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Rosenheck & Jonas: International Draft Issues

MLB’s new Collective Bargaining Agreement seemingly portends an international draft — Bud Selig has called it inevitable — but questions remain. Among them are: “Is it a good idea?” and “Is it even practical?” In the opinion of two people with extensive knowledge of baseball in Latin America, the answers are “No.”

Dan Rosenheck is the sports editor and deputy Americas editor for The Economist and writes about baseball statistics and economics for The New York Times. He worked for five years as a foreign correspondent in Latin America and is currently writing a book on baseball in the region.

Adam Jonas runs MLDraft.com, an online advisory service for amateur players. He formerly worked in player development for the Twins and Brewers — extensively in the Dominican Republic — and served as the Director of the International Academy of Professional Baseball.

Rosenheck and Jonas discussed the hurdles of implementing an amateur draft during separate conversations at the recent MIT Sloan Sports Analytics Conference.

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Dan Rosenheck: “The average signing bonus in the Dominican Republic went from $29,000 in 2004 to $180,000 in 2008. It has come down from there, but that’s because a lot of guys were getting held up by performance-enhancing drugs and age-and-identity issues. While the DR has stagnated in recent years, bonuses in Venezuela have soared. Either the investigations department is less hardcore there, or there is simply less fraud. I’m not sure which.

“Only a handful of guys break seven figures each year — I think it’s about 10 per year — and those obviously pull up the average. Overall, the number of signings has held pretty steady.

“The tax threshold is $2.9 million in 2012 and starting in 2013 it moves to a sliding scale based on teams‘ winning percentages. I believe that MLB’s idea is, ‘Let’s try this tax system and if it doesn’t accomplish what we want — which is more competitive balance and presumably lower signing bonuses, or at least a slowdown or stop in the increase of signing bonuses — then we’ll have to move to a draft. This is sort of an intermediate step.

“I don’t think there is any doubt that if the owners had their way, they’d have [a draft]. The union doesn’t care, because these people aren’t members. The victims aren’t represented. It’s hard to see how… the logic of this so overwhelmingly leads you to think that, one way or the other, the owners and players will eventually agree to do this. The players will be happy to sacrifice a draft in exchange for some other concession. Maybe it won’t happen within a few years, but I think it will sooner or later.

“If you have a draft, who’s to say they couldn’t cut bonuses way down below the cap level? These kids have no other options. They haven’t gone to high school and many have barely gone to middle school. They’ve done nothing but play baseball since they were six years old. They’re coming from an extremely low socio-economic base and would be thrilled to get $30,000. If someone has exclusive negotiating rights with you, it’s $30,000 or go shine shoes for a living, so these players have no leverage. Basically, if there is a draft — depending on how much of a hard line teams want to take — they could drive bonuses back to where they were in the 1980s. What would stop them?

“If there’s a draft, and a kid in the Dominican is only offered $30,000, he can’t shop his services to any of the other 29 organizations. This is one place where MLB was actually less aggressive than what you might have expected them to be — $2.9 times 30 is almost $90 million dollars. Last year, total international signing bonuses were $65 million. So, you’ll see some distributional changes, but they have set the cap high enough that I don’t think you’ll actually see it affecting total spending for awhile. The bigger concern is the possibility that [the tax threshold] leads to a draft.

“One of the big reasons the draft had such a devastating effect on Puerto Rican baseball is that it created this donut hole in the development system. In the old halcyon days of the 1980s you could sign these kids for $20 and ship them off to the minors when they were 16 years old. In the Dominican Republic, when you’re signed at 16 you go to a Major League academy for two or three years to play Dominican minor-league ball. You’re not shipped off to rookie-league ball in the United States until you’re ready.

“In the US you have high school baseball — serious, organized high school baseball — that you play when you‘re 16, 17 and 18. The problem is that if you’re a 16-year-old Puerto Rican, who wants coaching and wants to get better, you have absolutely nowhere to go. You can’t play in high school and a team can’t sign or draft you. You have to play in impromptu weekend leagues where the focus is on trying to win rather than on teaching and developing skills. By the time you’re 18 it’s too late.

