Gaming the System -- MLB Draft Day 3, and all those seniors drafted yesterday

ARLINGTON TX - NOVEMBER 01: General Manager Jon Daniels of the Texas Rangers looks on during batting practice against the San Francisco Giants in Game Five of the 2010 MLB World Series at Rangers Ballpark in Arlington on November 1 2010 in Arlington Texas. (Photo by Ronald Martinez/Getty Images)

For those who want to talk MLB Draft, Day 3, this thread is open for draft talk.

I also wanted to take a moment to talk about an interesting phenomenon that developed yesterday, with teams that are looking to game the new system that MLB has put in place for this year's draft.

In the first ten rounds of this year's draft, the Toronto Blue Jays selected seven college seniors. The Yankees, the Red Sox, and the Rangers each selected five college seniors, and other teams took more college seniors than usual.

Toronto, Boston, New York, and the Rangers at the top of that list particularly noteworthy, because those are all teams that have tended to spend more in the draft than usual, while college seniors are usually players that sign for nominal bonuses, since they have little leverage. So how does this make sense?

Well, it has to do with the new bonus pool rules. The Rangers, for example, have $6.567 million in their pool. The bonuses of the players they draft (and actually sign)* in the first ten rounds is applied towards that pool, as well as bonuses of more than $100,000 for players drafted after the 10th round.

* If you don't sign a player you draft in the first ten rounds, you lose that pick's pool allocation amount.

So how does drafting college seniors in the first ten rounds help teams like the Rangers, who want to spend more money, game the system?

Because all of the bonuses for players taken in the first ten rounds count against your cap, but only the amount over $100,000 for later picks counts against the cap, by taking cheaper players in rounds six through ten, and more expensive players later, you end up being able to spend more money.

For example...the Rangers drafted five college seniors in the first ten rounds. Let's assume, for the sake of discussion, that those college seniors get $5,000 bonuses. The bonus pool value for the Rangers' last five picks of the first ten rounds are $155,900, $141,400, $132,000, $125,000, and $125,000. If the Rangers had drafted guys who would sign for that amount in rounds six through ten, then drafted the college seniors later, there would be no leftover money for the bonus pool.

However, by drafting college seniors and giving them (for the sake of example) $5000 bonuses, you have $654,300 extra money available for your bonus pool to spend on other draft picks.

Now, let's take that one step further...let's say that the Rangers drafted players in rounds 11 through 15 who will require the slot money for rounds 6 through 10 to sign. The Rangers can sign those players for $155,900, $141,400, $132,000, $125,000, and $125,000, respectively, but the first $100,000 in each deal doesn't count towards the bonus pool cap. That means that the Rangers have, effectively, saved $475,000 ($500,000 for the first $100,000 paid towards each of those draft picks, less the $25,000 for signing five seniors in the first ten rounds). That gives them $475,000 more than they otherwise could have spent under the rules to sign other draft picks.


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