What Value Would the Trading of Draft Picks Add?

Over at Minor League Ball, John Sickels interviewed Athletics GM Billy Beane, and this little nugget really caught my eye:

SICKELS: With the basic agreement up for negotiation as we approach 2012, what do you think of the idea of trading draft picks?

BEANE: I think it would be a great idea. I have always been in favor of that, it would create more interest in the draft for the fans, and as a GM anything that improves my flexibility is a good thing.
SICKELS: Will it happen? It always gets talked about but it never gets implemented.

BEANE: Well, I can’t say for sure obviously, we’ll have to see what gets negotiated. I would say that it is a better than 50/50 chance, but it is not guaranteed. We’ll just have to see.

This really caught my attention, as it is something that happens in both the NFL and NBA right now, and is another asset that allows for the movement of players. When you think about it, amateur draft picks are the only commodity in baseball that cannot be traded for something else.

The example I heard mentioned on the Baseball Prospectus Podcast was this: What if the Nationals had decided that they did not want to meet the demands of Bryce Harper or Stephen Strasburg in either of the last two years? Undoubtedly, there would have been a team that would have been willing to meet those demands if the Nationals had not, and as such this pick has trade value. Would the Nationals have been better if they had, say, traded the rights to the #1 overall pick (Bryce Harper) to the Yankees for a package of Jesus Montero and another top-10 prospect? I’m inclined to believe that both teams would have benefitted from this.

I could see using future draft picks as another commodity in the same way that the minor leagues are used now. Would the Mariners have wanted instead of some of the secondary players in the Cliff Lee trade, instead they received Justin Smoak and the Rangers’ 1st round pick in 2011?

The biggest concern to me would be that there probably would need to be a limitation on how far into the draft (rounds deep) and how many years in advance a team could trade, but I think that this bears consideration. Even if the owners are able to get a hard slotting system for the draft, there could still be a lot of value in the ability to trade picks, as teams may not want to take players at certain picks and “move down” like seems to happen in the NFL a lot.

Roster Rules Review and the Next Set of Posts

With my post about trades and the trade deadline, I’ve finished up my Roster Rules series.

1. The 25 man roster
2. The 40 man roster
3. The Disabled List
4. Free Agency and Free Agent Compensation
5. Arbitration
6. The Rule 4 draft (June Amateur)
7. The Rule 5 draft (December)
8. Trades, the Trade Deadlines and Waivers

 Starting Friday, I am going to be reviewing some of the top candidates for the Writers’ Ballot for the Hall of Fame.

Roster Rules – Trades, the Trade Deadlines, and Waivers

A trade, essentially, is the movement between 2 or more teams of player contracts. Teams can make trades with any team they choose, involving any players that they choose, but there are some limitations:

• Teams cannot trade players drafted in the Rule 4 draft for 1 year from the date of the draft.
• Players can have no-trade clauses added to their contracts, generally only as a part of a new contract.
• Players can earn no-trade rights by having 10 years of service time in the major leagues, and having 5 years of service time with their current team.
• Players can waive their no-trade rights to facilitate a trade if they so desire.
• Teams can send monetary considerations as a part of the trade. Any amount of $1 million in cash must be approved by the commissioner’s office.
• Teams can also include a “Player to be Named Later”. Generally, this is a player who has already been determined by the teams involved, but cannot be included for various reasons.
• Free agents who sign a contract cannot be traded until after May 1st of the first season of the contract.

The Trade Deadlines

There are 2 trade deadlines:

• July 31st: The Non-Waiver Trade Deadline
• August 31st: The Postseason Roster Trade Deadline

After the July 31st trade deadline, a player must be placed on waivers and clear waivers before they can be traded to any team. Teams have until August 31st to trade for a player if they want to have them on their postseason roster.

Waivers

Players are placed on waivers in the period between July 31st and August 31st, with very few exceptions. Teams are allowed to make a claim to any player placed on waivers, and based on how many teams claim the player will determine how the claim is rewarded:

• If no one claims a player, they are said to have “cleared waivers”, and can be traded to any team
• If only one team claims the player, that team is awarded the claim.
• If more than one team claims the player, the team with the worst record in their own league is offered the claim.

