Does Baseball Need the Draft?

The Major League Baseball Rule 4 Draft begins this week. The modern draft was instituted in 1987, but a filtration system for entry-level talent existed before World War II. Today, the draft exists for two purposes — competitive balance and wage suppression, with the former being publicly cited as the reason for its existence but the latter being more of the actual motivation for the league. Let’s put aside the wage suppression issue for a minute, though — noting that nearly every corporation in America is essentially in the business of minimizing their labor costs — and focus on the competitive balance aspect of the draft.

To many, competitive balance is essential to their enjoyment of Major League Baseball. The satisfaction of these observers — fans — is directly related to the profitability of Major League Baseball. In other words, so long as fans are emotionally and economically invested in the sport, Major League Baseball will continue to profit.

The draft and revenue sharing are the two mechanisms in place to foster balance. Of course, Major League Baseball is the sole major American sports league without a salary cap. If the league removed the draft, some fear balance would erode and the American pastime would resemble the English Premier League. Whether said realization would have negative consequences is a contentious and interesting question for another day. For now, let’s assume that competitive balance is crucial to the league’s success.

Major League Baseball employs two distinct balancing techniques, the draft and revenue sharing, with distinct features. Wendy Thurm detailed the league’s revenue sharing procedure this winter after the Marlins’ firesale. The post is nothing short of a “must read” for collective bargaining nerds. Thurm writes:

“All 30 clubs contribute 34% of their Net Local Revenue to the base plan pool. The base plan pool is then distributed equally to the 30 clubs….[Then there is a supplemental plan.] The goal of the supplemental plan is to raise the overall percentage of revenue shared…from 34% (in the base plan) to 48%. But each [c]lub contributes a different amount to the supplemental plan, based on something a Performance Factor…”

Again, it’s a must read and Thurm explains other revenue sharing quirks that benefit small-market teams too. Remove all of the technical complexities and revenue sharing is a simple concept. Major League Baseball facilitates the transfer of profits from large-market to small-market organizations. Surely, a win for competitive balance — if the funds are reinvested.

Conversely, the draft structures entry-level talent procurement to benefit poorly preforming organizations, regardless of clubs’ finances. Should you be unaware of the new procedures, Thurm detailed them in a two part series over the last week.

Neither mechanism is without consequences. Revenue sharing contradicts America’s lust for capitalism. Why should the New York Yankees fund the Kansas City Royals’ operations? Typically, it would be offensive if one’s direct competitor asked for payroll funds. Of course, that assumes the big-market organizations and their ownership have earned their advantage over the competition. However, that is hardly the case. Major League Baseball and its owners have been gifted an anti-trust exemption and publicly financed stadiums by federal and state public officials. The former has an interesting history which can be attributed to Congressional inaction and judicial restraint. My favorite smirk inducing quote comes from Judge Cooper, who states, “The game is on higher ground; it behooves every one to keep it there.”

Well, not everyone. Due in large part to the anti-trust exemption and publicly financed stadiums Major League Baseball’s franchises operate within a unique goldmine. Ownership profits — so much so that revenue sharing is accepted — while Major League talent shares in those profits and fans get a superb product. Somehow the consequences of the draft are overlooked or even dismissed.

The draft serves competitive balancing purposes, but draftees suffer in the process. Draftees’ lack of rights are due to their lack of representation. Major League Baseball collectively bargains with the Players’ Association, of which draftees are not members. Without their interests being represented at the table, their interests are freely bargained away.

Ownership can cloak their adulation for the draft as a desire for increased balance, but their intent — or at least a major effect — is wage and movement suppression. The draft forces individuals to contract with specific teams  if they are to enter the league.

The Players’ Association has a duty to its membership, not its potential future members. If the Association believes there is a chance salaries could increase due to strict rules regarding amateur spending, they will not resist. And they haven’t.

Many seem not to care that an intended consequence of the Collective Bargain Agreement is to suppress wages and prohibit movement of an unrepresented third party. The draft is deemed appropriate because it promotes competitive balance.

When discussing this topic in the past I’ve used the following analogy to put the consequences of the draft in perspective.

Imagine you have just graduated with your masters in accounting. You’re brilliant and have many desirable qualities. Instead of having the option to negotiate with any of the “Big Four” or other quality firms you are drafted by KPMG. KPMG tells you should you sign with them you will work in their Torabaz Khan Road office in Afghanistan. KPMG owns rights to your accounting career and if you want to have a career in accounting you need accept their offer, set at a heavily discounted rate by the industry. While considering their offer, KPMG informs you that you will remain in Afganistan or wherever they may assign you until you have proven yourself. The chance of proving yourself is small, maybe 25%. But, should you succeed you will be brought to New York to continue your career. Then, after working for several years at a discount, you will be eligible to negotiate with their competitors. Hopefully you are still useful.

