On Friday, Major League Baseball decided to shorten the 2020 MLB draft to five rounds, despite clubs lobbying the league to make it 10 rounds.
The league had the option, per an arrangement agreed to by the players' union in March, to make the draft anywhere from five rounds up to 40 rounds, which it had been since 2012. The union rejected a league proposal last week that would have made the draft 10 rounds, but with lower slot values in Rounds 6 through 10 than the March agreement had outlined.
Clubs can sign an unlimited number of undrafted free agents for $20,000. The slot value for the last pick in the draft is $324,100. The March agreement set bonus slots at 2019 values (they normally rise each year with league revenue) and included a deferral program: $100,000 is due within 30 days of signing, 50% of what's remaining will be paid in July 2021, the rest in July 2022.
There are a number of implications now that this long-rumored move has been finalized, falling into three major categories.
2020 draft strategies
In addition to the changes in the draft, a severely abbreviated spring season for colleges and high schools has forced teams to adjust their approach.
Broadly, club officials expect teams to choose players in the top two or three rounds who had a long track record before this spring and a willingness to sign below the slot value. This means college players will win any coin-flip decisions with high school players, as they almost always have a more extensive track record than prep players. Additionally, the college players would lose negotiating leverage as 22-year-old juniors in the 2021 draft.
There's a group of roughly a dozen prep players who are well-known entities with long track records, plenty of performance data, and in some cases a spring season that had already started. Those players likely will be drafted in about the same place and get about the same nominal bonus they had been expecting in February.
There's a much bigger group of prep prospects who have a wider variance in how they're perceived by clubs because they have a shorter track record. With the asymmetry in asking price and what most teams are willing to pay them, combined with there being fewer picks, less money in the market, lower slots and bonus deferrals, many fewer high-end ($500,000 bonus or higher) high school players will be drafted and signed than would have been under last year's draft format.
• Club officials think teams will lean to college players and under-slot bonuses in the top two to three rounds. From there, teams might be able to use the gap in the slots from the fifth round ($324,100 to $426,600) and free agency (up to $20,000) to their advantage by offering half (or less) of slot to numerous targets in the fifth round, then select whoever accepts it first. That would mean that the non-consensus prep players with higher price tags will go in the third to fourth rounds, where clubs would spend the savings of their other picks.
Full coverage of the 2020 MLB draft is available here
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Wed., June 10: Round 1 starting at 7 p.m. ET (ESPN)
Thu., June 11: Rounds 2-5 starting at 5 p.m. ET (ESPN2)
Kiley McDaniel's latest mock draft
Team-by-team draft guide: Fits, needs for all 30 teams
Ranking the top 150 MLB draft prospects
• I've heard rumblings that a half-dozen or so clubs are in dire enough financial straits that their executives have discussed just taking the best college player on the board for their picks in Rounds 1-3 (the rounds with compensation for unsigned picks) and, without calling ahead to check on their signability, offer the player something like 70% of slot. In that situation, the club would get either a great bargain or, if the draftee doesn't sign, a compensation pick of equal value in 2021, plus a savings of $100,000 over the next year, which could end up saving a staff member's job if no games are played this summer.
It's an extreme position to take, but some execs are worried that if no MLB games happen in 2020, making even the short-term $100,000 bonus payment could impact jobs.
• A consensus top prep prospect such as Austin Hendrick is in a tricky spot. He's old for his class, so he would be sophomore-eligible in 2022 if he doesn't sign a pro deal and instead opts to go to Mississippi State. If he is drafted around the 10th pick, as expected this year, he'd get $100,000 this summer, then a couple of million the next two summers after that. If he goes to school and gets taken at the same pick in two years, the slots likely will be higher and there almost certainly won't be deferrals, so he'd get a bigger bonus, paid in full at the same time as a 2020 draft bonus would be paid off.
Betting on yourself as an elite prep prospect to play well at college has an even bigger return now, one that could be compelling even to top-10 overall picks.
For a player who is truly on the fence about signing for what he expects to be offered, this math could be meaningful. Hendrick's spring season in Pennsylvania never got started, so his track record from last summer is especially valuable, but some teams could still be hesitant to pick him over a comparable college player for whom they have more data and they saw play multiple games this spring.
Blowing out the draft
Last year, ESPN colleague Jeff Passan wondered if a team would ever pay the maximum penalty of two future first-round picks along with a penalty payment and spend wildly above their draft pool for one year. His conclusion was probably not, but I would submit that this year would make the most sense if a certain kind of club was inclined to give it a try. With more high school players who will be hard to sign for slot amounts, they should be easier to grab with later picks than usual.
The instinct might be that this strategy wouldn't make sense with a draft of only five rounds, with no team holding more than seven picks. Could this strategy work with seven players? I think it could, if a team meets a number of specific criteria:
• The team would be picking later in the draft order and have a middle-tier bonus pool at most. There's no reason for a team to blow its budget in a year when it would already get a lot of talent.