If a player is claimed, they can only be traded to the team that was awarded the claim. If they choose not to trade the player to this team, they can pull him back off of waivers. What this does is make the player essentially untradeable during this period. A team can only pull a player back from waivers once in this time period. If they place the player on waivers again, they cannot pull him back again.

Once a waiver claim has been awarded, the team with the player can try to negotiate a trade with the team that was awarded the claim.

Example:

Alex Rios was placed on waivers last season during the month of August. A claim was placed on him, and this gave the Blue Jays three choices:

• Pull him back off of waivers, and not allow him to be traded without exposing him to waivers a second time.
• Negotiate with the team that won the claim (The White Sox) to try and get something in return for him via trade
• Simply allow the other team to have the player, without any return. The new team would be responsible for the entirety of their contract, and the old team would be off the hook for any of it.

In this particular example, the Blue Jays chose option #3, and were free of the rather large contract of Rios.

Sources:
ESPN.Com article  – Waiver Rules

Roster Rules – The Rule 5 Draft

Yesterday, I talked about the Rule 4 Amateur Draft. Today I move on to the Rule 5 Draft.

The Rule 5 draft is done every year in December. Only certain players are eligible for this draft:

• Players must not be on any team’s 40 man roster. There is a deadline for this roster to lock.
• Players who signed at age 19 or older are eligible if they have been in the organization for 4+ years.
• Players who signed before age 19 are eligible if they have been in the organization for 5+ years.

The draft order is set in the same way that the Rule 4 draft is set, by won-loss record for the previous season. The difference with this draft is that each team can only draft if they have a spot available on their 40 man roster for this player.  If they do draft someone, they are required to keep that player on their 25 man roster for the entire next season. They are not able to send them back to the minor leagues without at least offering the player back to their original team first. As a result of this, the draft has been used mostly of late to find high potential pitchers who can be hidden down in the major league bullpen.

There is also a minor league portion, where players in A or AA can be drafted, and must be kept in AAA for the whole season.

Notable examples of players found via this draft: Johan Santana, Josh Hamilton, Shane Victorino, Joakim Soria

Sources:

Wikipedia

Roster Rules – The Rule 4 Amateur Draft

The Rule 4 amateur draft is held each year in June. It is 50 rounds long, and also includes the compensatory picks related to free agency. The draft order is set based on the previous season’s win-loss record, with ties being broken by the team’s win-loss record for the season prior to that.

Eligible Players:

Any players who have not signed a contract who fit the following criteria:

• Resident of the U.S., Canada, or any U.S. territory
• They must have graduated from high school, but not attended college
• They must have attended a 4 year college and be either 21, or in their junior or senior year.
• They must have attended a community or junior college.

Once a player is drafted, they have a certain window to sign a contract with a team. For most players, that window ends on August 15th. College seniors who have graduated (or run out of eligibility), have a longer window, due to their not being able to return to school any longer. If a team fails to sign their pick, they may potentially receive a compensation pick in the following year’s draft, depending on what round the player was drafted in.

If a player does not sign by the end of their window, their age will determine when they will be eligible to be drafted again. For players drafted out of high school, they will not be eligible until they meet the requirements for college players. For college players, they will be eligible in the following year’s draft. Notable examples in previous years include Aaron Crow, and Tanner Scheppers.

Each year, the office of the Commissioner gives out guidelines for what the signing bonus of each pick in the draft should be. The logic is that the best player available should be the top selection, and receive the highest signing bonus. This is also known as the slotting system. However, many teams do not adhere to it, as it is not a requirement to do so.

Analysis:

Since players drafted generally take between 2 to 4 years to make an impact at the major league level, organizations try to minimize their risk at the draft. This can include drafting players based on signability rather than talent, drafting lower ceiling players with a higher potential to reach their ceiling, and avoiding talented players with makeup concerns. This can lead to some unusual choices from time to time.