For any other career a draft would be outrageous. When it comes to athletes few seem to care.

Removing draft eligible high school and college athletes from the open market greatly suppresses their earning potential and forces them to work and live for a specific team without choice. Today, the new pool system and its draconian penalties limit both parties from negotiating freely, decreasing draftees’ signing bonuses even further.

In baseball, more than any other sport, one’s first contract is greatly important because they may never get another contract. Even top prospects have an extremely high failure rate. For the majority of this season’s amateur draft class, their value will never be higher than it is on June 6th.

Years later, the prospects who develop into Major Leaguers still feel the effects of the draft due to today’s extensions craze. The suppressed signing bonuses and minimal wages minor leaguers earn increase their teams’ leverage when negotiating extensions. It’s impossible to say whether Evan Longoria or Chris Sale would have signed their extensions had they earned their fair market value when they entered the league, but it’s undeniable they would have had significantly more leverage when negotiating terms if they had more money in their pockets.

No one is crying for Longoria or Sale, but they were lucky. Consider the story of Matt Purke. According to Nolan Ryan, Purke had a pre-draft deal with the Texas Rangers for $6 million in 2009. However, Major League Baseball terminated the arraignment after they assumed an oversight role of the Rangers’ non-budged transactions. Unable to cash in after an inspired freshman year at Texas Christian University, Purke reentered the draft in 2011 after a shoulder injury. He was selected by the Washington Nationals in the third round and signed a 4-year/$4.15M dollar major league deal which included a $2.75M signing bonus. It’s likely Purke’s earning potential will never be higher than it was in 2009.

Balance the desire for a level field of play against the draft’s effect on high school and college athletes. Is sacrificing their rights necessary to competitive balance? Hardly.

Major League Baseball, the Players’ Association and fans all have an interest in keeping the status quo. If draftees want a slice of the pie, it will need to come from a legal challenge. Last month, Jean-Louis Dupont announced he would bring an action against the Union of European Football Associations’ Financial Fair Play regulation on the following grounds: Restriction of investments; Fossilization of the existing market structure; Reduction of the number of transfers, of the transfer amounts and of the number of players under contracts per club; Deflatory effect on the level of players’ salaries; and consequently, a deflatory effect on the revenues of players’ agents (depending on the level of transfer amounts and/or of players salaries.

Dupont also notes the regulation’s infringement on fundamental freedoms of the European Union, “free movement of capital, free movement of workers, and free movement of services (player agents).”

Sound familiar?

Financial Fair Play is a different regulation with different ramifications, but Dupont’s lawsuit and the draft’s consequences share a common thread. Its generally accepted that wage and movement suppression is frowned upon. Should Dupont’s name sound familiar, that’s because he had success in a similar past action. In 1995, Dupont won a landmark players’ rights case on behalf of Jean-Marc Bosman before the European Court of Justice. Athletes’ rights are just as important as your own and it’s only a matter of time before the American courts hear a similar case.

In 1999, Commissioner Selig created a “Blue Ribbon Panel” to come up with a plan to address the competitive balance issues the sport was facing. Since that time, the league has greatly increased revenue sharing and instituted the luxury tax, flattening salaries between the top and mid-level franchises, helping create the current era of unprecedented parity in Major League Baseball. Given the success of competitive balance manipulation through revenue adjustments, it’s fair to wonder if the draft is really even necessary to achieve that goal.

While the draft may promote competitive balance to some degree, it’s worth noting that it was in place for the entirety of the time that the sport was dominated by a few marquee franchises. The draft’s relatively minor impact on competitive balance compared to increased revenue sharing means that perhaps the effects of eliminating the draft could be offset with further financial adjustments. If we could maintain the current level of competitive balance while doing away with draft, perhaps that would be the fairest outcome of all.

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Formerly of Bullpen Banter, JD can be followed on Twitter.

47 Responses to “Does Baseball Need the Draft?”

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  1. maguro says:

    Yeah, of course the draft is all about suppressing signing bonuses for amateurs. That’s not exactly news.

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    • jfree says:

      That and MLB’s anti-trust exemption is exactly why MLB needs the draft. If the draft were to stop, the on-field talent (the reason fans go to or watch games) might be able to extract an even higher proportion of the money that MLB is able to extract from the media because of their anti-trust exemption. And owners can’t have that can they.

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  2. RMD says:

    The fairest thing to do would be to reward players that are talented, but not talented enough to stay in the big leagues consistency.

