient of determination between those two data-sets (i.e. the R-squared value) is 0.408. The data does not correlate, and some of the dots “touching the line” doesn’t make it a correlation.
The reason for this is quite simple: the slope of the line is entirely wrong.
Whenever you have two lines of different slope, BTW, they are going to cross somewhere (i.e. some of the “dots” will touch the “line”). The fact that they cross simply confirms that the lines are not parallel. Or, to use a common expression: Even a stopped clock is right twice a day.
Bud Selig wishes that high-end talent was cheaper than it is, but Bud Selig wasn’t dealing with reality. Those two sets of data (Bud’s wishes and reality) do not correlate to one another. As a result, it is not reasonable to draw the conclusion that one of them was causing the other.
And you still haven’t explained how Bud reducing the slot recommendations across the board in 2007 “caused” MLB teams to spend more that year than they had in 2006 when the slot recommendations were higher.
Comparing which teams spent over-slot the most in the previous 5 years tells us which teams were using this strategy the most.
And by this, you are referring to the “strategy” of spending more money than an arbitrary and unrelated dollar figure. That’s not a “strategy.” That’s noise in the so-called “data.” If we wanted, we could weigh these ballplayers and figure out how much they would have been worth if they were made of gold. Then we could figure out which teams were employing the “strategy” of paying more than the price of gold. And that information would be about as useful as knowing who was paid “over-slot,” at least as you are using that term.
We know under the new CBA with its severe penalties, teams cannot go over-slot anymore. The teams that previously went over-slot the most are clearly hurt by the new rules because they can no longer use the over-slot strategy to buy extra talent.
There you go calling it a “strategy” again. None of this makes any sense unless you start from the unproven and untenable assumption that there was some stable relationship between those “slots” and the real-world market for baseball players. I’m not willing to make that assumption without any evidence. (Although I would be more than happy to test that assumption if I had the necessary data… that offer still stands). As it turns out, even your hand-picked 30 datapoints didn’t support that assumption, so it really wouldn’t make much sense for me to go down that road.
And, to answer the original question, what we really need to know is which teams would be punished if they keep spending as much as they have been in the past in terms of real dollars in the real world. Fortunately, we happen to have that exact data available. We know what the teams spent. Why would we use some other reference point, like Bud’s “I wish this is what a prospect cost” numbers or the price of gold? Use the actual numbers. Use the amounts that the teams spent. That’s data. The rest is speculation.
I continue to choose data over speculation.
by kcemigre on Dec 10, 2011 1:00 AM EST up reply actions 1 recs
Those two sets of data (Bud’s wishes and reality) do not correlate to one another. As a result, it is not reasonable to draw the conclusion that one of them was causing the other.
Really?
4 Daniel Moskos $2,475,000 bonus/$2,475,000 slot
6 Ross Detwiler $2,150,000/ $2,160,000
7 Matt LaPorta $2,000,000/$2,070,000
8 Casey Weathers $1,800,000/ $1,980,000
9 Jarrod Parker $2,100,000/$1,890,000
10 Madison Bumgarner $2,000,000/$1,800,000
11 Phillippe Aumont $1,900,000/$1,710,000
12 Matt Dominguez $1,800,000/$1,620,000
13 Beau Mills $1,575,000/ $1,575,000
14 Jason Heyward $1,700,000/$1,530,000
15 Devin Mesoraco $1,400,000/$1,485,000
16 Kevin Ahrens $1,440,000/$1,440,000
17 Blake Beavan $1,500,000/$1,417,500
18 Pete Kozma $1,395,000 /$1,395,000
19 Joe Savery $1,372,500/$1,372,500
20 Chris Withrow $1,350,000/$1,350,000
21 J.P. Arencibia $1,327,500/$1,327,500
22 Tim Alderson $1,290,000/$1,282,500
23 Nick Schmidt $1,260,000/$1,260,000
24 Michael Main $1,237,500/$1,237,500
25 Aaron Poreda $1,200,000/ $1,215,000
26 Justin Simmons $1,192,500/$1,192,500
29 Wendell Fairley $1,000,000/$990,000
I guess it is just a happy accident that Moskos and company signed for the slot amount.
