Friday, September 26, 2014

Competitive Balance Draft Picks and the Decentivization on Spending for Teams that Need Them

Assessing Competitive Balance Draft Pick Value, and How the System Needs to be Improved

There is, apparently,  an uneven playing field in Major League Baseball that needs balancing, and “new”-ish competitive balance picks in the draft can and/or will improve this.  Instead of basing the decision of which teams receive a balance pick on a team’s record (you know, that thing that actually indicates how well you competed that year against your peers), the picks are doled out via a lottery system to a pool of the ten bottom teams in terms of both market size and revenue (although a team's odds in the lottery, once they're in, is based on their win-loss record from the previous year).  I won’t get into how evidence shows that market size has little to no bearing on how well a team can make and spend money, especially in today’s world of revenue sharing, TV contracts (both local and national), and publicly funded stadiums.  Today’s massive global market is a big factor in every team being able to have a hand in the pot.  But I said I won’t focus on that issue right now.  Rather, I want to discuss whether competitive balance picks (which take place between rounds one and two, and again between three and four) have so far helped to create balance between teams that “can” spend and teams that “can’t”, and what the MLB can be doing better to help stimulate free agent spending league wide.

Back in late May of 2013, MLBTradeRumors writer Charlie Wilmoth wrote a post discussing the value of competitive balance picks, and how their worth may lie in smaller market and low revenue teams dealing away role players for these draft picks, or even having them included in a deal when they trade away a high impact player that they can no longer afford, need, etc.  Since the new collective bargaining agreement in 2012, there have been five deals that included a competitive balance pick changing hands before the July non-waiver trade deadline.  So far, the swaps that have involved balance picks have included both richer teams and poorer teams (based on revenue) being on the receiving end.  St. Louis and Detroit (ranked 5th and 8th in MLB in terms of revenue, respectively, per Forbes as of March, 2014) have both received balance picks in trades, the former getting a round B slot and the latter a round A slot.  The others include Houston (twice) and Miami (twice, one of which was a balance pick swap with Detroit).  Pittsburgh has been able to use one of theirs as buyers at the trade deadline, and Oakland got more value out of their round B pick by trading it away to Boston, a club that was looking a little farther past this season to be competitive (and Boston, of course, will probably never qualify to win one of these picks as their market size and revenue are both near the top of all MLB).  

Teams that Don't Get Involved in Big Free Agent Spending Have Even Less Incentive to do so
Because these picks appear to hold the value that both the MLB Commissioner’s Office and the clubs eligible for them had hoped, they seem to be working.  So why then, if the teams that are in need of these extra picks actually need them, are they taken away if that team spends money?  If the Colorado Rockies, for example, decide that they want to sign one or more impact players (guys that have received a qualifying offer from their former team), they would lose their 2015 round A competitive balance pick under the current collective bargaining agreement.  Going into the last three games of the season, the Rockies are a lock to have one of the 10 worst records in baseball, and therefore their first round pick is protected should they wish to sign a player that has been extended a QO.  Their round A pick, a mid-30 overall spot in the draft, however, would be forfeited.  What gives?  Are the Rockies suddenly a competitive team based on one signing, and are no longer in need of the handout?  Even if they sign the best free agent on the market this offseason, their team isn’t that drastically different.  So why are they being punished for opening the checkbook?  Their market size will remain the same, unless people begin to move to the Denver metropolitan area in some sort of mass exodus style from wherever they were just to watch Max Scherzer pitch in a Rockies uniform.  Their revenue could increase due to the signing, if the team were able to improve and the market that is there started coming out to more ballgames, but it could just as easily dip because of the $20M a year being eaten up by one player.  

Robinson Cano alone does not a competitive team make
It’s not just the drafted player that a given team would be forfeiting, but that draft slot’s signing bonus money, as well.  Of the $8.3M in draft pool money assigned to the Rockies for the 2014 amateur player draft, over $1.64M of it would have been lost if the Rockies had signed, say, 2nd basemen Robinson Cano last offseason.  Does the upgrade that Cano offers over the Rockies current man at the keystone, DJ LeMahieu, make them so good that they need to be treated like their big spending rivals, the Los Angeles Dodgers?  The Rockies would be 4.6 wins better than they currently are per Baseball-Reference’s calculation of both players’ WAR, which if rounded up, would make the Rockies 71-87 (and that’s after rounding up).  That makes them as good as the Chicago Cubs currently are.  But a signing like Cano could make them better when they are ready to compete, which could be as early as next season or the year after.  You don't sign a player to a multi-year deal solely as a win now move, but that is in effect the pressure the new collective bargaining agreement has put on small to mid-market teams.

Michael Bourn, 2013
For competitive balance picks to truly create a level playing field, assuming that the current one is uneven, they need to both be correctly doled out to teams in the first place, and they need to be protected.  That protection would need to continue even if they were traded to a big market, high revenue team such as the Yankees or Dodgers, so that the pick would retain its current high trade value.  The last thing that will create balance in the MLB is decentivizing teams that traditionally haven’t spent big on the free agent market from ever wanting to spend big on the free agent market, for fear of the loss of a draft pick and draft pool money.  In the event that a team isn't afraid to spend and forfeit one of those picks, like the Indians did going into 2013 by signing Nick Swisher and Michael Bourn, thereby forfeiting their Round B pick, MLB is effectively telling teams that they need to select their window or even year in which to compete.  Sacrifice a piece of your future for a chance at winning now.  That doesn't seem very balanced, especially compared to the teams that are willing to outspend their mistakes every year like the Yankees and Dodgers.

Photo Credit: Keith Allison (Cano) and Erik Drost (Bourn)

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