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The Future of the MLB Draft: Potential Changes


David Seifert
Director of College Scouting

With the current Collective Bargaining Agreement (CBA) between Major League Baseball (MLB) and the Major League Baseball Players Association (MLBPA) due to expire after the 2021 season, change is likely in the works in many areas other than just the draft moving from New Jersey to Omaha. With revenues continuing to increase annually, MLB is now a $10.7 billion industry. Add in a $5.1 billion extension with FOX Sports, which begins in 2022 and runs through 2028, and everyone from the team owners to the players to the player agencies want a bigger piece of the pie. And all three parties are equally important when it comes to creating the next successful agreement.

Today we will look at one part of the CBA, the Rule 4 First-Year Player (Amateur) Draft, and will recommend beneficial changes for all parties involved. Tomorrow, we will dive further into the effects and benefits these potential changes may bring to the players involved, MLB, college baseball and sports agencies.

Sidenote, below is the type of money involved…

  • 2018 Total Bonus Pools for all clubs: $255,969,600 increased 4.2% from 2017.
  • 2018 Total Bonuses spent for all clubs, All Rounds: $294,648,102. Rounds 1-10 $244,829,937. After the 10th round $49,818,165.
  • 2019 Total Bonus Pools for all clubs: $266,480,400 increased 4.1% from 2018.
  • 2019 Total Bonuses spent for all clubs, All Rounds: $316,560,984.
  • Estimated $12.66M* was earned in 2019 by player agents for their part in negotiating signing bonuses. (*4% commission of $316.5M. Typical commissions range from 3-5% of signing bonuses, and not every player has an agent)


Current System- Eligibility
To be eligible for the Rule 4 First Year Player Draft, a player must fit the following criteria:

  • Be a resident of, or have attended an educational institution in the United States, Canada, or a U.S. territory, such as Puerto Rico.
  • Have never signed a major or minor league contract.
  • High school players are eligible only after graduation or completed GED requirements, and if they have not attended college.
  • Players at four-year colleges/universities are eligible three years after first enrolling in such an institution, or if they turn 21 years old within 45 days of the most recently completed draft.
  • Junior and community college players are eligible to be drafted at any time.

New System (changes in BOLD)
To be eligible for the Rule 4 First Year Player Draft, a player must fit the following criteria:

  • Be a resident of, or have attended an educational institution in the United States, Canada, or a U.S. territory, such as Puerto Rico.
  • Have never signed a major or minor league contract.
  • High school players are eligible only after graduation or completed GED requirements, and if they have not attended college.
  • Players at four-year colleges/universities are eligible two (sophomore) or four (senior)years after first enrolling in such an institution. Four-year college freshman and juniors are not eligible, regardless of age.
  • Junior and community college players are eligible to be drafted at any time.

Additionally, eligible players must declare their intent to become a professional 45 days (approx May 1) prior to the first day of the upcoming draft. This declaration would be filed directly with MLB and once approved, would be shared immediately with all 30 clubs. A player is either in, or out. If a player who is eligible does not declare, he is NOT eligible for selection that year and may NOT sign as a non-drafted free agent.


Current System- Draft Order & Selection Process
Forty (40) total rounds with the draft order based on the previous season's standings. Team possessing the worst record receives the first pick, next worse record receives the second pick, etc. NOTE: There are also various “compensation” picks between the first and third round awarded to teams based on a variety of factors, including small market size, loss of players to free agency and revenue.

New System (changes in BOLD)
Selection order and compensation picks status quo. Fifteen (15) total rounds.
Day One: First round through compensation/supplemental picks
Day Two: Rounds 2-8
Day Three: Rounds 9-15


Current System- Bonus Pool Allotments
Each pick in rounds 1-10 has a signing bonus value. Each team receives a signing bonus pool that is the aggregate total of all its picks in rounds 1-10 (the “bonus allotment”). Signings after Round 10, including non drafted free agent signings, do not count against the bonus allotment unless they exceed $125,000, in which case the excess counts towards the total bonus allotment available for signings. A team may only exceed the bonus allotment subject to certain penalties. With each succeeding draft, the total pool of bonuses increases in step with MLB revenues. 2017 to 2018 pool increase was 4.2%. 2018 to 2019 was 4.1%.

New System (changes in BOLD)
Each pick in rounds 1-15 has a signing bonus value and a player receives that amount when selected with that pick in rounds 4-15 (no negotiation, the pick pays what it pays). For rounds 1-3, each team receives a bonus allotment that is the aggregate total of all its picks in those rounds, including supplemental and compensation picks. Bonuses in rounds 1-3 are individually negotiated, and subject to the same penalties that currently exist for exceeding a bonus pool. Slot values would continue to increase in step with MLB revenues, the same as the current agreement. Additionally, each team, regardless of where they pick or large/small market status, will be given a $1 million bonus pool for free agent signings of players who declared for the draft, but were not selected in the 15 rounds. This amount would be a hard cap; a club could not exceed $1 million with its non drafted free agent signings. The cap would annually increase the same percentage as slot values.