    With added TV revenue and more revenue sharing, the best thing would be to raise the salaries for pre-arb major leaguers and minor league players. The next CBA should see a great jump in pre-arb salaries, but minor league salary increases will always be an uphill battle. They have no marketability, they are expendable, and others are more than willing to take that crappy position. It’s no surprise they get a pittance for salaries.

    If minor leaguers get shafted, there is no hope for potential draftees. They obviously can collectively bargain — most of them are in the NCAA. They have such a high failure rate that the player’s association bargaining on their behalf would be a fool’s errand. Them’s the breaks.

    Since the draft was implemented in the mid-60s, there haven’t been many dynasties. Since the late 90s and the advances in MLB revenue sharing, competitive balance has exceeded anyone’s expectations. MLB is on the right track. Dismantling the draft now just sounds ludicrous.

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    • Richie says:

      The last paragraph here. Of course the draft has benefitted competitive balance. Historically inarguable, really. You propose we accomplish that some other way? Super. Just don’t BS about what the draft has accomplished ‘cuz you think it helps your argument.

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  3. Michael says:

    I’ve always viewed competitive balance in the sports leagues as an added element of the strategy to forming a team. Anyone knows that if you have better, and as a result usually more expensive, players you are more likely to win. But if everyone is playing with the same pot of money then it becomes a test of who can build the best team with these limitations placed on them. It’s another layer to the meta game in my mind.

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  4. rageon says:

    When I read “let’s put aside the wage suppression issue for a minute” I was hoping to finally read an article about the draft that didn’t use some variant of the phrase, “the purpose of the draft is to suppress salaries.” Guess not.

    I’m not so sure that your hypothetical seems that outrageous if you add a couple of things. First, rememeber that the employee, provided they make it through the first part of their career, will make a crazy amount of money, more than enough to live on for the rest of their lives. Second, remember that the potential employees are well aware of this system when they choose to go into it. It’s not like this whole draft thing has been sprung on a bunch of kids at the last minute. They know going into it what the the future holds. (Although they may know a little better if they were actually allowed to hire attorneys to assist them, but that’s an issue for another day.)

    Wage suppression or not, _a_ purpose of the draft is to help with competative balance. If we could achieve that solely through other means, fine. Small market teams in MLB already have a huge disadvantage, and eliminating the draft would make things exponentially worse.

    Side note — why can’t we have a salary cap that doesn’t “suppress salaries.” Say we add up all the revenue teams spend on players, add 10% (or some number) to that, divide it by 30, and make that the cap? Aren’t players coming out ahead in that scenario?

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    • x says:

      No, the players are most certainly not coming out ahead in that scenario. Forcing the Yankees to cut payroll to within 10% of league average doesn’t do anything to make the Astros spend more.

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  5. Robert D says:

    There’s something you’re assuming here that I think is incorrect. You infer that each franchise, on a business plane, are competitors. In one analogy you say that revenue sharing would be the same as a competitor asking a company for payroll money. And in the other “accounting” analogy, you use the same comparison of negotiating with competitors. The thing is, from a pure business perspective, these are franchises that, when combined, create a larger organization. On a pure business plane, each of these franchises are not competitors. While these franchises compete via sport, they do not directly compete financially in the same way that other organizations compete. I would say it’s more accurate to compare each franchise to a department within one company. And because there is only one company that these athletes can provide their services through, and not a “big four” like your accounting analogy, it makes it at least understandable why atheletes would sacrifice leverage to be able to work for that one company.

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    • Richie says:

      I like this, only I would change the simile to that of different geographical branches of the same company.

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      • Robert D says:

        Yes. Exactly. This also accounts for the awkwardness when the A’s want to setup shop in San Jose or when the Expos wanted to move to DC.

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    • Tyler says:

      This is much closer to the analogy I’ve used in the past to explain this to others. I work in a field of science that has very limited companies. Because I want a future in the field, I don’t get to pick and choose where I would like to work. I wanted to get my foot in the door, and that meant going to North Dakota. After a few years of experience, I moved on to something better in Seattle. In an effort to avoid arguing about American society today, I won’t dive too deeply into it. However, I find that in general, athletes and non-athletes alike expect to be able to live and work whenever they want, and I don’t feel like should be like that all the time. Put in your time, and you can move onto to better things and places if you prove your worth.

      I understand the argument about most players hit their peak value on draft day, but I don’t see that as a reason to award them more money. Like college graduates, they are still unproven. No reason they should earn more because their career is already on a downhill trend, and there are more people wanting to play baseball than there are roster spots in the Major Leagues. No one pays graduates fresh out of college with business degrees seven figures simply because the odds of them becoming CEO’s are slim.

