MLB Can't Contain Draft Bonuses

The newly-imposed Aug. 15th signing deadline for drafted amateur baseball players and league-recommended slot bonuses that were 10 percent lower than last year couldn't contain the dollars dished out this week. Three weeks ago, I questioned what these league-recommended bonuses really mean legally and whether they have any teeth when the clubs are not penalized for paying more than slot money. At the time of my post, half of the first rounders had already signed and they all actually signed for slot money or less. Well, on the Wednesday signing deadline this week many of the clubs broke the bank and doled out some record bonuses to the remaining unsigned picks. According to Baseball America:

For all the effort MLB put into reducing bonus slots by 10 percent from a year ago and trying to strong-arm teams into toeing the line, the average first-round bonus went up anyway. All 30 first-rounders signed in both years, with the 2006 crop averaging $1,933,333 and this year’s group averaging $2,098,083. The 2007 average is also the highest since 2002 ($2,106,793).

The average increase in bonuses this year went beyond just the first round. Baseball America also reported that the recommended slot bonuses for the first five rounds this year averaged $568,944 (down 10 percent from last year's slot money for these rounds which averaged $631,870). However, the picks in the first five rounds this year actually received an average of $685,328 (up 3 percent from the average received last year which was $662,531). Keep in mind that this 3 percent jump occurred despite the fact that half of the first rounders signed for 2007 slot money or less! What does this data say to all of those first rounders who hastily signed this year for slot money or less?

Unsurprisingly, no Scott Boras client received slot money, or even close to it. One of his clients even received the highest up-front bonus in draft history at $6 million. Every year there are clubs that voluntarily and knowingly draft his players and then mumble under their breath as they voluntarily sign the bonus checks: "That $*%$*@$!#&*$ Boras!". So the new draft rules this year designed to give the clubs more leverage, combined with recommended slot bonus amounts that were 10 percent lower than last year, couldn't control the purse strings of many teams, including the Yankees, Tigers, Orioles and Devil Rays. But they did prove to be effective in reducing the bonuses paid to half of the entire first round class this year. On the other hand, we'll never know whether those clubs paying slot money (or less) a month ago would have ultimately decided on Wednesday to pay substantially more than slot money if faced with the prospect of failing to sign their first rounder.

A draft in and of itself operates as a restraint on competition among the teams for the top amateur players. But what this year's baseball draft demonstrates to me is that there is still a viable market for the top amateur players, and there always will be as long as competition among the teams for the top talent is not further impeded by restraints in the form of rookie bonus pools and caps. In my opinion, slot money should be universally viewed by agents (sorry, "advisors") as representing a dollar amount proposed by the club as merely a starting point in the contract negotiation process between the two sides. It will be interesting to see next year what the league "recommends" as slot money -- Maybe this year's draft will cause players and their advisors to be a little more skeptical about it next year.

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