MLB's 2020 Draft Rules Could do Irreparable Damage to Small-Market Teams
Due to concerns surrounding COVID-19, Major League Baseball recently announced that the Draft would consist of just five rounds (normally 40) and signing bonuses for any undrafted amateur free agents would be capped at $20,000. That signing cap will not only hurt players in the Draft, it is likely to hurt small-market teams as well.
Consider all the talent teams tend to find in later rounds of the Draft. Yes, there are a few can’t-miss prospects that go in the first round every year, but inevitably, there are a few diamonds in the rough in the later rounds. In fact, roughly 20 percent of Hall of Famers who signed with the team that drafted them were selected after the first five rounds. Now, instead of scouting departments providing their value by helping identify these diamonds in the rough, well-established, big-market franchises will clearly have the upper hand at the negotiating table for those draft hopefuls who still plan on turning pro this summer.
There are a couple reasons for this. First of all, in general, a big-market team is going to be more appealing to a prospect than a low-market team. You get to live in a big city (if you make it to the bigs), you get to tell your friends which tradition-rich organization you belong to, and you have a better chance of landing a mega-deal down the road with your original team. Of course, there will be exceptions to the rule. There might be a hometown kid who wants to sign with the Royals or the Rays or the Marlins. But, for the most part big-market teams have a lot more to offer. All things equal, which they are given the signing bonus cap, kids are going to pick the teams they recognize, who play in the more desirable cities, and where they think they can make the most long-term money.
The implications of such a selection process are fairly obvious. If big-market teams are scooping up all the hidden talent in the Draft, the gap between them and the small-market teams is only going to widen. Small-market teams like the Rays and Athletics have been able to stay consistently competitive simply because they scout well and develop talent. This $20,000 signing bonus cap will ask them to continue pumping out major-league talent with a hand tied behind their back. It won’t be easy convincing a talented kid to sign in Tampa Bay or Oakland when they could sign in New York, Los Angeles or Chicago. All this is true without even mentioning the fact that players taken in the first five rounds are likely to sign for less money because the threat of a $20,000 signing bonus cap waiting beyond the fifth round can be used as leverage by big-league teams. With prices being pushed down, even players taken in the first five rounds by small-market teams may feel inclined to return to school (if that’s an option) and take their chances next season, denying those teams the replenishment their farm systems so desperately need.
This freedom of choice is a win for players in a purely theoretical way. Instead of being taken essentially as property of these big-league clubs, anybody not taken in the first five rounds now has the power to choose. However, the guys who were going to be selected soon after the fifth round are going to lose a significant amount of money in this new process. Are their lost signing bonus values worth the power to decide where to begin their professional careers? That’s up to each individual. But as it pertains to competitive balance, it could have disastrous effects. Before 1969 when the Draft was established, big-market teams regularly dominated the league with little resistance from teams who had to be more frugal. Assuming we have just one year of this adjusted Draft system, the consequences on competitive balance won’t be nearly as dire as in the early days of baseball. But for small-market teams who already face an uphill battle, these new Draft rules are yet another obstacle standing in the way of their path to a championship.