Wednesday, July 22, 2009

Chin Music: Bonuses Down...For Now

In the latest issue of Baseball America, Jim Callis makes some interesting points regarding the Major League Baseball First Year Player Draft. Bud Selig’s bonus recommendations, which are the non-binding guidelines set forth by MLB on what a specific draft slot should receive as a bonus, have decreased by 10 percent compared to last year.

The MLB draft, as with all drafts, is a means to control costs for professional sports franchises rather than creating a bidding war. Baseball draftees, however, are known to hold out fairly often and return to school for their senior season. Scott Boras clients Jason Varitek and J.D. Drew both tested the draft regulations by playing independent league baseball for the St. Paul Saints in an attempt to circumvent the draft rules. The Royals’ 12th overall pick this year, Aaron Crow, followed a similar route when he played professional independent league baseball after opting to hold out after he was drafted ninth overall in the 2008. Boras represents the top overall pick this season in Stephen Strasburg, who will surely demand more than the recommended slot money.

What is interesting though is that despite a cut in the recommended slot bonuses, players are signing fairly quickly, and only a handful of players appear to have signed with bonuses over the recommended slot value. While it’s still early, draftees have about a month before they need to sign or wait until the 2010 draft to start the process all over, it is a little interesting that players are taking the money below slot value. Two players who have received more than slot value are Rex Brothers and Ben Paulsen, both of who signed with the Colorado Rockies.

Due to many players’ likelihood to hold out, teams oftentimes skip over top talent and instead draft someone who is “signable.” That has played a large part in the lower bonuses from this most recent draft. Tony Sanchez was drafted fourth overall by the Pittsburgh Pirates, which was a surprise for sure since many pegged him for a late first round pick at best. Instead though, the Pirates got a solid player that they knew would sign, and he signed for 700,000 less than last year’s fourth overall pick. The Orioles fifth pick Matt Hobgod signed for roughly 4 million less than last year’s fifth pick. A.J. Pollock signed with the Diamondbacks for 100,000 less than his slot last year, and the Nationals’ Drew Storen signed for 500,000 less than his slot last year. The decreases in bonuses are clear.

The number of first round picks who have signed contracts thus far are similar to the number of pick that signed over the last two years through as many days after the draft. And while many of the quick signees are signing for less than Bud Selig’s suggest slot value, expect the remainder of players to hold out and receive higher than their suggested bonuses. Players like Strasburg, last year’s holdout Aaron Crow, and second overall pick Dustin Ackley are all likely to receive huge bonuses, and they aren’t alone.

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