You can keep sticking your head in the sand and ignore the 23 out of 30 signings that were the same, virtually the same, or within 10% of the slot, but the reality is that 23 teams essentially complied with the slot recommendations for the first round in 2007.
Lumping all teams together and comparing them to the total slots for all teams tells us nothing about what individual teams did — which was the question presented. Any lack of correlation between what all teams spent lumped together and the total slots for all teams is driven by the teams that went over-slot most aggressively. The purpose here is to identify those individual teams. Whether that over-slot spending by those teams diminished the correlation between what all teams spent lumped together and the total slots for all teams is irrelevant.
The point is some teams generally complied with the slots. Some teams did not and gained an advantage by signing better talent. That advantage is gone under the new rules.
Speculating that teams would have signed players for the same amounts in 2007 to 2010 if the 2012 slot numbers hypothetically applied is not data, it’s make believe.
by Gopherballs on Dec 10, 2011 1:23 PM EST up reply actions 2 recs
I guess it is just a happy accident that Moskos and company signed for the slot amount.
I never said it was an accident. I said (and have said all along) that whatever effect may be present is not statistically significant. And, once you came up with some data, it turned out that a simple r-squared calculation supports that statement by demonstrating that there is not a statistically significant correlation.
Lumping all teams together and comparing them to the total slots for all teams tells us nothing about what individual teams did…
I didn’t lump them together, I ran the correlation on each signing bonus and each slot recommendation, using the complete dataset presented. You, on the other hand, just threw out a quarter of the data because it doesn’t fit your theory.
Speculating that teams would have signed players for the same amounts in 2007 to 2010 if the 2012 slot numbers hypothetically applied…
I’m not speculating at all. I’m using the actual data, i.e. the amounts the teams spent. You’re the one who wants to use something other than the actual data.
Gonna disagree here.
The bonuses are generally close to the suggested slots, and a r-squared of .408 suggests a pretty strong correlation. There’s definitely a relationship between the assigned slots and the bonus amounts.
The key here is that Gopherballs appears to be at least partially mistaking correlation for causation. He seems to be saying that because a slot is $X, the bonus will tend to be near $X. While I’m sure that teams did try to bring up the slots as a negotiation tactic, I think the cause for the correlation was that both the slots and the bonus figures were highly dependent on the recent signing bonus market. If the #1 pick signed for $6M in 2007, the slot for the #1 pick in 2008 will probably be near $6M (but less than $6M since the system was designed to suppress signing bonuses), and the bonus amount for that pick will probably be near $6M.
Moreover, the relationship between the old slots and past signing bonuses does not seem to be directly tied to the issue of which teams will be most hurt by the new CBA. The new CBA sets hard caps (a team’s cap size is determined by the team’s draft position and league revenue) on bonus spending, and it will prevent teams from spending in excess of those caps. We therefore want to look at how much teams spent in recent years relative to those caps (we can figure out what the caps would have been since we know teams’ draft positions and league revenues).
Gopherballs has yet to formulate a clear argument for why the old slot figures should be involved in this discussion. His argument seems to be:
(1) some teams spent in excess of the recommended slots;
(2) under the new CBA, teams will have hard caps on bonuses
==> therefore, (3) teams that spent in excess of the recommended slots will be hurt since they will no longer be able to spend as much money.
Of course, (3) does not follow from (1) and (2) since the hard caps are much higher than the old slot recommendations and they’re fitted to a different curve which benefits high-drafting teams relative to low-drafting teams. It’s possible that a team that spent well in excess of its recommended slots may be unable to continue spending at the same rates under the new CBA, but it’s also possible that their cap will be high enough to support that level of spending. Spending relative to slot can’t answer the question of whether a team will be able to maintain its draft strategy under the new CBA.
Of course, (3) does not follow from (1) and (2) since the hard caps are much higher than the old slot recommendations . . . . It’s possible that a team that spent well in excess of its recommended slots may be unable to continue spending at the same rates under the new CBA, but it’s also possible that their cap will be high enough to support that level of spending.
There are a couple problems with your argument here. First, one thing we certainly know from prior drafts is that almost every players signs for at least the slot. This is a basic understanding of leverage — both the team and the player’s agent know what the slot number is. The teams can try to use the slot to keep the final number from going too much above it, but the agents can use the slot as a floor because they know how much the league has allocated for that pick. Do you really think players will not get at least the 2012 slot amount?