The slotting system does not help teams to land the top players available all the time, since it is only a suggestion and not a requirement. A great example was Rick Porcello. When Porcello was eligible to be drafted, he was widely viewed as a top-5 draft pick. However, knowledge of his contract demands became public, and many teams shied away from him due to concerns about signability. Since he was a high school student, if he didn’t sign, he could simply go to college, and wait 2 years to be drafted again. As a result, he fell to the end of the first round, when he was drafted by the Detroit Tigers, and received a contract well over the slot suggested by the commissioner’s office. The Tigers were willing to pay him what it took to get him signed. The reason that this has become a bigger problem is that it works, as evidenced by the season that Porcello had in 2009. If he had not signed with the Tigers, he would have been eligible to be drafted this coming season in 2010. The Tigers’ willingness to pay Porcello what he believed he was worth impacted this season, as well as future ones as well.

Also, the fact that international players are not subject to the draft has become a point of contention. All international players who have not signed contracts are considered to be free agents, and a player can be signed after June 2nd of the year that they turned 16. As a result, teams that can offer better development opportunities and better money will generally get these players, leaving the other teams out of the process.

The Rule 4 draft is going to be a hot topic of discussion when the next collective bargaining agreement negotiations begin, and could very well see some large-scale changes with wide-ranging impacts on the market for players.

Sources:
Wikipedia
Sons of Sam Horn

Roster Rules – Arbitration

Arbitration is something that was negotiated into the collective bargaining agreement in order to help players who were not eligible for free agency to be paid similarly to players who were eligible.

How it works:

Essentially, both the player and the team submit a single figure, and an independent arbitrator looks at both cases, and chooses one of the numbers. The arbitrator is not allowed to choose any number other than one of the two that were submitted.

Each case is based on similar players. Both the team and the player will build their cases around what they view as “comparable players”. Generally this will include service time, a player’s accomplishments, and other improvements/deficiencies that a player has.

Who is eligible:

Any player with at least 3 years of service time can qualify for arbitration. In addition, the top 17% of all 2nd year players (in terms of service time) will also qualify as “Super-2’s”.

Any free agent can be offered arbitration, but unlike players that are not free agents, can either accept or decline arbitration. If they accept, they are subject to the decision made, and are no longer free agents.

Another thing to remember with arbitration is that it is related to free agent compensation.

[Edit]

MLB Trade Rumors has put together another great post about this topic as well.

Roster Rules – Free Agency

Free Agency actually started this morning at 12 AM EST, so we’ll go over that topic next.

After a player has completed 6 full seasons in the major leagues, they can file for free agency. Free agency allows a player to negotiate with any team they chose. A player can also become a free agent if they are released by their previous team. Since major league contracts are guaranteed, if a player is released, any team that signs him during the remainder of that contract will only be required to pay the player the minimum salary, and his old team will be on the hook for the rest.

Free Agents may be subject to compensation as well, under the following system:

All players at the end of each season are ranked by the Elias Sports Bureau. They are broken into groups by league, and by similar positional group:

Catchers
1B-OF-DH
2B-3B-SS
Starting Pitchers
Relief Pitchers

MLB Trade Rumors has a breakdown of exactly what they look at for each player. Keith Law of ESPN.com also went into this in quite a bit of detail.

What the end result of this process is that each player is given a ranking:
Type A: Top 30% of their position group
Type B: Top 50%, but outside the top 30% of their position group
All Others: Bottom 50%

Type A free agents, if signed by a different team, earn for their previous team compensation in the form of:

• The first round draft pick of the team that signed the player (if the pick is #16 or higher), OR
• The second round draft pick of the team that signed the player (if their first round pick is from picks #1 through #15), AND
• A “sandwich” pick in between the 1st and 2nd rounds.
• These are all in the June Rule 4 draft. (To be discussed in a later post)

Type B free agents, if signed by a different team, earn for their previous team the following:

• A “sandwich” pick in between the 1st and 2nd rounds.