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      • Al Dimond says:

        You chose a field where options were limited, then you chose to take a job in a place you apparently didn’t want to live because that was your best chance for career advancement. Sounds reasonable. If you really didn’t want to go to South Dakota (say, for example, you hated Mount Rushmore) you could have not taken that job and been free to pursue others in your chosen field.

        And when you took your job you negotiated your starting salary and its conditions, without outside limitation. I mean, it’s possible that your department would like to make you a better offer and the company overall would not allow it, but that wouldn’t affect what any other company might offer. And MLB franchises are independently owned — that’s the meaning of a franchise, as opposed to a company’s department.

        FWIW, if I’d had no control over my location of employment for the first six years of my career I’d be in a different field.

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  6. Nick C says:

    To me, the biggest obstacle in getting rid of the draft remains the desirability of eventual destination. It seems reasonable that, given a free market, more players would like to play for a geographically or meteorologically “convenient” team.

    The NBA has a similar issue, with marquee free agents consistently signing with the top 8-10 teams – an amalgamate of the biggest markets (L.A. / New York / Chicago), the markets with the best weather (Miami), and the markets with a prestigious team Celtics, Knicks). This essentially forces mid or small market teams to overpay for the second-tier of free agents, and miss out on the top tier of free agents entirely. In recent years, we’ve even seen free agents-to-be using their upcoming “freedom” as leverage to demand trades to those same 8-10 teams. Franchises in cities like San Antonio, Oklahoma City, Denver and Memphis have no choice but to build through the draft and trades, where players don’t have the choice to leave for greener pastures.

    In MLB, the inherent risk associated with career development (injury, lack of production etc) acts as leverage to give teams fair market value on their own young, developed talent. Longoria, Tulowitzki, and Ryan Braun are all good examples of teams that paid more-or-less fair market value for their own players. I’d say that’s the biggest benefit to the current system.

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    • geefee says:

      What really kills parity in the NBA and permits the inmates to run the asylum is max salaries. In that sport, the gap in utility between an elite player and even a very good one is enormous, but you can floss with the difference in the salaries they command. In the obvious example of LeBron (Wade and Bosh too), he signed for significantly under the max despite being indisputably the best player in the league. This makes it virtually impossible for a smaller market team to compete long term because even if they had the money to pony up for an elite player, they won’t be allowed to do it. That player would be able to sign for much less with another team and make dramatically more money because doing so would grow his own brand. I’d hazard that this is all by design.

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    • Al Dimond says:

      There’s an easy solution to the problem of disparity between big/attractive markets and others: give teams freedom to locate rationally. Does Man U dominate the Premier League because Manchester is the dominant, overwhelming market in England?

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  7. AC of DC says:

    Nice read, and I can see both sides. Alluded to but not specified is that wage suppression is risk management. This is a business where bodies will pay an aging slugger $20M to go in the tank and pay a young phenom league minimum to carry the team. Salaries simply cannot reliably reflect contribution to winning or, more broadly, to revenue; predictive measures are imperfect and a player’s “fan value” too obscure to nail down. This is true in most every business, of course. If teams were free to tender offers to any amateur player who declared himself available, would we see gambles? Would whatever protection the draft may provide against a few teams’ market dominance be eliminated? No matter how much money the big teams give the small, the former will always have more than the latter — enough to make a difference when it comes to signing players.

    On the other hand, I would wonder if anyone has developed a satisfactory formula that suggests the draft’s impact on competition. It isn’t just a matter of players’ wins added, as there are countless other costs and variables that would be very difficult to track and weigh. We may have seen a more varied slate of champions post-1965 (the draft) than before, but we must bear in mind that just a few years earlier (1959) MLB was 16 teams, playing a single-tier playoff (to change in 1969 and again thereafter), with no free agents (1976). How much of today’s balance (still far from perfect) is due to the draft?

    As the draft works to general financial advantage, as you suggest any challenge will presumably have to come through legal means. As the draft may still provide some small leverage in favor of balance, we would be better served if its elimination came partnered with the implementation of a new and superior system.

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  8. Grant says:

    JD – Two things:

    1) You keep brushing aside competitive balance like it’s purely a ploy by ownership. Imagine what amateur free agency would do to competitive balance. How does Kansas City ever outbid New York for someone like Harper. The premium picks would never go to underachieving small-market teams. Is the solution to that a tiered cap on amateur spending? If so, that’s the same system as the draft is now.

    2) Wage suppression? Suppressed from what? The market value of a #2 starter at High-A ball? Minor league players generate minimal revenue for their clubs. It’s not unfair that they get paid less than major leaguers despite their low chances of making the show. In fact, it’s precisely because they have such little chance of producing from their club that it is irrational to pay them a lot of money. The ones who do have the talent to inevitably produce end up getting paid anyway when they hit arbitration and free agency. Talent and potential do not entitle a player to a larger payday.