Second, while the new 2012 slots are higher than the 2007-2011 slots, the 2012 slots generally are actually below most of the significant over-slot signings in 2011. Here are the first seven picks in 2011:
1 Gerrit Cole $8.0 million
2 Danny Hultzen $8.5 million
3 Trevor Bauer $4.45 million
4 Dylan Bundy $6.25 million
5 Bubba Starling $7.5 million
6 Anthony Rendon $7.2 million
7 Archie Bradley $5.0 million
All but Bauer at no. 3 would still be well above the 2012 slots (which starts at $7.2 million and goes down from there). The same effect would apply to the players signed for high six figures or more once you past the first round or two.
Let’s just look at the Royals from 2011. Here are the Royals’ significant over-slot signings from the 2011 draft:
1st Bubba Starling $7.5 million
2nd Cam Gallagher $750,000
3rd Bryan Brickhouse $1.5 million
4th Kyle Smith $695,000
5th Patrick Leonard $600,000
12th Jack Lopez $750,000
29th Jakob Junis $675,000
The Royals first five picks were above slot (four of them well above slot), and the Royals also went substantially over-slot in the 12th and 29th rounds. Even under the 2012 slot (“bonus pools”) amounts, it appears that seven of these signings (all but Gallagher) would still have been well above slot. You do not have to be good at math to quickly realize that the Royals’ 2012 cap would not “be high enough to support that level of spending” in 2012 as 2011.
Actually, no
Do you really think players will not get at least the 2012 slot amount?
First, as you noted the bonus pools are now set based on slots that were much higher than the previous recommendations, so teams can cite that fact in their negotiations. I think many may end up getting right at slot in 2012, but the imposition of real and tangible penalties for exceeding the new slots has given teams a pretty powerful negotiating tool. Agents know that the team will have to essentially penalize itself one way or another if the team goes over slot. Previously, I think agents could sell the “it’s just a recommendation” argument, and teams knew they’d probably have to go over it because they knew that agents knew there were no real consequences for the team. Selling teams on going over slot now is going to take a very desperate team, a very special player, or some combination of the two.
It will be very interesting to see how things go in the next draft. I think most teams are just going to draw lines in the sand, offer max slot deals (at most) and sit back and wait for the agents/players to blink first. Only the Starlings of the world have any serious alternatives. Even with another sport to fall back on, I still think the overwhelming majority of draftees are going to take a max slot offer instead of heading off for the uncertain, no-money college option.
by Sweep_the_Leg on Dec 12, 2011 2:56 PM EST up reply actions
I think we agree that most players will sign for the slot
I think most teams are just going to draw lines in the sand, offer max slot deals (at most) and sit back and wait for the agents/players to blink first.
I was not suggesting that players will sign above slot (a point I made several times in this thread), only that most will sign at the 2012 slot. This was in response to a suggestion that because the new slots are so much higher (but really only higher than the previous slots, not what players actually signed for in 2011), players will sign for less than the 2012 slots. I think the effect of the new rules is to effectively take slot leverage out of the equation — agents will have to expect that teams will not pay over-slot, but teams will have to expect that agents will not accept under-slot deals. I think you are right that most of the players who sign will sign for the slot amount.
In addition to the two sport stars like Starling, I think the new slots will affect the high school players who do not get picked in the first or second round. To get a multi-million deal now, a player has to be picked in the first half or so of the first round (the number for pick 30 is reportedly $1.6 million) and to get at least $1 million, it looks like the player would have to be picked no later than the second round. In previous years, high school players could still get $1+ million after the second round, but now they cannot. Those players have an incentive to go play college ball in an effort to improve their standing. Under the old rules, teams like the Royals were good at getting these high school talents who slipped into the later rounds by offering first or second round money, but under the new rules, they cannot do that anymore.
A few things
First, the 2011 draft was a ridiculous spend-fest for MLB as a whole. From BA:
MLB teams combined to spend $228,009,050 on draft bonuses in 2011, and a total of $236,059,050 including additional guarantees in major league contracts for Danny Hultzen, Trevor Bauer, Dylan Bundy, Anthony Rendon and Matt Purke. Those are both records, up from $195,782,830 and $201,832,830 in 2010.
