In the 2016 Draft, It’s All About The Money

Some high school players are going to get very rich before Thursday night is over.

In a draft with no one who has separated themselves from the pack and seemingly every team has money to spend, it’s a great year to be a high school prospect with enough talent to demand a seemingly outlandish signing bonus.

The amount teams get to spend in the draft keeps increasing, but the top-end bonuses aren’t coming close to keeping pace. The top-end talent isn’t getting more money, but the teams are spending more overall in the draft. So when you have a draft like this one, where there’s depth but no one who has set themselves above the pack, it is set up perfectly to see a lot of high school talent get a lot of money later in the first, supplemental first round and beyond.

High school players generally have more leverage. A college junior who turns down a big bonus knows that a year later most college seniors are pretty much given take-it-or-leave-it offers. A high school senior can turn down a similar bonus in the belief they will earn even more money after two or three years of college.

Controlling The Board
The Phillies pick first overall, but before they pick again, there are 10 teams who will have at least two picks and lots of money to spend.
Team	1st/Supp. 1st picks	Allotment
Reds	2	$9.6 million
Phillies	1	$9 million
Braves	2	$8.2 million
Padres	3	$8 million
Rockies	2	$7 million
Dodgers	3	$6 million
Cardinals	3	$6 million
A’s	2	$5.8 million
White Sox	2	$5.5 million
Mets	2	$4.4 million
Pirates	2	$3.8 million

The top college players will likely be picked in a close semblance to their order of talent. The top players will get the top bonuses at the top of the draft and by picks 20-25, most of the consensus top college players will be off the board.

But don’t try to line up the high school talent tonight by the order in which the players are picked. It’s likely that many of the top high school players in this draft will try to slide to the back of the first round, where there is more money to spend.

To give an example: the Twins pick 15th. That pick is slotted for $2.8 million, a sizable amount that is more than all but 14 players in last year’s draft received. But that’s the Twins’ only pick in the top 50 picks of the draft. Compare them to the Dodgers, who don’t pick until pick No. 20, but also have picks Nos. 32 and 36. The slot for pick No. 20 is $2.3 million, a half million less than the Twins. But if the Dodgers decide to go cheap with just one of their top three picks and save $1 million, they can use that surplus to offer the same player $3.3 million, a half-million more than the Twins’ slot.

This year teams picking near the back of the first round and in the supplemental first round will have a lot of money to spend, largely because more money keeps getting pumped into the draft, and it has to find somewhere to go.

In 2012, in the first year of the new draft spending rules, teams spent $207.9 million overall, an average of $6.9 million in spending per team. Last year, teams spent $248.8 million on the draft, an average of more than $8 million per team.

But a look at the top bonuses in the draft shows no similar inflation. Kris Bryant set the draft record in 2013 with a $6.7 million bonus, which has not come close to being topped since. The top three picks in 2013 earned a collective $17.85 million in bonuses. Last year’s top three picks earned $17.9 million.

The current system limits the growth of the top signing bonuses because the penalty of not being picked in the top three is so severe. The difference in bonus allotment from pick No. 1 to pick No. 3 is $2.5 million. If you are the clear No. 1 prospect, you can drive a hard line with the team picking first, because you know that if you somehow slide past No. 1, the team picking No. 2 has the money to meet your demands. But if you aren’t assured of going second or third, that leverage evaporates.

The difference between what the Phillies get to spend by having the first pick and what teams can spend further down is so massive that it gives them the opportunity to entice a player to take dramatically less than the allotted slot. Take the example of high school outfielder Mickey Moniak. If Moniak knows that he’s not really in the mix at No. 2 or No. 3, which seems likely, he faces a relatively simple choice. If the Phillies offer him $5.5 million, which is more than $3.5 million less than slot, it still is more than the Rockies could offer him at pick No. 4 while offering him their full slot allotment. No player taken outside the top three has signed for more than $5 million under the current draft format.

When Carlos Correa was picked 1-1 in 2012, the first pick was slotted at $7.2 million. When Kris Bryant received $6.7 million in 2013, the amount slotted for the No. 1 pick was $7.7 million. The Phillies will have $9.015 million allotted for the first pick in the draft. They don’t have to (and won’t) spend all of that allotment on the first pick, but the amount they are given to spend has gone up almost $3 million from what the first pick was slotted to receive in 2012.

Year	Money Spent	Top 3 Bonuses
2012	$207,886,990	$15,120,000
2013	$219,302,880	$17,858,400
2014	$222,809,919	$16,782,000
2015	$248,833,845	$17,900,000

So the very format of the draft is giving the teams at the top of it massive amounts of money to spend on later picks. In the four years of the current collective bargaining agreement, only six players have received a bonus of $6 million or more. Only 17 players, an average of four a year, have received $4 million or more. But remember that the total amount being spent keeps going up. That ensures that more and more players are signing seven figure deals. 

The advantage that comes from picking at the top can’t be overstated. The difference in the slot allotment for the first pick (Phillies) and the second pick (Reds) is $1.25 million. The difference between the second pick (Reds) and the third pick (Braves) is another $1.25 million and the difference between the Braves’ third pick and the Rockies’ fourth pick is another $1.25 million.

At that point, the slot difference between picks quickly slows down. The gap from the Rockies’ fourth pick to the Brewers at pick No. 5 is $876,500. The gap from the Brewers to the A’s at pick six is just over $300,000. And by the time you get to the 10th pick, there’s less than a $100,000 drop-off to the slot for pick 11.

So Philadelphia, Cincinnati and Atlanta are going to have a lot of money to spend, but it will be fascinating to see how they spend it.

Last year, the Astros showed the way to use a financial advantage. They took their largest bonus allotment and used it to snag three top 10 talents, even though their third pick was not until pick No. 37. Daz Cameron floated very large bonus demands to other teams, slid in the draft and ended up receiving the fifth-highest bonus in the class ($4 million) even though he was a supplemental first-round pick. Houston ended up with three of the top six most expensive players in last year’s class.

This year, it will be much tougher to get a player to slide so far.

Philadelphia will have the money—a $6 million bonus for the first pick would still let Philadelphia spend $4.5 million on their second pick without touching a dime of the money allotted for their later picks. But it’s going to be very hard to see anyone with that kind of talent making it to the Phillies’ second pick at No. 42.

By that point, 10 different teams will have picked twice including three teams which will have picked three times. Most of those teams have enough money available to spend $3 or even $4 million on a player. Even if some teams play it straight and use the money to pay above-slot on later picks, there are simply too many teams to feel completely comfortable that any one player will make it through the first and supplemental first round.

Even if the Phillies have a deal in principle with a top high school talent to sign a Cameron-esque deal, the plans can be ruined by another team picking the player earlier. And there are a lot of teams with the motivation and the money to do just that.

The Reds, who pick again at No. 35, would seem to be in a better position. They can strike a deal with someone at pick No. 2 for somewhere around $2 million under their slot allotment and have nearly $4 million to spend at pick No. 35. But by then the Cardinals (Nos. 23, 33, 34) and Padres (Nos. 8, 24, 25) will have each picked three times, giving each of them the option of trying to snag a $4 million, top 10 talent who has slipped.

That doesn’t ruin the Phillies’ or the Reds’ drafts by any means. There are a large number of projectable high school players with large price tags who should be available for them to spread their money around. But it will make tougher this year to spend it all in one place.