A Word of Genius: A Review of the 2012 MLB Draft

He is a man who has graced the pages of 500 Level Fan before, bringing you – the reader – such brilliant pieces on the draft, on Henderson Alvarez, and on Drew Hutchison.

He is a man who could break you in a game of Blue Jay prospect trivia.

He is a man who once beaned me square in the middle of the back during a pee-wee league baseball game.

Who else would you want getting into the nitty gritty of the 2012 baseball draft than “Future Star” Yarwood?


Over the last three days, MLB teams took turns picking new players for 40 rounds in the 2012 first-year player draft. In total, 1238 players were selected, of which only a very small fraction will ever make any kind of impact in professional baseball.

This year the league implemented a unique new system, assigning a monetary value to every position in the draft. The goal of the new system is ostensibly to ensure that players are drafted in order of talent. This is how the system works in other professional sports leagues, and how it was probably intended to work in baseball, but increasingly over the past 10 years, we’ve seen some of the draft’s most talented players holding out for huge bonus amounts, scaring off certain teams from drafting them. As a result, some of the best talent in the draft has slipped further down, often to the teams with the deepest pockets. However, in the last few years, small-market teams such as the Rays, Nationals, Pirates, Royals, and Blue Jays have taken advantage of the system and invested heavily in the draft, giving themselves a competitive advantage over big-market teams content to save their piles of millions for free agency. It remains to be seen how effective the new system will really

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be in leveling the playing field.

The suggested bonus for the #1 overall pick is $7.2 million dollars. The #2 pick is $6.2 million, #10 is $2.7 million and the last pick in the first round, pick #31 is $1.575 million. This doesn’t mean teams have to pay the player they draft that much money, or that the player has to sign for the suggested slot amount. Instead, teams are given an overall draft spending allotment, or a “bonus pool” based on their draft positions. In order to ensure that teams stay within their allotment, MLB implemented a new system of penalties for over-spending, including a prohibitive tax and the loss of future draft picks. Minnesota has the highest bonus pool this year at $12.4 million. The Jays have the 5th largest bonus pool at $8.8 million. The Angels have the smallest at only $1.7 million. These numbers represent the total amount of money each team can spend on signing all of its draft picks from the first 10 rounds of the draft. In rounds 11-40, teams can spend up to $100K per player, any amount over that counts against the overall bonus pool. Any team exceeding it’s bonus pool by more than 5% faces an increasingly strict set of penalties.

For a summary of the bonus pools, more detail on the new rules and info about the penalties, check out this article in Forbes: http://www.forbes.com/sites/maurybrown/2012/06/04/mlb-enters-new-age-with-constraints-on-draft-bonuses/

The Jays draft team seem to have taken a unique approach to the draft this year, to make sure they get the most high-upside talent possible early in the draft. The Jays had 14 total picks in the first 10 rounds. Their thinking seems to be that it is best to get 4 or 5 high-upside players out of that group, even if it means throwing the rest of the picks away. So, in addition to drafting high-upside players like D.J. Davis (#17), Matt Smoral (#50), Tyler Gonsalez (#60) and Anthony Alford (#112), the Jays took a group of college seniors, players barely on the radar of most MLB teams. For example, in the fourth round the Jays took Tucker Donahue, a senior from Stetson University. Donahue has reportedly already signed for “4 figures”, well under the $308K allotted to his draft position. The result is that the Jays will have at least $200K extra in their bonus pool to entice one of the higher-upside young players they drafted to sign up, players that they would probably not be able to sign by simply offering them the amount allotted by MLB to their place in the draft. After picking Donahue the Jays’ next 6 picks were also off-the-radar college seniors, who are likely to agree to low bonuses and will almost certainly never make it near the major leagues. In effect, the Jays traded their 4th-10th round selections for one or two more 1st round talents.

If the strategy works, the system will be stocked with a small, but talented group of high-end prospects, and the college seniors get a modest payday, a chance at a spot on a low-level professional baseball team. Although their role is essentially to shuffle more money to more talented players, and though many of them will probably be out of baseball next year, these players have essentially been offered $10-100K and a chance to audition for their dream job.

The Jays’ approach probably does as much to illustrate the flaws in the MLB’s new draft system as it does to add talent to their system. But the new rules are there to be exploited, and it looks like Toronto’s young front office is well ahead of the curve.

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