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    • Ramiro Pena says:

      What an awful post.

      1) Competitive balance isn’t a ploy, but if the owners believe that it’s necessary for the health of the game, then they can handle that amongst themselves without boning the players in the process. If the yankees put a dollar value on competitve balance, then they should simply pay that dollar value, instead of creating a slave class of players to create excess NAV out of thin air to pay with instead. It’s a sweet con though when they get away with it.

      2) Wage suppression from what draft picks were paid before the current CBA. ROFL. They’re being paid less now than they were under the slightly more free-market system a few years ago. And OMFG your last sentence is beyond stupid. The talent and potential of what players might do after signing a FA contract is EXACTLY WHY they get larger FA paydays, but somehow in herpderpistan or wherever you’re from, that logic doesn’t apply to pre-FA players.

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    • Tim_the_Beaver says:

      re: 1)
      Agree with this. The draft’s impact on competitive balance seems to be overly marginalized in this article. Am I missing something?

      Yes, if you look at all the stakeholders (owners, players, fans, draftees), the draft likely net transfers benefit away from draftees to all the other groups (through some increase in competitive balance and savings in not paying them “free market rate”, whatever that may be). And part (or all) of why this happens is because draftees do not have a seat at the negotiation table the way the other stakeholders do.

      But is that so wrong? Comparing the draftees situation to Afghanistan seems over the top(todmod), and as rageon points out, draftees know exactly the risks they take on in entering the system. From a philosophical standpoint, is it so wrong to more heavily reward those that “make it” rather than spread the wealth more evenly? I am not convinced.

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    • Winston says:

      “How does Kansas City ever outbid New York for someone like Harper Matt Bush.”


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  9. todmod says:

    It doesn’t help your case to compare minor league teams to jobs in Afghanistan.

    I never understand the desire by writers to use outrageous examples to try and help their point. If you need to exaggerate, it hurts your case.

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  10. ttnorm says:

    And it isn’t like the MLB minimum salary ($490k) is chump change.

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    • Eric R says:

      That’s what I was thinking. It sure stinks that Purke went from $6M to 4/$4.15M and that could be his last significant paycheck, but I can think of it this way.

      Lets say you just graduated from college and can get a $40k job in your field. If that increase by about 3% per year, it’ll take you 48 years to get to $4.15M — your entire working life.

      And even then, I’d certainly rather have $4.15M spread out over the next four years, than over the next almost fifty years.

      Take a 2.75M signing bonus and and stick in a CD at 0.5%; take the remainder and spread it out over the other three years [no idea how it was broken down in reality]. Take out the $40k per year [plus 3% per year for inflation] and when you get to year 48, you still have $810k in the bank

      And by spending just a single day on the MLB roster you’ve earned lifetime medical insurance… pretty sweet. And I think with as little as 43 days on a MLB roster, you get a MLB pension too.

      No– I will not be crying for poor old Matt Purke. A guy like RA Dickey who went from an $810k signing bonus to $75k after a medical exam and then toiled in the minors forever and at age 36 still had barely anything to show for it, that’s guy I’m going to feel for and even so, I think he was still doing OK at that point…

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    • stretchfest says:

      The AAA minimum was $2150/month last year. That drops to $1110/month for first year minor leaguers.

      Chump change.

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      • stretchfest says:

        Quick calculation: $1110/month is $13200/yr. $7.25/hr is $15080/yr.

        Minor league minimum is below minimum wage.

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  11. jfree says:

    Actually the primary benefit of the draft for MLB is that it eliminates the player pool for any competitive league. Basketball and football are able to latch on to the NCAA’s own “student”/unpaid athlete sports monopoly. With 340 often state-funded teams in the NCAA’s “Premier League”, the NCAA itself is able to serve as the anti-trust exemption arm of those professional sports.

    For MLB though, their anti-trust exemption sucks the oxygen out of the NCAA (via the minor league tiering structure). And so they need the draft in order to kill off any potential untiered baseball league that might be inclined to market itself on local businesses, local media, local boy made good, attendance, etc.

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    • jfree says:

      And the author is dead wrong that the status quo is “good for fans”. Fans are precisely the ones who are harmed by the status quo. They may not understand how — because this particular monopoly is extracting its economic rent via reduction in supply (fewer professional baseball teams) and fans generally attribute the shrinking supply of baseball to “baseball is just not America’s pastime anymore”.

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      • Jason B. says:

        “And the author is dead wrong that the status quo is “good for fans”. Fans are precisely the ones who are harmed by the status quo.”

        Depends what team a fan roots for; some teams (and their fan bases) may benefit from the status quo.