• The team should be a slam dunk contender, ideally with a larger payroll, so the forfeited first-round picks would project to be late ones.
• The team has to have a top-notch amateur scouting department, both so the GM and owner feel comfortable letting them spend a very high amount of money, but also so that even with a shortened spring, they'd have enough information on top prospects to feel comfortable making these decisions.
• The team would need to have plenty of cash, as the bill over the next two summers would be big. For a number of reasons, a team wouldn't even want to be considering furloughs or staff cutbacks while being the first franchise to spend way over a hard-capped bonus pool in the draft.
This narrows the number of teams that could consider this strategy considerably. Some of these criteria are subjective, but I ended up landing on only one team for which such a plan could make sense: the Dodgers. I spoke to a few clubs that met most of these criteria and they admitted that they'd talked about this strategy internally, but it doesn't sound like any clubs are seriously considering it.
Even if a club were to meet all these criteria, the optics of spending wildly when other clubs are in serious financial trouble and people are being furloughed or taking pay cuts to save colleagues' jobs would be challenging.
Long-term labor concerns
The MLBPA has been trounced by MLB in almost every point of their negotiations in the recent past, but the league overplayed its hand when it came to determining the number of rounds in this year's draft.
First, it was reported that there might not be a draft this year (even though there always was going to be one), so when MLB offered the union a shorter draft with slot cuts and bonus deferrals, it seemed like a win for the players. It was negotiated that MLB had the discretion to make the draft anywhere from five to 40 rounds, but it was understood that the draft would be between five and 10 rounds, as the league wanted to limit draft expenditures for owners who had lost so much early-season revenue.
Once teams told commissioner Rob Manfred that they wanted a draft of 10 rounds, since it made for more flexibility in the draft process for little added cost, MLB proposed that to the union, but with even more cuts to potential spending from what already had been agreed upon. The union rejected this proposal because it would set the precedent that a 10-round draft could be run with significant financial concessions, and the union didn't want a 10-round draft to be part of its new collective bargaining agreement in 2022 and beyond.
Agents advising the union told me they essentially saw doubling the number of players entering pro ball at half the expected bonus payout as a net negative, due to the possibility that this would help lead to more draft cuts in future years.
MLB took the stance that going from five to 10 rounds was a concession by the league that it needed to be compensated for, even though many clubs preferred the extra rounds. When the union rejected the proposal with the reduced payouts, it would have been a clear negotiating loss for the league to just make it a 10-round draft at the agreed-upon slots.
So the league ended up boxing itself into a worse outcome for its clubs. The bonus expenditure for Rounds 6-10 is just less than $30 million, or less than $1 million per team. With deferrals, that means it would have cost each team on average roughly $500,000 for the next year. To the commissioner, it may have seemed worth a shot to try to get Rounds 6-10 at a discount, but the offer to the union dramatically increased the odds that Rounds 6-10 wouldn't happen at all. And for what? The projected savings in the first year (i.e. solving the short-term cash-flow issues) of the MLB proposal as opposed to the already-agreed-upon terms for Rounds 6-10 would have been less than $2 million spread across 30 teams, or roughly $60,000 per team.
Draft fiat foreshadows fiscal austerity
I bring all of this up because I think it's an indicator of how the league will approach the economic elements of the upcoming CBA negotiations. The league already was setting an aggressive economic agenda in cutting dozens of minor league teams in search of savings, at the cost of losing baseball in small-town America. There has been some lip service to establishing teams in independent leagues in those cities, but many of the affiliated teams on the proposed chopping block were losing money when the parent MLB clubs were paying the players. How would they suddenly become viable independent league clubs, unless MLB subsidized them at a meaningful enough level that there wouldn't be much reason to cut the teams in the first place?
With the huge loss of revenue from the coronavirus pandemic, owners can now simply say that financially struggling minor league clubs are necessary cuts to get the books in order. They can say that continued cuts or caps on bonuses for amateur players are necessary for the same reason. The MLBPA has accepted big cuts and caps on amateur markets because it prioritizes gains for the big leaguers. I've been told by sources on both sides of the negotiating table to expect hard-slotted picks and the trading of picks (the two go hand-in-hand) in both the domestic amateur draft and a newly created international draft for the 2022 season.
If MLB can now justify its unpopular cost-cutting stances as necessary to get its books in order, will it add another unpopular cost-cutting measure to the top of its agenda? Can we assume the league will treat all of these negotiations in the punitive way it handled a relatively minor issue like the number of rounds in a single year's draft? Will there be another long-term target as part of the next proposal, in addition to live baseball in small-town America and the incentives for young athletes to pursue a career in the game?