Two Negatives Can Make a Positive: The Pre-Preliminary 2014 Draft Budget

Finding a sad/disappointed picture of

is basically impossible so I went with the most hilarious one we have instead. (Mandatory Credit: David Richard-USA TODAY Sports)

If the 2013 Toronto Blue Jays season was a movie, the genre would be horror, and parents would shield their children’s eyes away from the television in an effort to save them from the nightmares likely to haunt them for years to come. Many of the story’s original characters have been lost, and even the return of the main protagonist halfway through the journey wasn’t enough to steer the ship away from its seemingly predestined conclusion. All drama aside, this year has sucked, and that suckage is amplified by the fact that for the first time in a long time, we fans entered the season with a true sense of optimism. Not just about the future, either; about the present.

Given that the present is so devoid of positivity and joy, I thought now might be an opportunity to once again look optimistically at the future. In addition to the major league roster failing, General Manager Alex Anthopoulos didn’t have a particularly great amateur draft. By failing to sign 10th overall pick Phil Bickford, the Blue Jays spent just north of three million on draft picks in 2013, a far cry from when the club spend over twenty-one million across the 2011 and 2012 drafts. Don’t worry; I’m getting to the optimism. These two negatives do in fact create a positive, as the Blue Jays are well on their way to having one of the largest bonus pools in the 2014 amateur draft.

As most draft followers know by now, a team’s bonus pool is the sum of the values of all picks they possess within the first ten rounds. The first overall pick has an assigned value based upon baseball’s revenue the previous year, and each of the following 320-or-so picks have assigned values equal to a set percentage of the first overall pick’s value.

The new Collective Bargaining Agreement resulted in three ways by which a team can gain additional picks in the draft. The first is through what is called the Competitive Balance Lottery, where Major League Baseball creates twelve extra bonus slots, and tacks six each onto the end of the first and second rounds. Those picks are awarded to teams through a lottery of sorts, the mechanics of which I don’t fully understand – they’re supposed to go to low revenue teams, yet somehow the Tigers, Mariners, and Cardinals have received picks. Makes sense, am I right?

Though the Blue Jays didn’t win any picks, for the sake of completion: the Rockies, Orioles, Indians, Marlins, Royals, and Brewers will have picks at the end of the first round, while the Padres, Diamondbacks, Cardinals, Rays, Pirates, and Mariners have selections at the end of the second round.

The second way to gain additional picks in the draft is through making a qualifying offer to one of your free agents, an offer worth the average of the top 125 salaries in the game (usually in the range of 13 million). Should the player reject the offer and sign on with a new team, that team loses their first round pick, and the team that made the qualifying offer gets a pick appended to the end of the first round, immediately before the competitive balance picks.

Entering the season, Josh Johnson was an obvious candidate to receive such an offer. In June, he was still a likely candidate. Now, there’s really not much of a chance. The players that I suspect will receive offers are as follows: Robinson Cano (NYY), Jacoby Ellsbury (BOS), Brian McCann (ATL), Hiroki Kuroda (NYY), Ervin Santana (KC), Carlos Beltran (STL), A.J. Burnett (PIT), and Shin-Soo Choo (CIN). Cano is all but guaranteed to re-sign, while Kuroda will either re-sign or retire, dropping the group to six players. Given how well Choo has meshed in Cincinnati, I suspect he’ll be qualified and will eventually re-sign as well. The other five, however, whether it be for financial reasons or simply a lack of need, I expect to be qualified, to decline the offers, and to sign on elsewhere.

The third and final way to gain additional picks in the draft is to simply not sign a player you selected in the top five rounds of the previous draft. The compensatory pick goes in the slot immediately after the unsigned pick in the subsequent draft, i.e., if you fail to sign the first overall pick, you get the second overall pick as compensation the next year. All picks thereafter slide back one slot. There’s a caveat, mind you, as the team must offer the player a bonus worth at least 40% of the assigned slot to receive the compensatory pick. How Major League Baseball polices this I have no idea, but apparently they manage to get it done.