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  12. Los says:

    I’m sorry but Wage suppression should be exercised in the draft. The failure rate is far too high to guarantee as much money as they do to top 10 picks on their potential alone. I also disagree with your analogy about an accounting grad student. Most graduates don’t get long term contracts after graduating.

    I can see two “fair” ways to handle the payment of players in MLB:

    1)A strict revenue sharing system with both a salary cap and a salary floor where everyone is a free agent after every year.

    2)Pay per WAR (or some other agreed upon metric)

    I hope everyone can see the problems with both of these.

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  13. lowcountryjoe says:

    Can you explain the position to John “hammer and” Sickles?

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  14. Gary Mugford says:

    Robert D. is correct. The player rights advocates continue to operate in a reality vacuum. Sports is NOT like other businesses. It is, in fact, a collective, rather than a typical business model where dominating the market to the point just below inspiring anti-trust investigations is the goal. Sports organizations NEED other teams to come play in their buildings, to draw crowds, and their wallets. It also makes for better TV when the event is a game rather than a practice. While viewers tend to fondly remember dynasty teams (especially if local), the fact is that sports requires home AND visitor teams and true monopolies lead to league disbanding.

    George Steinbrenner once famously whined about a lack-lustre crowd at old Yankee Stadium with the Royals as guests. Because the game was likely NOT to be an entertaining contest with the outcome in doubt, all but the die-hard fans had decided to stay home (with their food and beverage dollars) and watch the game on TV or do something else. Steinbrenner was pushing for a new stadium what with the empty seats that would be filled by interest in the game OR the new stadium, but his argument FOR needing the new stadium was flawed. He’d outspent the Royals into being a non-contender as Kansas City ownership at the time had decided not to lose money (a real life possibility a LOT of franchises faced at the time) by playing with the Yankees, Red Sox and Dodgers in the ‘big boy’s club.’ If the game is likely a runaway, where’s the entertainment value for the casual fan?

    There is no RIGHT to play in Major League Baseball. There are other professional teams, including minor league teams who hire unaffiliated players. And independent leagues. There’s also other countries. You CAN choose not to sign the offer you are getting, as Mark Appel did in 2012. The system is well-known at this point. If you don’t want to go through a low-paying apprenticeship before possibly getting retirement money before you are 30, then do something else. Sign somewhere that doesn’t have the apprenticeship stage. It is your choice and no RIGHTS are being abrogated.

    Payment in sports is almost always about what you did, rather than what you are going to do. Sure, there are playoff wonders who don’t pan out with their 3-year contract afterwards. Same thing happens in basketball. We, here in Toronto, watched Yogi Stewart hang out at the end of the bench for the Toronto Raptors for the better part of a decade, because he had a good play-off (with another team). Still, he was being paid for what he did, however briefly, at the top level of the game, in the play-offs. The money the Angels, Dodgers and even the Phillies have tossed around as of late always had a best-before date smell to them. Everybody knows the current salaries might be accurate in terms of WAR or whatever, but that by the end of the contract, an expensive pinch-hitter or occasional reliever will be thinking more about retirement than anything else.

    Rookies are lucky there is even the ability to negotiate salaries for some. The teams actually SHOULD enact a league-wide pay schedule and stick to it, since subsequent salaries are always based on the previous one. It would eliminate the start of bad feelings for many players. Maybe add contribution bonuses that allow the true wunderkind to more quickly accelerate their pay raises. But wage suppression works for the greater whole, that whole being the players and the teams. Do the teams get the greater share of the greater whole? Yes. And your point?

    Business with branches don’t have to send a newly-hired accountant to Afghanistan. Maybe it’s cross-town. Maybe it’s moving from Austin TX to Rochester NY or the reverse. Companies not in the sports business do that all the time (ask bank tellers, for instance). Your choice is to go or find another company to work for. Maybe the company cushions the forced move with a moving bonus. Maybe the company offers nothing but a ‘See, ya.’ In either case you can quit or get fired, after making that impassioned plea to stay right where you are. If you asked for market value for your skills and the right to work out of your home (more extreme than asking to work close to home than an example where you are forced to work in Afghanistan, for example, but a valid one), MOST companies would end the interview right there and then, unless you are talking about a computer consultant of some sort (that’s my job and I have a home office). So, STOP bleating about branch assignments. It’s boring.

    When I was a sports reporter (I’ve worked in several kinds of avocations), I knew I would be working weekends. Was part of the job. I also knew I would be a poorly-paid ink-stained wretch. On the other hand, I got great seats for games I would probably have spent my weekend at home watching on the tube. So, was I allowed to kvetch about working weekends (Every weekend for three straight years at one point … I enjoyed my job and hate vacations)? No. I knew what I was getting into. Awareness of the actual workings of the job you are applying for is a requirement, not an option.