So bonus spending in 2011 was about 15% higher than the record set in the previous year. The rapid rate of inflation in the bonus market was, I’m sure, the primary motivator for the changes in the new CBA. Teams were not gaining an advantage by spending aggressively in the draft—they were simply treading water trying to keep pace.
Understanding that the CBA is designed to curb the sort of bonus spending that occurred in 2011, we shouldn’t be surprised that the 2012 MLB total bonus pool, set at $200M, is less than the $236M that was spent in 2011. Given that the CBA will cut about 20% out of league bonus spending relative to 2011 levels, it shouldn’t surprise us that it will cut back on the Royals spending since this large of a reduction will hit almost every team.
Almost all teams will cut back on spending when compared to 2011, so in order to figure out which teams will suffer a competitive disadvantage, we need to know which teams will have to cut bonus spending the most. kcmegerie’s study shows pretty convincingly that the teams that will have to cut their spending by the largest percentage are the Yankees and Red Sox. The Royals were also among the most aggressive spenders, ranking 4th on the list.
Put another way, the Royals spent $14M in 2011, but the Yankees spent $6.3 despite having no first round pick and drafting at the end of every subsequent round. If you take the #5 pick in Starling out of the Royals draft, they had basically the same draft position as the Yankees and they spent almost exactly the same amount of money. So when you consider that at similar draft positions, the Royals and Yankees were spending similar amounts of money, do you think that the Royals were gaining a competitive advantage over the Yankees by spending more aggressively, or do you think that their competitive advantage was that they were drafting higher?
In response to:
Do you really think players will not get at least the 2012 slot amount?
Yes, players will sign for less than the bonus pool for their picks. Teams cannot go over those figures, so they’ll be used as a ceiling rather than a floor. I don’t see what this point has to do about shifting competitive balance between small and large market teams.
So when you consider that at similar draft positions, the Royals and Yankees were spending similar amounts of money, do you think that the Royals were gaining a competitive advantage over the Yankees by spending more aggressively, or do you think that their competitive advantage was that they were drafting higher?
Why suddenly is the only relevant comparison to the Yankees (who had a first round supplemental pick)? I think the Royals and all teams that spent significantly above slot had a substantial competitive advantage over all of the teams that did not spend significantly above slot, such as the White Sox basically never went above slot. Each year, the White Sox passed up better talent to make “signability” picks. The Royals had an advantage over the Sox because (1) the Royals would go well over-slot in the first couple rounds to sign the best early round talent and (2) the Royals would go well over-slot in later rounds to sign first and second round talent who slipped. As a result, the Royals were not only getting better talent in the first and second rounds, they were also getting more first and second round talent in the later rounds while the White Sox took third, fourth, fifth, etc. round talent who would sign for slot. Under the new rules, those advantages are completely gone.
You're on solid ground here
kcemigre’s inflation-adjusted list at the start of this comment series tells us which teams will have to cut back spending levels the most. The Royals are #4 on the list and will have to substantially cut back spending, while the White Sox are #30, and can continue doing exactly with no fear of approaching the bonus caps.
So the new CBA hurts the Royals draft spending strategy more than it hurts the White Sox.
I agree that the CBA hurts the Royals draft strategy (although it will save them money by making the premium talent that they do draft less expensive) relative to most teams—I only object to the notion that the CBA disproportionately hurts small market teams.
Also, the fact that some teams’ 2011-level spending will not be permitted under the new CBA does not constitute a hole in my argument when I said:
Of course, (3) does not follow from (1) and (2) since the hard caps are much higher than the old slot recommendations . . . . It’s possible that a team that spent well in excess of its recommended slots may be unable to continue spending at the same rates under the new CBA, but it’s also possible that their cap will be high enough to support that level of spending.
Your argument that teams that spent the most over slot will be hurt the most by the new CBA doesn’t logically add up because the caps are defined differently than the old slots were. All of your arguments have contained the same hole in that you set a false equivalence between the old slots and the new caps, and you draw your conclusions from this false equivalence.
If you just used the word "false" or other perjorative terms a few more times
your argument might have been convincing.
The bonuses are generally close to the suggested slots, and a r-squared of .408 suggests a pretty strong correlation.
“Close” is a relative term. That’s why we have statistical methods to analyze correlation, right?