“If an international draft kept the age at 16 by July 2nd — the current age for signing international players — that would obviously be better than if it doesn’t. The average Dominican kid leaves school after eighth grade and you need to graduate from high school to be drafted. You couldn’t possibly apply that rule to the DR, because if you did there wouldn’t be any Dominican players. I imagine that the International Talent Committee knows this.

“There are also legal issues. Major League Baseball has a 100-year history of getting congress and the courts to basically let it do much — although not all — of what it wants to do in the US. It has not established that precedent in the Dominican Republic. This is a sovereign country with its own laws, own courts and own government. Because MLB has invested there, and because the DR has a free trade agreement with the US, they have options. If they wanted to fight this, they’d have some real legal tools at their disposal. Either the Dominican government, the buscones, or the players, could file a class action suit. Any individual who was drafted could claim that he was wronged and demand compensation. Of course, that would require organization and I see very little of that.

“Instituting an international draft would be subject to far more international legal risks than you usually hear [discussed]. Whether the potential victims of an international draft know that they have this recourse, and are organized to use it, is another question entirely. Regardless, there are hurdles beyond whether a draft would be good for the game.”

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Adam Jonas: “For logistical reasons, I think a worldwide draft is almost impossible. Of course, what we are really talking about a Dominican draft.

“I was working in the Dominican Republic when Sandy Alderson was there, and just getting any kind of consensus in that environment is nearly impossible. The buscones — the trainers — have a lot of influence on how the process unfolds. Trying to get them to play in the same league is just not possible. There are factions and rivalries, because they’re all competing for a limited amount of talent. Having them collectively make moves, as a unit, is an unlikely proposition.

“If there is going to be a change, the teams could certainly force the hands of the buscones, because they set the market. There is no question the market was effected when Sandy was there. Ariel Ovando, with the Astros, was the only really big signing [in 2010]. None of the other top-tier players were paid anything close to what top-tier players received in 2009. Some of that, I believe, was the presence of new policies. Having Sandy around, and a heavier hand from MLB, influenced how the bonuses were spent.

“However, again, we’re talking about logistics in a place that is very unorganized, and it has been very unorganized for a long time. And that’s just the Dominican. In Venezuela, with the political climate, it would be almost impossible to have any sort of regulation. They have Cubans washing up onshore. There are unknowns that have to go through the multi-step process of getting cleared for free agency by MLB.

“There are also emerging markets, like Columbia, where more players are coming onto the scene. We have all of these different areas. We have Cubans, where they’re all free agents, all the time, and a lot of the investments there haven’t proven to be wise. We have Dominican players who for years and years had been underpaid and now are considered overpaid. We have Venezuelans, and with the Wilson Ramos situation fewer scouts will be traveling down there because of increasing personal safety issues and the political situation. In Mexico, Asia, and Australia, the market is totally different. It’s very difficult to balance all of those pieces and make sure that everyone is treated fairly. That’s why when people talk about a worldwide draft they are really speaking to a Dominican draft.

“As Dan [Rosenheck] was saying [at his MIT Sloan presentation], an international draft would economically exploit the players, because unlike their American counterparts they have no educational or economic alternatives. They won’t be going to college or pursuing another career. They have no choice but to take what is offered by the club. As for the other issues, I’m not of the camp that it’s solely a political issue. I think it’s mostly a logistical issue. MLB could come in with a very heavy hand and structure things — and they already have somewhat with the drug testing and identification system — but what would happen if a player was 16 years old and he’s hidden for two years? When he became 18, would he still be eligible for the draft or would he become a free agent and be on the open market?

“Mark Shapiro and Jeff Luhnow were talking [on the Baseball Analytics Panel] about how the changes to the [amateur] draft will handcuff their development capabilities. A similar sort of structure in Latin America would handcuff a lot of teams in terms of how they sign players. Teams should have a choice of whether they’re going to spend $3 million one year, $1 million another year, and $5 million the next. There needs to be some flexibility built into the system, so there isn’t a hard cap for a special player. A Stephen Strasburg or a Bryce Harper gets paid for his project-ability, so why shouldn’t a Dominican player get the same opportunity? There’s a fairness issue in play here. There’s no question that the interests of American players are looked at in a different way than Latin players.”