    Sports is unlike all other businesses. The mechanics of the sport always need tuning. I’m for a world-wide draft and I want Cuban and Japanese players to be included. Fairness is involved. Will I get my way? No. And maybe the Mexican players might get the same out that I don’t want them to get. Will the sport be unwatchable if I don’t get what I want? Of course not.

    This argument is purely based on the concept of rights that don’t exist and business requirements that don’t apply to the business because of it being a collective rather than competitive process. It occurs every draft for all sports by well-meaning people who see society’s rules being altered for the benefit of rich owners. It’s a view from outside the system rather than in it. The players who make it, make retirement money before they are 40. The players who don’t, work a job they enjoy for nine months of the year and augment their salaries by taking jobs (often in winter-leagues) or take vacations for the rest of the year. If they don’t like the job (and we are using the term broadly. Everybody has good days and bad days), they retire. And change vocations. Just like I have done five times in my half-century on this earth.

    Sports equates to a lottery ticket worth millions, maybe even hundreds of millions, with a chance to affect the odds all by yourself. People want that chance. And sports offers them that chance–within a structure of apprenticeship and forced changes in work locations. It is NOT a perfect job and a ‘free market’ would inevitably lead to fewer Yankee farm-hands making the big team (bigger pool to swim through) and no teams in poorly thought of locations (which might then include Toronto). It would not be the nirvana people think of. If they are old enough to remember when the Yankees used the A’s as their own quad-A farm club for years, they remember dynasties and perennial losers.

    How’d that work out for Kansas City fans? An expansion team, well-run, all the way to the World Series. And then economic reality hit and Kansas City became the modern-day St. Louis Browns.

    In the real-world test of a totally free economy, the Browns, the Phillies, the A’s and other teams went years and years envying the Cubs, who go centuries between World Series victories. I like the current fighter’s punch chance we see converted every now and then. I like Tampa Bay’s AAA salaries and World Series appearances. I like Minnesota winning and I don’t mind the odd Yankee and Red Sox championship. As long as it’s the odd year and not every year.

    Sorry, but the arguments against the draft fail the real world test. Well-run franchises compete these days, even if teams like Tampa Bay evoke memories of Bill Veeck. Poorly-run franchises fail. See ‘Blue Jays – Ricciardi Era.’ Players who succeed, succeed spectacularly. Most players who start their apprenticeships fail. And then get on with their lives. I failed at a couple of jobs, succeeded pretty well in others. I enjoyed every job I ever did. Ask the Crash Davis’s of the world whether they’d do the whole career minor-leaguer thing all over again, and the first question would be, “Where am I assigned?”

    Curt Flood lost more than he won. Yet he shone the light on actual flaws in the game and the game was made better by the changes he initiated. Analysis of areas of dispute or just areas of interest are worth reading and thanks JD for the effort. But I’m more interested in pitching ERA in innings after batting and especially innings after batting AND running the bases, than I am in re-hashing an argument with the foundations of quicksand.

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    • Jake says:

      I didn’t read your post. I just want to note that your post was 1,517 words according to an online word count tool I used.

      The original, lengthy article was 1,727 words.

      That is all.

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      • Gary Mugford says:


        I tend to run on. Have absolutely no issue with anybody who chooses not to read all or part of it.

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  15. Steve says:

    I’m surprised this article didn’t address the nightmare that would ensue when the teams set about to negotiate with 100’s (1000’s for some teams?) of players. Also, if you are going all free market, shouldn’t teams be free to sign players whenever? Market inefficiency: sign high school freshmen. They do it in Latin America, why not here? How much less could you get Harper for if you signed him when he was 13 as opposed to 18?

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  16. rustydude says:

    Reading through these comments, I’m mindful of former A’s owner Charlie Finley’s push to not have arbitration or team control, at all, and have all players be free agents, all the time. The players union rejected that. It’s a real conundrum why a small market team owner would want a free for all system, until you break down how the current system (essentially negotiated back in the 70’s) benefits the players over all.

    I commend JD for breaking down this issue of competitive balance as it relates to the draft. This is issue is not as obvious as first meets the eye.

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  17. MDL says:

    The article links to this page, which shows the Marlins’ hitters WAR leaderboard this year.

    I just want to point out that 3rd on that list is a guy with 10 PA. 5th on the list is Jose Fernandez.

    Jose Fernandez is the 5th most valuable hitter for the Marlins this year.

    That is all.

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  18. GLS says:

    My thought is that the best way to handle this would be to get rid of the draft, but keep something similar to the current bonus slotting system, so that the team with the worst record had the most money to spend, etc. This would have the effect of pushing the top talents to the worst teams, but would also allow both sides some degree of choice.