I’m confused, however, by your saying that an r-squared of 0.4 indicates a “pretty strong correlation.” Now, I’ve never had any training in statistics and have been teaching myself for the past year, so maybe there’s something that I’m really misunderstanding going on, but hear me out (and then tell me what I’m missing if that’s the case).
We’re talking about a single-variable dataset. That seems to me like the most important fact here. If I were to develop a model intended to predict the values of a 30-point single-variable dataset but which produces an r-squared of less that 0.7 when compared to the actual data… I’d throw that model out and start over. I think most people would, because 0.4 is really low for a single-variable dataset.
There is, to be fair, a great deal of volatility in the data (that’s what small sample size do), but r-squared actually adjusts for volatility some by incorporating the data’s variance from its own mean as a denominator. We could, nonetheless, call the reliability of this calculation into question because of the sample size. But I don’t see how we could conclude that an r-squared of 0.4 on a single-variable dataset indicates that any real correlation is taking place between the data and the model tested.
So, as I see it, there’s an argument that there’s no significant correlation and there’s also an argument that the sample is too small for any reliable conclusion. But I don’t see any argument that a correlation between the actual data and the “slot recommendations” has been established in this case.
I’m not going to to a great job explaining this, but I’ll give it a shot.
The correlation coefficient, r, is a measure of the strength of the linear correlation between data sets. Taking a baseball example, let’s define a first data set comprising each player’s 2011 pre-all star batting average, and a second data set comprising each players 2011 post-all star batting average.
We’d find that the data correlate (high average hitters in the first half tend to post hit averages in the second half), but there’s a lot of luck in a couple months of batting average, so maybe our correlation coefficient between the two data sets is 0.7, and the r-squared is 0.5. This means that about 50% of the variance seen in the second half batting average data set can be explained by accounting for first half batting average. The other 50% is luck—bad hitters can get hot for a couple months.
While r and r-squared tell us about the strength of the correlation, they do not tell us about the statistical significance of the correlation. First half batting average may explain only 50% of the variance in the second half batting average set, but we’d still feel confident that the relationship is real and not a statistical fluke where good first half hitters just happened to overlap with good second half hitters.
To measure the statistical significance of the correlation, we look to the p-value.
http://en.wikipedia.org/wiki/P_value
The p-value tells us what the likelihood is that a measure relationship between data sets happened by a sampling fluke (ie a coin landing heads 10 times in a row). A p-value of .05 or lower tells us that there is at least 95% chance that a measured relationship is real, and this is a common threshold for saying that the relationship is statistically significant.
In other words, if you want to know whether the relationship is statistically significant, pull up the regression again and look at the p-value. I’d guess it’ll be less than .05, but I might be wrong.
I should say that I studied engineering in college and I was pretty versed in stats at the time, but I don’t use stats at my job and I haven’t taken a stats course in about a decade, so I can’t promise that everything I said is totally correct. I’m definitely sure that the p-value is the variable you’re looking for, but I doubt that my explanation of r is very good.
If anyone who knows what they’re talking about wants to chime in and correct me, please feel free.
And by this, you are referring to the "strategy" of spending more money than an arbitrary and unrelated dollar figure. That’s not a "strategy." That’s noise in the so-called "data." If we wanted, we could weigh these ballplayers and figure out how much they would have been worth if they were made of gold. Then we could figure out which teams were employing the "strategy" of paying more than the price of gold. And that information would be about as useful as knowing who was paid "over-slot," at least as you are using that term.
This. A thousand times, this.
The strategy was never drafting players and paying them more than Bud’s arbitrary slot figures. The strategy was drafting the best possible talent and paying however much it took to sign them. Because Bud’s figures were unrealistic (solely existing to be used by clubs for negotiating leverage), the strategy of drafting and signing the best available talent necessitated spending more than Bud’s figures recommended. Spending over slot was a side-effect—not a strategy.
The real strategy of drafting the best available talent will still be permitted, but it’s likely that less premium talent will fall to the later rounds. So it likely won’t happen as often that aggressive teams the Royals snag a Wil Myers in the 3rd round, but kcemigre’s study shows that some big market teams were just as aggressive (or more aggressive) than small market teams in throwing money at premium talent that fell in the draft due to bonus demands.
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