Current System- Bonus Slots
The slot amount for a signing bonus is negotiated between MLB and the MLBPA. Once selected, signing bonuses are negotiated for all rounds and picks throughout the draft by MLB teams and a player and/or his agent. There is no maximum bonus. The all-time record bonus is $8.1M by Adley Rustchman in 2019. The minimum bonus by rule is $0, but typically not less than $1000. Signings in excess of the bonus slot allotment for a particular pick must be paid for with savings from another pick (e.g. Player A has a bonus slot allotment of $1,000,000 and Player B has a bonus slot allotment of $500,000. Player A may sign for $1,250,000 provided Player B agrees to sign for $250,000).

New System (changes in BOLD)
Slot amounts continue to be negotiated between MLB and the MLBPA. However, in this system bonuses would be slightly lower than the current ones in the top 3 rounds to account for the increase of bonuses in the later rounds and a much higher annual salary (discussed below). Bonuses after the 3rd round would pay:           

4th round- $400,000
5th round- $350,000
6th round- $300,000
7th round- $250,000
8th round- $200,000
9th round- $175,000
10th round- $150,000
11-15th rounds- $125,000


Current System
If a draft-eligible player (drafted or non drafted) does not sign by approximately July 15 (July 12 in 2019), he retains all of his remaining college eligibility and may return to school.

New System (changes in BOLD)
If a player declared, but is not drafted, he is eligible to sign as a non drafted free agent for any amount up to a maximum of $100,000. If he does NOT sign as a free agent, he retains the remainder of his college eligibility. If he does NOT sign as a drafted player in the 15 rounds, he loses the remainder of his college eligibility and is subject to the draft once again the following year. All players, drafted and non drafted free agents, must be signed within five (5) days from the last day of the College World Series (approx June 30).


Current System
All drafted and free agent players are eligible for the College Scholarship Plan (CSP). Scholarships can be for any amount, and in most cases reflect where the prospect currently attends college, or where he may be committed to attend. However, these plans are negotiable for any amount, and are not limited to the actual cost of attendance.

New System (changes in BOLD)
Scholarships are limited to the actual cost of attendance to where a player currently attends, or where he has officially signed to attend. A COLA clause will be built in to account for any increases in the cost of attendance. NOTE: The current CSP is administrated by the clubs and MLB as a well-oiled machine from my experience. If a player wants to complete his degree, this program is designed to do just that. Obviously, the player must be willing to do the coursework, but if you are a player reading this, do not buy into the rumors that “no one uses this program” or “clubs hope you don’t use the money.” Both of these statements are false.


Current System
For injuries discovered post-draft, but previous to signing, a club must offer 60% of draft slot value or lose the pick if in the top three rounds. If the club makes this offer, but the player declines, the club will receive a similar pick in the next draft and the player may return to college with full remaining eligibility. Picks after the third round have no restrictions, nor does a club receive a compensation pick in the following draft if a player does not sign.

New System (changes in BOLD)
For injuries discovered post-draft, but previous to signing, a Club must offer 60% of draft slot value or lose the pick if in the top five rounds. If the club makes this offer, but the player declines, the Club will receive a similar pick in the next draft and the player may return to college with full remaining eligibility. After the fifth round, selection of players is caveat emptor- the club assumes full responsibility for the health of a selected player and the slotted signing bonus is paid in full. NOTE: After years of administrative dysfunction between the clubs and MLB, they have recently streamlined the pre-draft player questionnaire and medical note evaluation process. This is an area that would need additional resources and continued expansion into the top 250 prospects.


Current System
Starting minor league salary is $1,100/month for only the time in which minor league games are played. This does not include instructional league, spring training, extended spring training, or any other game(s) outside of the actual MiLB season. The salary increases each year and at each higher level (Triple-A pays more than High-A, for example), topping out around $2,100/month for minor league players who haven’t yet become free agents, or those who are not selected to a 40-man roster. Recently, the Toronto Blue Jays have taken the lead with an increase to these salaries, and as a result they do pay more than what is noted above.

New System (changes in BOLD)
Starting minor league salary is $1,500/month beginning the date of signing the original contract and paid each month through December 31 of that year. On January 1 the salary increases to $2,500/month ($30,000 annual) for a player’s first full MiLB season. Each succeeding year, the contract increases 15% and pays the same at all MiLB levels until placed on a ML roster.


Check back with us tomorrow when we dive further into the effects and benefits these potential changes may bring to the players involved, MLB, college baseball and sports agencies.

 

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