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  19. Mike Newman says:

    What I find interesting about these comments is nobody has acknowledged over 90% of drafted players never sniff the Major Leagues.

    However, while a guy plays in the Minor Leagues, he receives $12/day meals, covers his living expenses and is expected to do little things like tip out clubbies and such.

    These players often spend years in the minors, living in the red and working odd jobs in the off-season. Others will file for unemployment when not in season because they are paid during the MILB season ONLY. Spring training, fall leagues, instructs, winter leagues are on the house.

    If a prospect was worth a million on the open market, but received a $250,000 bonus due to the draft and it’s ability to suppress values, that player will have burned through much of the bonus just trying to live without hitting up his parents for meal money in the minors.

    It’s common for a player drafted at 18 to spend six or more years in the minor leagues. If in the seventh year, he makes the big league minimum, then his combined salary over that time period is approximately $550,000/7 years or about $78,500/year if averaged out. You can’t separate time spent in the minors and simply say the player is rich once the MLB paycheck comes in. You must calculate in the years of sacrifice, or it’s just cherry picking.

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  20. Chuck says:

    “The modern draft was instituted in 1987”

    The draft existed before you were born, JD…

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  21. Eric says:

    A lot of excellent points in this piece, but there’s one very important one that seems to be missing entirely: wage suppression itself encourages competitive balance (which, as another commenter rightly pointed out, should not be dismissed as a mere ploy by ownership) . Already we see small-market teams shying away from the biggest high school names in the draft for fear they won’t be able to sign them. And from time to time we actually see them reach for those players and get stalled in negotiations; the deadline comes and goes, and all they have to show for it is a comp pick next year. Further, I’m really not convinced that doing away with the draft would mean financial windfalls for every amateur player; sure, the headline talent would get more money, but that leaves less budget room for the fringe prospects who get left with squat. Minor league salaries are a problem, yes, but that’s a problem that can be addressed directly without sacrificing the real, tangible benefits we get from the draft.

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  22. Maverick Squad says:

    How much is the draft a wage suppression tool at all? If we got rid of it and had pure free agency for everyone would we see total wages rise at all? Or would we see older players(the ones who in the current system are ‘free agents’) get less and younger players get more?
    Also how much do minor leaguers make per hour- do they make less than the people who work at the concession stands? A minor leaguer has to work a lot of hours practising and training as well as playing.

    The argument about revenue sharing and why should the Yankees have to support their competitiors – it doesn’t really work like that. The Yankees are not a standalone business-they are part of the MLB. They could leave the MLB and go become part of an independent league if they didn’t like it, but I don’t see them wanting to do that. They need to be part of the MLB to make big revenue.

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  23. Trenchtown says:

    An amateur athlete attempting to challenge the draft under antitrust laws is an instant loser of a case. Not because of baseball’s antitrust exemption. Baseball does not have an antitrust exemption regarding labor since Congress passed the Curt Flood Act of 1998. The case is an instant loser because businesses have an antitrust exemption in regard to restrictions on labor agreed to in a collective bargaining agreement. Essentially, because the MLBPA agreed to the CBA, the draft procedures are unchallengeable.

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    • JD Sussman says:

      Yes, I intentionally did not make a legal argument or conclude they could win for that reason. But, without researching, I would say this isn’t exactly being collectively bargained for future members.

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      • SPK says:

        In Wood v. NBA (1987), Leon Wood filed an anti-trust claim against the NBA after the 76ers could only sign him to a 1-year, $75,000 contract so that they wouldn’t exceed the salary cap. As a result, he argued that the salary cap and the draft violated anti-trust laws for the same rationale that you mentioned, JD. The court held that “at the time an agreement is signed between the owners and the players’ exclusive bargaining representative, all players within the bargaining unit and those who enter the bargaining unit during the life of the agreement are bound by its terms”. That being said, there’s already a common law precedent that players who are not yet playing in the league cannot challenge the terms of an existing collective bargaining agreement on anti-trust grounds.

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  24. GLS says:


    I wonder if that’s true. It seems like the CBA could be challenged based on amateur players not truly being represented.

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    • Al Dimond says:

      Some laws regarding labor relations are sort of weird like that, and exist to protect established unions (for better or worse). It’s common enough that unions protect their current membership even at the expense of other employees, or protect their senior membership at the expense of other members.

      In order to get a seat at the table the amateurs (or newly signed minor-leaguers) would have to organize and strike. Their position would be impossible. I don’t know if anyone’s analyzed this, but it wouldn’t surprise me if MLBPA’s negotiation on the behalf of its non-members suppressed top draftees’ salaries and bonuses but raised the compensation floor.

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