This point is the easiest to evaluate, as only four players selected in the first five rounds did not sign with their team. The most prominent was Phil Bickford with the Blue Jays, resulting in Toronto gaining the 11th overall pick in the 2014 draft. The Miami Marlins failed to sign two picks; LHP Matt Krook and SS Ben DeLuzio, resulting in the club picking up the 36th and 81st overall picks. Finally, the Phillies couldn’t come to terms with 151st overall pick LHP Ben Wetzler, gaining them the 152nd pick in 2014.

If things play out as I have suggested, there will be 321 picks in the first ten rounds, eleven of which will belong to the Toronto Blue Jays. To determine where the organization selects and the value of those slots, we have to make two assumptions; first, where the Blue Jays will finish in the reverse standings, and second, how much the number one overall pick will be worth.

At the time of this writing, the Blue Jays currently have the 7th worst record in baseball, and while they’re just 3 games back of the White Sox for the 3rd overall pick, they’re also just 2.5 games ahead of the Rockies for the 15th overall pick. I’ve based my calculations off of the Blue Jays finishing with the 6th worst record overall, and given the number of players injured and/or likely to be shut down and the overall downward trend of the season, I think that’s more than reasonable. The second part is far more of an approximation, as no one outside of Major League Baseball knows what their revenues for 2013 look like, and won’t for a number of months. What we do know, however, is that in 2012, the first overall pick had a value of $7,200,000, and in 2013, that same pick was worth $7,790,400 – an 8.2% increase. If we presume that baseball is in a state of steady growth and we apply that same 8.2% increase to the 2013 figure, then the 2014 first overall pick should have a slot value of roughly $8,429,200.

A numerical approximation of the 2014 Blue Jays draft budget

The above table is a numerical representation of the 2014 Toronto Blue Jays draft pool, with the round, overall pick number, 2013 slot value of that pick number, and estimated 2014 slot value of that pick number. The 2013 Value column is taken directly from Baseball America, while the 2014 Value column is simply taking the 2013 value of each pick number and increasing it by the 8.2% figure. Should my calculations be correct, that would give the Blue Jays a total spending pool just over 10.5 million for the 2014 draft. Oh, but there’s more.

A numerical approximation of the 2014 Blue Jays draft budget, including the 4.99% potential overage

Teams are allowed to spend over their bonus pool, but there are increasing levels of penalties for doing so. Any team that spends more than 105% of their allotted bonus pool begins to forfeit first round picks in subsequent drafts, as well as paying a tax on their spending. No team has spent to or above this point through two years under the new CBA, and if you believe what is said among most draft experts, it’s doubtful anyone ever will – picks are just too valuable. What’s more important and relevant to this discussion is the penalty for spending above your bonus pool, but not reaching that 105% threshold. In that situation, the organization simply pays a tax to Major League Baseball equal to the 75% of the overage; if you spend $100,000 more than your pool on amateur talent, you’re cutting Mr. Selig a cheque for $75,000 dollars as well. As you can see in the table above, if you include a 4.99% overage buffer onto the 2014 value column, Toronto is looking at the capability of exceeding 11 million in bonus spending.

A volume of cash of that magnitude has the potential to be farm system altering if spent wisely and on the correct players, and could help remove some of the sting left from offseason trades that saw Travis d’Arnaud, Noah Syndergaard, and Jake Marisnick (among others) depart the organization. These draft picks aren’t going to help in 2014, and it’s doubtful they’ll have much of an impact in 2015 or 2016, either. They will, however, be there to soften the blow in the latter half of the decade when players like Jose Bautista, Jose Reyes, and Edwin Encarnacion are either in sharp decline or gone altogether, and having cheap, controllable talent to offset the expensive back ends of contracts is a necessity for sustainable success in this modern era of baseball. In follow up articles to come down the road, I hope to open a discussion about how the Blue Jays should go about maximizing their bonus pool while referencing strategies we’ve seen utilized over the past couple of years, while also putting forth some names that Blue Jays fans should follow over the winter, and even more so early next year when high school and college baseball gets underway.