All other free agents which do not qualify as Type A or Type B will not earn their previous team any compensation. Also, any team which re-signs a player that had been on their team prior to filing for free agency does not earn any compensation for that team (since there is no loss to the team).

The key with any compensation is this: The player’s previous team must offer the player arbitration by the deadline (usually in the first week of December), or the player must sign prior to December 1st. If neither of these conditions are met, then there is no compensation.

MLB Trade Rumors also has some examples about this as well.

Roster Rules – The Disabled List

The Disabled list is a fairly basic concept. When a player gets hurt, and he is going to be hurt for an extended period of time, you move the player onto the disabled list. There are two different lists, the 15 day, and the 60 day.

15-day Disabled List
This is used to allow teams to bring a player onto the 25 man roster. Any player placed on the 15-day disabled list remains on the 40 man roster. A player can be moved from the 15-day to the 60-day, but not vice-versa.

60-day Disabled List
This is used to allow teams to bring a player onto the 40 man roster. A roster spot is freed up by placing a player on the 60 day disabled list.

In both cases, a player may be placed on either list retroactively up to 10 days into the past, providing that they have not appeared in a game since. Also, players are required to be on the list for the full amount of time (either 15 or 60 days).

Players may also be sent down to the minor leagues for rehabilitation, but there are limits of 20 days for position players and 30 days for pitchers.

Sources:


Wikipedia

Roster Rules – The 40 man roster

Yesterday, I discussed the basics of the 25 man roster. Today, we’ll go into the 40 man roster.

The 40 man roster is considered to be the protected roster.

Players on the 40 man roster include:

• All players on the 25 man roster
• All players on the 15 day disabled list
• Selected minor leaguers

Any minor leaguers which a team wishes to protect from the Rule 5 draft must be added to the 40 man roster by November 20th each year.  Only certain minor leaguers are required to be protected:

• If they signed their initial contract by the age of 18, after 5 seasons in the minor leagues
• If they signed their initial contract at age 19 or older, after 4 seasons in the minor leagues

Some other terms related to the 40 man roster:

Recalling a player – Moving a player already on the 40 man roster to the 25 man roster.
Purchasing a player’s contract – Adding a player to the 25 man roster that has not been added to the 40 man roster. This player would also be automatically added to the 40 man roster as well.
Designated for Assignment – This is essentially a holding place for a player that is being removed from either the 25 man or 40 man roster. It gives the team 10 days to either trade the player, or put him on waivers.

Options – Once a player has been added to the 40 man roster, they can be freely moved between the minors and the majors for 3 different seasons following that. Some notes:

• If a player does not get sent down during a season, an option is not used. 
• If a player is sent down to the minors during spring training, an option is used.
• If a player uses all 3 of his options, he must be put on waivers, and clear in order to be sent to the minor leagues.

This roster is also used starting September 1st, and any player listed on the 40 man roster can be used in a game for the month of September. Players on the 40 man roster, but not on the 25 man roster on August 31st, are not eligible for postseason play.

The 40 man roster is probably the most important piece of information for a general manager. It helps protect players from other teams, allows them to draw on a base of players for their team, and can potentially be a financially driven item as well.

Sources:

Wikipedia
Brewerfan.Net

Roster Rules – The 25 man roster

Each team has both a 25 man roster, and a 40 man roster. I’m going to start with discussing the 25 man roster today.

The 25 man roster is also known as the active roster. These, simply put, are the players you can use in a live game. Any player that you wish to use MUST be on the active roster. The key with this roster is this: If you wish to have a player available to play, you must get them on this roster. There are a few ways to get players onto it:

– Place a player on the disabled list (either 15 or 60 day)
– Release a player
– Send a player to the minor leagues (on an option)

Any player that a team wishes to use in a playoff game must also be on the 25 man roster as of August 31st each year.

All players which are on the 25 man roster are automatically on the 40 man roster as well.

Sources:

Wikipedia