The Captain's Blog

In a year that has seen the NFL and NBA deal with acrimonious labor negotiations, MLB is on the verge of ratifying a new collective bargaining agreement without the slightest bit of rancor. However, there has been one point of contention: the escalating bonuses being paid to those selected in the Rule IV amateur draft.

Thanks to unprecedented labor peace, baseball fans are unlikely to face a work stoppage next season.

Back in March, I identified mandatory slotting as one of the main topics to be addressed by the new CBA, so it’s not much of a surprise that the issue has momentarily held up the deal. According to Buster Olney, although some points still need to be ironed out, progress is being made on a compromise. In Olney’s report, he identifies the following elements:

• Slots will be recommended, not mandatory. However, if teams go over their cumulative slot recommendation for signings made during the first 10 rounds, a tax will be applied.
• If teams exceed their slot recommendation for a second time, they will also lose a high draft pick.
• In exchange for this concession, draft compensation will no longer be tied to free agent classifications.

Although I strongly oppose mandatory slotting, the solution outlined above seems like a reasonable compromise. My initial concerns regarding a slotting system centered around the inherent unfairness heaped onto the shoulders of amateur players who already lack negotiating leverage because of the six-year reserve. Although the recommendation system being proposed could have the effect of dampening amateur demands, it doesn’t constitute a hard cap. As a result, individual draftees can still make the case that they merit a team either paying a tax or losing a draft pick.

Ultimately, the amount of the slotting recommendations will determine just how fair this compromise turns out to be, but in the abstract, it really is no different from that which tenured players in the MLBPA currently face, namely the competitive balance tax and free agent-based draft compensation. Granted, the latter would be omitted under the compromise proposal, but at least the current players aren’t asking their soon-to-be brethren to play under rules vastly different from their own.

The questions before MLBPA executive director Michael Weiner have been far less complicated than those faced by his NFL and NBA counterparts.

So, what does this mean for the Yankees? The conventional wisdom has suggested that slotting of any kind will prevent large market teams from scooping up overpriced talent in later rounds, but the opposite seems just as likely. Once again, just consider the competitive balance tax. The only teams who have regularly exceeded the applicable threshold are the Red Sox and Yankees. Why? Because they can afford to do it. There’s no reason to think the same won’t also be true regarding the slotting tax, which means big market teams could wind up with an even greater advantage when it comes to spending in the draft.

One could argue that the Yankees already overspend in the draft, so any form of limitation would be welcomed. However, that assessment ignores the net effect. If other teams are discouraged from spending over slot more often than the Yankees, the gap between the two sides could actually grow. Similarly, if big market teams are able to use the slotting system to suppress bonuses paid to non-elite selections, they could wind up with more money to spend throughout the draft, a luxury that smaller market teams are unlikely to share (assuming their total budgets are not on par with a team like the Yankees).

Finally, the loss of a high round draft pick would be a prohibitive measure, but again, it seems to disproportionately impact teams who must build future success through the draft. For example, the Rays are much more likely to be discouraged by the loss of a first round selection than the Yankees because they are not as financially capable of building their roster via free agency. However, big market teams will be freer to decide that an amateur selection like Gerrit Cole warrants going over slot because, even if a future pick is lost, a high-priced free agent could be signed to serve as a stop-gap measure.

A prodigy like Bryce Harper should still get paid under a recommended slotting system.

If the compromise outlined by Olney really is on the fast track, does that mean Bud Selig and the small market owners are oblivious to the implications I’ve suggested? Of course not. In addition to providing cost certainty in the draft, small market teams will actually benefit by removing the link between free agents and draft compensation. Once again, the devil will be in the details, but if automatic supplemental round picks are awarded to teams losing free agents, it would remove the need to offer arbitration, which for some players, can be a very risky proposition. On many occasions, teams have declined to offer arbitration to ranked free agents out of fear they would accept it, so now, they wont have to make that difficult, and potentially costly, decision. Furthermore, small market teams have often been torn between either trading players in their walk year or holding onto them for free agent compensation. With more certainty regarding the actual pick they would receive, teams should be able to better assess their deadline options.

As an advocate of the free market, especially when it comes to sports labor negotiations, I’d like to see the draft abolished completely. So, it’s kind of hard to endorse a measure that would add further restrictions to the system, particularly when they fall upon the weakest in the food chain. All things considered, however, the recommended slotting system outlined above seems to benefit all parties. The big market owners are not prevented from flexing their financial muscle in the draft, nor will they face the prospect of losing a first round draft pick when signing a type-A free agent. Meanwhile, the small market owners gain cost certainty, while lessening arbitration exposure and achieving greater transparency when evaluating potential deadline deals. Finally, current players no longer have to contend with teams shying away from their services because of the draft pick compensation tied to their contracts.

Under any slotting system, amateurs are the ones who get the short end, but at least the rumored compromise does not completely strip them of their rights. Besides, if these players fulfill the promise that underlies their bonus demands, they will soon reap the benefits of the most favorable player-owner relationships in all of sports. If it means maintaining the labor peace that promises to make everyone rich, recommended slots are probably a small price to pay.